customer experience behavioral analytics solutions

Solving the Risk vs. Customer Experience Challenge

Risk vs Customer Experience, a battle as old as time…

Army vs. Navy…Greece vs. Troy…Risk vs. Customer Experience…It’s a rivalry as old as time. Why can’t these teams just get along?

Well, for starters, their goals are perfectly misaligned. 

Imagine that you’re a Customer Experience executive who’s been tasked to deliver best-in-class digital experiences. Your first move is likely to look for any friction in the application process and remove it. Applications with low friction have higher conversion rates. Higher conversion rates mean higher revenue. Problem solved and your promotion awaits, right?

Not so fast…

As you remove friction from the application process, you’re inadvertently increasing the risk profile of your applicants. This inverse correlation makes risk and fraud team’s jobs more difficult as they are responsible for lowering risk as much as possible.

Let’s explore this conundrum for a minute…

customer experience software

What’s at stake for customer experience teams?

Two words – false positives.

According to a recent TransUnion report, 63% of consumers would consider no longer doing business with a financial institution or retailer if they were declined during the application process, which makes it an imperative initiative to determine genuine customers from bad actors & fraudsters.

Let’s think about that for a minute.

With only 1 in 5 blocked transactions being fraudulent, the cost of false positives far outweighs the cost of actual fraud (depending on what kind of insurance you’re selling).

Incorrectly turning down a genuine customer immediately lowers current revenue as well as future revenue loss from cross-selling and up sell opportunities. It also devalues your brand and wastes acquisition spending.

As a business, it seems as though you only have two options:

1) deliver an application process filled with cumbersome security barriers leading to high drop-off and frustration


2) deliver a frictionless customer experience with high rates of genuine customers being turned down.

security customer experience

What’s at stake for Risk teams?

Money, and lots of it.

For Life Insurers, one question on the application is responsible for over $3.4 BILLION in premium loss per year. *Cough* I’ll let you guess which question that is *cough*.

According to Verisk, 47% of applicants don’t disclose their smoking status when they apply for coverage.

This makes accelerated underwriting much more difficult as carriers move away from fluid tests on every applicant. (We discuss this particular issue here).

By analyzing our customer’s application and outcome data, we’ve learned that roughly 11-13% of every application has some level of misrepresentation and, of those, roughly 30% are underwritten.

This level of premium leakage is impacting the bottom line of 100% of insurance carriers. 

How to Deliver a Dynamic Experience Without Sacrificing Security

customer experience behavioral analytics solutions

“Everything in moderation, including moderation”. 

Delivering a great user experience during the application process doesn’t mean you’ll be letting fraudsters Trojan Horse you and walk through your front door with open arms. What it does require is operationalizing a multi-layered security approach that acts in real-time.

A multi-layered security approach utilizing dynamic experiences looks at each user or session in 3 fundamental ways:

    1. What device is connecting?
    2. Who is behind the screen?
    3. What is their intent?

The most recent and impactful evolution in fraud detection comes in the form of Behavioral Intelligence – which is the measurement of uniquely identifying human behavioral patterns that focuses on how information is provided as opposed to what information is provided to determine customer intent.

Why understanding “Intent” is Crucial for Dynamic Customer Experiences

The “intent” portion of that long-winded definition is where the true breakthrough lies.

To understand just how important it is, let’s think back to 15 years ago.

Online banking was quickly gaining momentum with 31% of US households utilizing some form of internet banking.

But completing end-to-end transactions like opening an account online was no easy task and still years away from being fully operational.

If you wanted to apply for a loan or open a new bank account, where would you go?

Most likely, you’d walk into a retail location where a branch manager would take you through the process step-by-step, dynamically adjusting the experience as you engaged in the application process.

For example: 

If you were unfamiliar with the product you were applying for, or maybe you were frustrated and confused by the questions in the application, there was a person to educate and assist you through the finish line.

If you were highly engaged and showing interest in other products, there was a person to provide more information and help determine the best package for your needs.

If you were nervous or you didn’t know the answers to certain questions, there was a person there to further qualify your application.

See where we’re going here?

In all previous banking transactions prior to the rise of the internet, there was an underlying concept – human interaction. In a face-to-face setting, there’s a trained employee reading your body language, taking into context the nature of the transaction, and handling it accordingly.

Each prospect or customer was unique.

Each case required a different approach by the branch manager in order to convert a happy customer or further qualify a potential fraudster.

Are we applying the same level of personalization, qualification, and dynamic experience in the digital era?

The Digital Shift Created “The Faceless Digital Customer”

Today, most enterprises assume & decide solely on final answer data.

What does that mean?

It means that how you provide your answers on an application for a loan, or an application for life insurance, doesn’t necessarily matter at all.

Some businesses even allow you to submit your application for an estimated quote, then go back and adjust your answers to get a better rate.

Now imagine if this were true in the face-to-face examples we talked about.

The branch manager wouldn’t react to any of your questions or concerns, they wouldn’t care if you didn’t know your previous address, and they wouldn’t blink an eye if you were copying various social security numbers from a printed out spreadsheet of stolen identities.

They would simply wait until you were ready to apply and process your information as if nothing were wrong.  

If that sounds insane to you…it’s because it is.

Yet most financial services institutions do this every time they process a digital application.

Having a static experience instead of a dynamic experience is not the way to do business anymore. 

Dynamic Customer Experience: Measure Behavior, Predict Intent

If you’re truly a “data-driven” organization, you need to leverage all of the pieces of the puzzle to create best-in-class dynamic experiences that cater to an individual’s unique behavioral characteristics.  

At ForMotiv, we’ve developed a solution that does just that.

As users engage with an application, ForMotiv passively collects and analyzes the user’s unique behavioral signals to understand the intent of the applicant.

In an effort to model the face-to-face interaction in the form of a digital dynamic experience, Formotiv’s Digital Polygraph measures unique parameters like typing speed, mouse movements, corrections, and advanced keyboard shortcuts to determine not only the intent of the applicant but the best path forward for that user.

If a user shows behavioral signs of risk or fraud, such as editing medical/tobacco questions or copying/pasting an address or zip code, carriers can adapt the experience to further qualify the individual. For instance, they might have the applicant finish the medical portion of the application over a TeleMed interview or put them in a queue for fluid tests. If the applicant is rushing through the application and showing signs of price shopping or a high likelihood that it is a bot filling out the application, carriers can dynamically change the experience to require a driver’s license upload or additional questions to further qualify the individual. 

Conversely, if the user is showing behavioral signs of abandonment or confusion, carriers can dynamically introduce contextual help or a direct chat line to a customer advocate. 

In a time when it is crucial to understand who your true customers are and deliver the dynamic experiences that they have come to expect, it only makes sense to employ a multi-layered security approach that understands how our unique human behaviors predict our intentions.

With dynamic experiences, customer experience and risk teams can finally be friends again.

Now kiss and make up!

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