Fraud Detection Is the Cornerstone of Digital Customer Experiences

Consumer and business digital adoption has fast-forwarded 10 years in 90 days, transforming digital customer experiences overnight. Retailers are gaining new customers by delivering excellent omnichannel selling and service experiences that are secure, trusted, and free of fraud. 40% of online consumers said they tried new brands or made purchases with a new retailer, with the United States seeing 46% of online retail consumers switch brands. These and many other insights are from McKinsey’s latest study, Retail reimagined: The new era for customer experience, published earlier this month. A PDF of the study can be downloaded here. Periscope by McKinsey surveyed more than 2,500 consumers in the United States, the United Kingdom, France, and Germany to understand how consumer behavior is changing today. By compiling research before and during the shutdown, the research team found how abrupt the flight to online and omnichannels are, the resulting shock to customer loyalty, and how convenience is being redefined with technology. What is noteworthy about the study is how the key factors of an excellent online purchasing experience need fraud detection to deliver an excellent digital customer experience. Key insights from the study include the following. Online retailer customers say loyalty card offers and No-Questions-Asked return policies—two areas known for extensive fraud activity—are among the most important features of a great online purchasing experience. Retailers need to start planning now for how they will scale and capitalize on the five core attributes of delivering a great online purchasing experience, as McKinsey demonstrates in the graphic below. It is best to start by turning fraud detection into a cornerstone of delivering digital customer experiences by defining which customers are the most trustworthy, therefore reducing the friction involved in their buying cycles. By relying on the Identity Trust Global Network to calculate identity trust or risk levels in real time, businesses can reduce friction, block fraud, and deliver improved user experience. Combined with adaptive AI, Kount provides the fraud detection and prevention that retailers need to excel at delivering digital customer experiences. With 40% of all online retail customers trying new brands or making purchases from new retailers this year, reducing false positives and quickly building trust is a must-have for online retailers today. McKinsey’s study found widespread brand-switching by online customers who prioritize quicker, more responsive websites and more complete product descriptions with supporting product images. For retailers, this is a great opportunity to gain new customers quickly, making fraud prevention integral to delivering an excellent experience. Instead of slowing down new customers’ buying with false positives, online retailers need to consider using trust scores to accelerate them. Kount’s Identity Trust Global Network is comprised of over 32 billion annual interactions across geographies and products, combined with expertise in A.I. and machine learning to turn trust into a sales and customer experience multiplier. Omnichannel is gaining in importance with online customers, adding greater challenges to providing friction- and fraud-free buying experiences. Improving mobile buying experiences is one of the most challenging aspects of launching and growing an omnichannel strategy. Having fraud prevention designed into mobile apps from at the code level is best. Online retailers who are rebranding mobile apps for order capture, payments, order status, and service need to set fraud prevention goals in the following areas. First, have a centralized fraud prevention platform capable of making real-time updates to machine learning algorithms and fine-tune the responses to customer transactions. Second, rely on an AI fraud prevention platform that can drastically reduce the number of manual reviews for fraud analysts. Third, always look for ways to reduce the friction and challenges customers face buying over any mobile device. The following graphic from the McKinsey study illustrates the dominance of mobile apps in omnichannel retailing strategies today: