Why Fraud Resolution is Critical to Building Customer Trust
As fraud rises, banks must prioritize trust-building strategies in dispute management. Implementing best practices for quick and effective resolutions is essential for maintaining strong, long-term customer relationships.
By Caroline Hroncich, Contributor at The Financial Brand
Scammers are draining more consumer dollars than ever before.
Consumers lost a staggering $12.4 billion to fraud in 2024, marking a 25% surge from the previous year, according to Federal Trade Commission data. Investment scams accounted for approximately $5.7 billion of those losses, making them the most costly type of fraud, followed by imposter scams.
Banks often serve as one of the first lines of defense against scammers, and many are investing in advanced technologies to better protect customers from threats. However, human error is inevitable, and fraudsters are growing more sophisticated — making it challenging for even the most savvy consumers to determine if something is legitimate.
As banking goes digital and more consumers opt for online services over branches, fraud resolution has become a crucial touchpoint for banks. And a misstep could be disastrous for the bank-customer relationship.
"It’s such a critical moment," says Joseph McLean, CEO and founder of Quavo, a fintech company providing tools for dispute resolution. "That person’s already a card holder, but the reality is they don’t have to be, people have choices. And a lot of them. There are thousands of banks just in the U.S. People can go anywhere and bank, they can go and set up at another bank in an hour."
As fraud rises, banks must invest in trust-building strategies when fraud occurs. Understanding customer pain points and implementing best practices that prioritize both responsiveness and timely resolution are key to maintaining strong relationships, McLean says. According to a recent Quavo survey, 62% of respondents say how a bank handles fraud is more important than the fraud itself. Additionally, 71% are likely to lose trust in their bank if dispute resolution is delayed, and 66% would consider switching banks due to a slow, cumbersome process.
"Fraud is never going to go away, as long as there are people and banks and money there’s going to be fraud," he says. "This is an important part of banking and it’s worth you making that investment for your consumers."
By investing in smarter fraud prevention and resolution strategies, banks can not only protect their customers but also strengthen long-term loyalty and trust. Here’s how banks can stay ahead of the curve and tackle fraud more effectively.
Invest in Technology
Banks can invest in various technologies to automate the fraud resolution process. Tools powered by artificial intelligence and machine learning can accelerate resolution, streamlining the process for both employees and customers.
Fraud resolution can be a tedious and complex process, McLean says. It often involves multiple third parties, such as the customer, card issuer, the merchant where the fraud occurred, and others. Without automation, this process can require extensive documentation and data entry, placing a heavy burden on employees — especially as fraud incidents become more frequent.
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At First Hawaiian Bank, for example, employees faced challenges with the volume of manual data entry required from customers. With the growing frequency of fraud, this makes resolution both complicated and time-consuming for banks to handle effectively.
"Our dispute process was 100% manual, including a duplicate process of repeating the claim intake once in our core system and a second time for the chargeback process," says Barbara Valona, vice president and bank card center manager at First Hawaiian Bank in a case study.
By implementing Quavo, the bank automated its dispute resolution process, streamlining tasks like generating letters and emails, making monetary adjustments, and integrating with MCOM and Verifi for automated case management.
"This has taken so much pressure off our team, enhanced work/life balance, and improved team morale," Valona says.
Banks should consider rethinking their internal processes for fraud resolution, McLean says. For example, many banks assign a single employee to manage a customer’s claims investigation from start to finish. While this may seem like a more personalized approach, it actually slows down the process considerably, McLean says. Instead, it’s more efficient to manage these cases in an assembly-line fashion, using an automated system to move them through the process and allowing multiple employees to handle different stages as needed.
Using automated intake forms that require customers to include all necessary information also helps improve the process. At Rogue Credit Union, for example, teams struggled with incomplete information and lacked the tools to effectively manage follow-up calls. The investigation team spent a considerable amount of time gathering necessary data, with retrieving transaction details and establishing recovery rights taking too long. To address this challenge, the team developed an automated intake questionnaire to gather critical details early in the process, which saved them significant time on follow ups.
Help Your Team Improve their People Skills
To build trust with customers, particularly frustrated ones, banks should invest in training employees in improving their people skills. Soft skills are expected to become even more vital in both customer service and leadership positions, particularly as more customers shift toward digital banking. Leaders should offer opportunities for learning and development, open dialogue, and place value on these soft skills in the workplace.
Offering soft skills training is an effective strategy for tackling this issue. Christine Samuel, founder and co-creator at Inner Work Matters, which provides leadership and career coaching, emphasizes the importance of taking a deeper approach when teaching skills like active listening, particularly in high-stress situations.
Samuel introduces an exercise called a "deep listening circle" to help participants sharpen their listening and response skills in customer interactions. In this activity, a facilitator plays a recording of a customer complaint call and asks employees to analyze what they hear. Participants are encouraged to identify the customer’s emotions and share their interpretations.
As team members share their insights, the group gains a richer understanding of how different individuals perceive situations, emphasizing the importance of thoughtful and empathetic responses in communication. Companies can also leverage learning management systems like LinkedIn Learning or Workday, which offer a range of training on these essential skills.
"It should include experiential training where they can practice what does it mean to be relational, what does it mean to have emotional intelligence, what does it mean when we have discussions and it’s open and can be attuned to one another," Samuel says.
Foster Greater Collaboration
Combating fraud is a challenge that extends beyond banks; government agencies and various private and public organizations also play a crucial role in protecting consumers and helping to address the growing issue of fraud. By collaborating across these groups to develop effective solutions, they can strengthen efforts to prevent fraud, improve consumer education, and enhance the overall security of financial systems.
The more banks collaborate with other organizations, the smoother and more efficient the customer experience will be, allowing them to better address the evolving long-term impacts of fraud.
Many banks are already leading this effort. Last year, members of the Bank Policy Institute, a nonpartisan public policy, research, and advocacy group that includes major banks like Bank of America, Wells Fargo and Ally, outlined several strategies for tackling these challenges. Their proposals range from equipping the government to better educate consumers on fraud to promoting data and intelligence sharing between institutions.
"The issue of combating scams and fraud is a nationwide challenge, one in which banks invest substantial resources to protect their customers and their customers’ money. Such a far-reaching challenge demands comprehensive, multi-dimensional solutions," members of the institute said in the statement. "Collaboration across the private and public sectors is crucial to help protect the American consumer from criminals who seek to defraud them."
Technology is evolving rapidly, and hackers have an advantage over banks due to their ability to move swiftly and adopt new technologies, McLean says. The more banks demonstrate to consumers that they are committed to fraud protection and dispute resolution, the more likely they are to build long-term customer loyalty.
"Cardholders that trust their bank, stay with them," McLean says. "You don’t want to lose customer loyalty and trust."
