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Businesses hold FIs responsible for security
MADISON, Wis. (8/16/12)--Fraud continues to hit a majority of businesses, which still look to their financial institution (FI) as primarily responsible for securing the online channel, said Guardian Analytics' third annual study of small and medium business. Credit unions should take note.

Businesses still are not improving their defenses, and a majority continues to lose money due to fraudulent transactions, said the research company. Businesses hit by fraud continue to take their business elsewhere, showing little patience for an FI that can't protect their accounts.

What's new in this year's study is a clear trend towards greater use by businesses of FI's online and mobile banking channels.

Findings include:

  • Businesses are increasing their use of online banking. Businesses conducting all banking online increased to 20% from 9% since 2010, and now half of businesses conduct at least half of their banking through an online channel.
  • Use of mobile banking is rising. Businesses accessing online banking from mobile devices increased to 54%, up from 23% in 2010.
  • Businesses are looking to their FI for fraud prevention. Seventy-two percent of small and medium businesses surveyed indicate that their FI is most responsible for ensuring online accounts are secure. Such trust in their bankers may explain why the use of various fraud-prevention technologies has been flat since 2010; 43% did not change security practices at all following a fraud episode.

  • Fraud attacks are widespread. Two out of three businesses have suffered fraudulent transactions, and of these a similar proportion lost money as a result. For example, in the online channel, 73% of businesses experienced fraudulent transactions (i.e. there was a fraudulent transaction before attack was detected), and after recovery efforts, 61% still ended up losing money.
  • Businesses are not reimbursed by their FI. While the levels vary by channel, about seven in 10 businesses that suffered fraud losses were not fully reimbursed by their FI.
  • When businesses suffer a fraud loss, the leave. After a fraud episode, 40% of businesses move some or all of their banking business. And 56% indicate that it takes only one fraud loss to lose confidence in their FI.
  • FIs are losing money through Automated Clearing House (ACH) fraud. When a business loses money through a fraudulent ACH transaction, the FI reimburses some or all of the money 54% of the time. That means FIs are losing money.
The study reflected the input from 998 small and medium businesses with fewer than 200 employees and who generated less than $100 million in annual revenue. The surveys were conducted in May.


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