IT’S YOUR FAULT Companies look to banks to recompense online fraud
Fraud continues to
hit a majority of businesses, which continue to look to their financial
institution as primarily responsible for securing the online channel, according
to Guardian Analytics in its third annual study of small and medium business.
are not improving their defenses, and a majority continue to lose money due to
fraudulent transactions. Also, businesses hit by fraud continue to take their
business elsewhere, showing very little patience for financial institution that
can't protect their accounts.
Major findings include:
· Businesses are increasing their use of online
banking. Businesses conducting all banking online increased from 9% to 20%
since 2010, and now half of businesses conduct at least half of their banking
through the online channel.
· Use of mobile banking is rising as well.
Businesses accessing online banking from mobile devices increased to 54%, up
from 23% in 2010.
· Businesses are looking to their financial
institution for fraud prevention-72% of small and mid-sized businesses indicate
that their financial institution is most responsible for ensuring online
accounts are secure. Perhaps such trust in their bankers helps to explain why
the use of various fraud-prevention technologies has been flat since 2010; and
43% did not change security practices at all following a fraud episode.
· Fraud attacks are widespread. Two out of three
businesses have suffered fraudulent transactions, and of these a similar
proportion lost money as a result. For example, in the online channel, 73% of
businesses had money stolen (i.e. there was a fraudulent transaction before
attack was detected), and after recovery efforts, 61% still ended up losing
· Businesses are not reimbursed by their bank.
While the levels vary by channel, approximately 7 in 10 businesses that
suffered fraud losses were not fully reimbursed by their financial institution.
· When they suffer a fraud loss, they leave. After
a fraud episode, 40% of businesses move some or all of their banking business.
And 56% indicate that it takes only one fraud loss to lose confidence in their financial
This study reflects the input from
998 small and medium businesses as defined by having less than 200 employees
and generating less than $100M in annual revenue. The surveys were conducted in
[This article was posted on August 21, 2012, on the website of ABA Banking Journal, www.ababj.com.]