Text messaging is being used to enable anytime, anywhere alerts between financial service providers and their customers in a battle to fight fraud. Using Clickatell SMS Receipts and other text notifications sent directly to cell phones, financial service providers are giving the power directly to customers to scrutinize transactions as they happen. As banks, credit unions, credit and debit card issuers, payments processors, money transfer organizations, and others continue to deploy mobile services, they are quickly reducing the impact of identity theft and other forms of fraud using SMS.
According to a recent Javelin report, the number of victims of identity theft increased 22% in 2008 compared to the previous year; more than 9 million people were impacted and the average cost per incident was $500. There is evidence that criminals are increasing in their sophistication and are moving faster to perpetrate crimes. In cases where identity fraud was reported, 71% of the incidents occurred in less than one week from when the data was first stolen, up from 33% since 2005.
Just this month, Gartner issued research that concluded 7.5% of U.S. adults lost money as a result of some sort of financial fraud in 2008: victims of electronic checking and/or savings account transfer fraud were nearly five times more likely to change banks because of security concerns.
In addition to cyber fraud, traditional forms of consumer theft also remain high. Lost and stolen wallets, checkbooks, credit and debit cards continue to remain the most likely avenues of attack. Combining cyber and physical theft, fraudsters have a variety of ways to quickly get their hands on vital information, compromise personal identities and gain access to financial accounts. Despite the myriad of existing anti-fraud technologies and fraud detection methods, the industry continues to fight the growing problem.
Consumers already carry an effective device to detect fraud -- their mobile phone. The role of the consumer in early fraud detection is now being recognized as more important and effective in the fight against identity theft. "Customers want more control, and institutions should offer tools to customers to check information, account information. Involve your customers in the security process," said James Van Dyke, president and founder of Javelin. "But customers can be just as effective and help catch fraud, because one out of two fraud cases is first detected by the customer."
Heeding this customer call to action, financial institutions are looking for ways to provide on-the-spot mobile SMS Receipts and other alerts to notify customers when there is any account activity - suspicious or otherwise. As consumers become increasingly mobile, they require their financial institution to help them stay informed on account activity and status - anytime, anywhere. Financial service providers are using SMS Receipts and other text alerts to notify customers when transactions occur giving them instant ability to verify legitimate use of their account or to detect fraud instantly. Mobile SMS Receipts offer customers an early warning service, giving customers confidence that a transaction was recorded accurately at the time of payment. When mobile alerts are received, customers can take action if fraud is suspected.
Moneybookers, provider of its fast growing e-wallet service available on Facebook and eBay, is working with Clickatell to provide customers with real-time alerts when money movement occurs in customer accounts. Nikolai Riesenkampff, Moneybookers, Co-CEO commented, "Real-time SMS alerts, such as those provided by Clickatell, help make Moneybookers one of the most secure options to pay online. Data security and fraud prevention are among the most important criteria for users of online payments, making the eWallet an outstandingly safe payment method. With Clickatell SMS Receipts, we are offering our customers yet another mind-easing security feature for their online transactions."
Customers of S1 Enterprise and Postilion, both divisions of S1 Corporation, see anytime, anywhere mobile messaging as critical to the growth and adoption of mobile banking and payments services, worldwide. "Convenience and security are two of the driving factors in the adoption of mobile banking by consumers and small business banking customers," said Mike Jackson, S1's Vice President of Product Strategy. "By providing proactive SMS alerts directly to the customer's mobile device, financial institutions can notify customers of account status, build trust in the mobile channel, and reduce costs by decreasing expensive customer initiated toll free calls. Given Clickatell's experience in providing enterprise-quality SMS for banks around the world, they have the trusted systems in place to provide secure, quality solutions to their customers."
First National Bank (FNB), a leading South African bank working with Clickatell for more than six years, reports that its SMS alert service inContact has reduced fraud significantly and has also increased the effectiveness of its Internet banking service. With more than 80% of its customers now subscribing to inContact, FNB reports that client retention has grown significantly, and call center costs have been reduced. "InContact has been a tremendous success for FNB for many years,"said Len Pienaar, FNB's CEO of Mobile Transact Solutions. "The SMS-based program created early consumer confidence in mobile banking through text receipt alerts and has translated in rapid uptake of our interactive mobile banking services. We experienced significant fraud reduction, fewer false reports of fraud, and less pressure on the call center, which saved the bank money. Now, our customers choose FNB because of inContact. SMS is a standard feature of all GSM networks and widely used by subscribers. This has allowed us to rapidly replicate the service across a number of our subsidiaries,"concluded Pienaar.
More than three billion people depend on cell phones everyday for business and personal use -- and SMS comes "built into"every mobile phone shipped. It is estimated that more than 225 billion text messages were sent in 2008. While a predictable 80% of young people text everyday, 40% of their parent's generation text as well, and these numbers are growing rapidly. It has also been reported that more people would go back to retrieve their cell phone over their wallet. People want to be reached on their cell phone, and SMS is fast becoming the preferred method of communications, even over voice calls.
"Now customers are the first to know and become part of the solution by being able to notify their bank immediately if they do not recognize a transaction. Banks and card issuers offering this service can stop fraudsters in their tracks; and customers won't be inconvenienced with service interruptions when traveling, for example, as a result of atypical card usage and other false positives,"commented Pieter de Villiers, CEO of Clickatell. "First National Bank, Moneybookers, S1 Corporation and other leading financial service providers are improving customer satisfaction and loyalty, while lowering fraud and related expenses at a time when they need to earn customer trust more than ever."
Clickatell enables businesses, governments and communities to leverage the ubiquity of mobile messaging to inform, alert, notify, transact, interact and share information. Delivering mobile messaging solutions since 2000, Clickatell is a global leader in mobile communications specializing in SaaS messaging services and Bulk SMS gateway connectivity to small, medium and large enterprises in a variety of vertical markets. Clickatell's multi-modal capability and worldwide coverage gives organizations the power to deliver any message to any device anywhere in the world. Reaching 775 networks in more than 200 countries, Clickatell serves 8,300 customers including Standard Bank, First National Bank, Nedbank, CapiTec, Old Mutual, Moneybookers, Metropolitan Life, Visa, S1 Corporation and other financial service providers. Clickatell products and services increase customer acquisition, improve loyalty and build trusted brands through direct, personal, easy and immediate communications. A Sequoia-backed company, Clickatell is headquartered in Redwood City, CA, and has offices in South Africa.