Credit unions, with their member-focused approach and community-oriented services, have become increasingly popular. However, they face unique challenges when it comes to combating fraud and identity theft. In this blog, we will delve into the reasons why credit unions are more exposed to fraud and explore how Anonybit’s decentralized biometric authentication can play a pivotal role in fortifying security measures and protecting their members.
- Member-Focused Approach and Trust Relationships
Credit unions build strong trust relationships with their members, often serving close-knit communities. While this fosters a sense of belonging and personalized service, it can also make credit unions more vulnerable to credit card fraud and identity theft. Fraudsters exploit these trust relationships, employing social engineering tactics to gain access and take over member accounts. In fact, a survey conducted by the National Credit Union Administration (NCUA) found that 46% of credit union members experienced a cybersecurity incident in the past year and 50% of those incidents comprised phishing attacks. “Phishing” is a scam where fraudsters trick a person into divulging personal information, which can include access credentials like usernames and passwords, one time security codes sent to a mobile device or email address, or other identifiers. Anyone who has access to these credentials can impersonate a credit union member. Biometric technology on the other hand, are an unequivocal link between a person and their physical identity and cannot be phished or stolen out of someone, making them an ideal measure of security to verify member identities. Anonybit’s decentralized biometric authentication technology strengthens identity assurance, mitigates the risk of identity theft, and safeguards the trust credit unions have established with their members.
- Limited Resources for Advanced Fraud Prevention Security Measures
Compared to larger financial institutions, credit unions often operate with limited resources and struggle to invest in advanced security measures. In fact, credit union fraud rates increased by 70% last year, and are expected to rise further with an impending recession, the emergence of generative AI and recurrence of fraud techniques seen before the pandemic. Systems that can unify the user journey and limit unnecessary calls to contact centers are key to fraud prevention. By leveraging the ubiquity of smartphones and embedded cameras, credit unions can implement robust authentication and fraud prevention measures without significant infrastructure investments and limiting the need to hire vast amounts of people to manage risk. The Anonybit Genie provides a turnkey solution that handles digital onboarding and KYC as well as downstream decentralized biometric authentication, ensuring a higher level of security without straining limited resources.
- Shared Infrastructure and Collaborative Security:
Many credit unions rely on shared infrastructure or collaborate with third-party service providers for various banking functions. While these partnerships offer cost-effective solutions, they introduce vulnerabilities that can be exploited by fraudsters. Anonybit’s solution operates on a multi-cloud infrastructure, where member biometric data is securely stored and accessed. The decentralized approach enhances the security and privacy of member information, reducing supply chain and vendor risks. Member personal data is also protected against insider threats. By adopting this technology, credit unions can strengthen their data protection posture while leveraging collaborative networks with increased trust and confidence.
- Regulatory Compliance and Data Protection:
Credit unions, like other financial institutions, must comply with stringent regulations regarding data protection and member privacy. Non-compliance can result in severe financial penalties and reputational damage. By adapting data minimization and privacy by design elements, Anonybit’s decentralized biometric authentication system helps credit unions stay one step ahead of data protection regulations and fraudsters alike. By decentralizing data storage and utilizing award-winning decentralization protocols, credit unions can demonstrate their commitment to protecting member data while providing a convenient and secure authentication experience.
Credit unions, with their member-centric approach, face distinct challenges in combating fraud and identity theft. However, Anonybit’s decentralized biometric authentication presents a transformative solution to bolster security measures and enhance the member experience. By integrating this technology, credit unions can unleash many possibilities offered by digital transformation, strengthen identity assurance, reduce vulnerabilities stemming from shared infrastructure, and better align with regulatory requirements. Through the adoption of Anonybit’s decentralized biometric authentication, credit unions can safeguard their members’ financial well-being, preserve trust within their communities, and establish themselves as leaders in secure and innovative financial services.
To learn more about the Anonybit Genie for credit unions, schedule a time to meet with a member of our solutions team.