One thing technology has brought the banking industry in recent years is better service for customers. From artificial intelligence to chatbots, online banking to all-in-one access to services, banks are finding ways to help customize the overall consumer experience. But even though this has boosted activity, it has also opened the door for fraudsters and hackers to obtain information and then break consumer confidence.
Cyber threats against banks and their customers have been on the rise in recent years, and bank cyber insurance has become a hot commodity for financial institutions looking to protect the information of their clients. In fact, a single cyber attack on a bank could cost as much as $1.8 million. This costly price tag not only literally breaks the bank for a financial institution, but can have long-lasting effects in terms of losing customers and clients who want to take their business elsewhere.
Accessing Through Apps
Bank customers are taking advantage of online-only and mobile app services instead of opting to head inside a brick-and-mortar location. In fact, there are new banking companies that are solely available online. But fraudsters are costing banks and customers around $274 million globally every year. Most people believe that a bank is responsible for the safety of their information and finances, only adding to the notion that bank cyber insurance should be set in place for financial institutions. This service provides a financial safeguard for banks who have undergone a cyber attack and can provide financial help after legal fallout.
Banks who operate online and have mobile apps for customers to use ideally have layered security measures in place to cut down and prevent fraudulent transactions. But sometimes more sophisticated hackers are able to still get in and obtain the information they need.
Fraud Impacts Brand Loyalty
When a hack takes place and the overall hygiene of a bank’s cyber landscape is taken advantage of, customers are more apt to pull their accounts and take up with another bank. Nearly 40 percent of all banking customers in the United State have fallen victim to fraud, and this can cause brand loyalty.
When a customer closes their account at a bank, they take away future revenue from that bank as well as cross-selling potential. They may even spread word about the bank’s cyber risk and leave reviews, which can turn potential customers away as well. All told, banks are losing about $15 billion in relationship value every single year.
As banks are continuing to offer online services and updated mobile applications, and as new bank customers are trending toward a more digital-friendly user experience, banks need to understand the long-term fallout from a cyber attack. It’s not just about the initial damage that is done in terms of finances—it’s really about the effects down the road. Having the right insurance in place as well as updated security measures can help to curb a decrease in customer loyalty and increase awareness and healthy relationships with customers.
About Financial Guaranty Insurance Brokers
Since 1983, Financial Guaranty Insurance Brokers has distinguished itself as a provider of Professional Liability, Cyber Liability, and Crime insurance products for entities of all types. To receive timely, personalized service from a knowledgeable and experienced staff, call us today at (877) 485-4413 to speak with one of our professionals.