Banks missing the mark on tackling fraud online – New study shows majority of Millennials want online banks to get serious about fighting fraud using geolocation data
55% of Millennials and Gen Z Would Switch to a Bank that Uses Location Data to Secure their Accounts – PYMNTS Survey Finds
November 30, 2020, Vancouver, Canada: It’s been over 20 years since the world was introduced to online banking, and despite fraud rates soaring during a global pandemic, consumers are starting to lose patience with their banks’ slowness to get to grips with geolocation data.
Consumers are increasingly willing to take additional protective measures, such as sharing their location data with banks, to keep their accounts secure. In a survey released today, a PYMNTS and GeoGuard collaboration, 40% of consumers and 55% of millennials and Gen Z indicate they would switch to a bank that uses location data in order to secure their accounts.
Importantly, the survey titled: “Location, Location, Location: How Location Data Can Help Banks Prevent Online Fraud,” also notes that 50% of U.S. consumers who share or are likely to share their location data with banks, do so to help these institutions better protect their accounts from fraud.
The full survey can be viewed here.
When Seeking Consumers’ Location Data, Banks Need To Be More Proactive and Transparent
The survey shows that banks and financial institutions need to be more proactive and transparent by informing their customers about the role that location data can play in securing their accounts. PYMNTS’ research reveals that consumers are more willing to share location data with their bank, if their bank assures them their location data will not be shared with third parties and that the information will be used to protect them from fraud.
The survey also reveals:
- Sharing location data is commonplace: 55% of U.S. consumers (138 million people) already share location data with at least one app.
- A strong relationship between previous fraud incidents and a willingness to share location data. While 61% of card users are “somewhat” concerned about fraud, that number jumps to 66% when the customer has previously experienced fraudulent activity on their account. This suggests that fraud victims are more willing to share their location data if it will help prevent fraud in the future.
“The rapid shift to digital over the last eight months has put a fine point on the fraud risks that banks and their customers face for account takeovers, unauthorized transactions and card-not-present fraud,” says PYMNTS CEO Karen Webster. “What’s interesting about our survey results is the extent to which consumers want to be part of the solution, including a willingness to share their location data to avoid becoming a victim of fraud. For digital natives such as millennials and Gen Z, using location data tech is not only something they do with many other apps, but can be regarded as a brand differentiator for banks. Provided, of course, that banks absolutely ensure that the same data that can help prevent fraud is kept private and secure – and out of their reach.”
Banks Need Accurate and Unaltered Location Data to Outsmart Fraudsters
The use of location data is critical for detecting and thwarting financial fraud. However, not all location data is created equal. If banks are using location data at all, it’s usually derived from a device’s IP address. The use of IP addresses to determine location is extremely problematic since the location data can be easily changed or altered using popular spoofing apps such as VPNs and proxies.
“The banking industry uses fraud detection technology and risk engines but they’re missing a critical signal, and that is accurate, authentic and unaltered location data,” says GeoGuard CEO David Briggs. “If they use any location data at all, it’s usually based on IP addresses, a twenty-year-old technology, which is easy for fraudsters to spoof using VPNs and other anonymizers. And using IP addresses from mobile devices is misleading, since the IP address will always point to where the wireless carrier is located – not where the device is located.”
David adds, “The PYMNTS survey clearly shows consumers are willing to share their location in order to secure their accounts and stop fraud. All banks have to do is ask, provide assurance that the data is going to be kept private, and then implement the back-end tools to ensure the reliability of the location data. With online fraud spiking, it’s time for the banks and financial institutions to implement the technology that’s already in use in other regulated industries, to build the digital trust needed to ensure safe online transactions. And as an added bonus, they might get some new customers in the process.”
To see the full survey results, visit.
About the Survey
“Location, Location, Location: How Location Data Can Help Banks Prevent Online Fraud,” a PYMNTS and GeoGuard collaboration, is a report that is based on an online survey of 2,141 U.S. consumers who have mobile devices and regularly use a credit or debit card. The report assesses consumers’ attitudes toward location sharing with their card-issuing banks when transacting online and their interest in switching to financial institutions that offer such capabilities.
At GeoGuard, we focus solely on geolocation-based security, fraud detection and the protection of digital content and assets. As the independently rated market leader for protection against VPNs and Proxies, we help a wide range of industries guard against fraud and piracy while ensuring geolocation compliance with minimal user friction. GeoGuard provides a suite of geolocation based solutions that are combined with human intelligence in order to stop internet users from spoofing their location.
GeoGuard’s solutions are based on the award-winning geolocation and geo-protection technologies that its parent company GeoComply developed for the highly-regulated and complex digital gaming industry. Our software is installed in over 400 million devices worldwide, putting GeoGuard in a uniquely powerful position to identify and counter both the current and newly emerging geolocation fraud threats.
With GeoGuard, fraud has no place to hide.