Fraud never takes a day off, but neither do your analysts. Every day they defend the trust, the relationships, and the money of your account holders against an enemy that keeps getting faster, smarter, and more patient.
On a recent episode of The Purposeful Banker, host Jim Young sat down with Q2's HD Jacobs, a senior sales specialist for fraud solutions. HD has met with many fraud teams at banks and credit unions, discussing the importance of fraud protection and, more importantly, how to convince their executives to invest in the solutions that will make the biggest difference. This conversation left the sales pitch at the door to focus more on the numbers and the true meaning behind them.
Here are six key takeaways from the conversation.
The wake-up call shouldn't be the first alarm
Fraud is on every financial institution's list of priorities, yet it often takes a fraud event to move it to the top. A spoofed URL or an account takeover turns into a loss no one can ignore. Suddenly, fraud solutions seem more important than ever.
But starting there carries its own price tag. Until proactive tools are in place, teams end up reacting to each scheme after it hits, and the manual review and recovery that follow cost money on top of the loss. With the right tools in place, institutions can instead see the next attack coming and stop it before it lands.
The final bill has hidden costs
LexisNexis puts the full number at $5.75 for every $1 lost, once the manual work, back-end effort, recoveries, and litigation are counted. Then there's everything that happens after.
Sometimes, features like Zelle and bill pay get switched off as a precaution, which costs the institution revenue. Even tasks as simple as updating an email address or a phone number can get moved to the call center, which means call center staff have to field more calls while also trying to determine if the caller is a fraudster posing as the account holder to change those details.
And when a large commercial client gets hit, plenty of institutions eat the loss to keep the relationship, since losing that client would cost more than the fraud did.
So, the loss ends up being a small slice of the total. Financial institutions that build the budget around the surface price alone risk underfunding the protection itself.
Staff hours belong in the cost of fraud
Some institutions push back on the $5.75 figure. It doesn't cost them that much, they say, because they already have people and processes in place.
But those very people are the cost.
The analysts reviewing alerts and working through what happened are the reason the $5.75 isn't higher, but their time isn't free.
On the treasury side, it can sometimes add up to an entire employee's worth of time spent tracking down fraud. If that person's day job is selling treasury products, take away whatever they would have sold in a year and add that to the fraud costs as well.
Also, a fraud analyst rolling a swivel chair between screens to piece a case together is spending time that could instead go to contacting the account holder. With a clearer timeline in front of them, that analyst could reach out while there's still a chance to save the money.
A quiet year is proof that protection works
Fraud protection is a lot like car insurance. The monthly fee feels like dead weight until the day you need it. But insurance proves its worth after something goes wrong. A fraud solution proves its worth by making sure nothing goes wrong. When it's doing its job, nothing happens and can make it a hard investment to justify.
One institution almost learned that the hard way. Nobody could say what they were getting for the fee, and they were close to turning the solution off. But then it stopped a pair of fraudulent transactions that would have cost the institution ~$700,000.
Most days, though, there’s no number like that to point directly to, which is why the case for protection can’t wait for a near miss.
Funding gets easier when everyone sees the same math
During their conversation, HD recounted a real light bulb moment during a recent pricing call. The head of fraud, the head of digital, a fraud analyst, and a senior executive were all on the line, and the executive's first reaction was that the institution's losses didn't even amount to the price.
Then the analyst spoke up about how much time the solution would give back, and the conversation immediately moved from price to ROI. By the end, the group was open to a more creative pricing structure.
Everyone on that call had a different piece of the picture, and the executive's piece was the loss line. The strongest cases for better solutions include everything—digital, the core, and the call center, along with fewer manual reviews, efficiency gains, and lower churn.
Another institution's bad day can be an early warning
Fraud isn’t bound to one institution. A scheme that works at one FI tends to move on to the next, which means the first signs of it often show up somewhere else.
No team can see all of that coming on its own. So, if schemes are acting as a collective, the fraud solutions should work in tandem too.
Instead of one team trying to guess what’s next, the ideal solution learns from account takeover, money mule, and suspicious account change patterns across institutions, and real-time risk signals surface them before they arrive. It takes the burden off the people closest to the work and lets them focus on the account holders in front of them.
And with AI in the mix, the pressure is only growing. Some institutions are still taking baby steps with it, but more are realizing it will work both for them and against them. Staying ahead takes a team, and the best ones learn from every institution they protect.
Ready to hear more?
Listen to the full conversation between Jim Young and HD Jacobs onThe Purposeful Banker. To explore more of Q2's perspective on Fraud Intelligence, from stopping account takeover to improving positive pay adoption, visit here. Or go here to get in touch with us.