At last count, North America was the continent most affected by data breaches—accounting for 1,164 or 76 percent of breaches in the world. Fifty-four percent of those 2014 breaches related to identity theft; 17 percent to financial access; and 11 percent to account access. And in that year, 32 data records were lost or stolen every second—averaging out to almost 2.8 million a day.
In a world of widespread breaches, card issuers must look at reissuance as an opportunity. Here are three strategies financial institutions must embrace when facing a breach:
- Flexible technology is a must. Every two seconds, another American becomes a victim of identity fraud. The rising incidence of data breaches paired with ongoing EMV chip issuance means issuers now deal with a larger volume of card turnover than ever before. Combatting breaches is inescapable, making it crucial for banks and credit unions to strategically align with technology partners who offer the most flexibility to meet market demands—and help, not hinder, the bottom line.
Card issuers need to stick to what they do best: bringing sought-after, marketable cards to market that consumers want to keep top of wallet, and that drive card portfolio profits. Gone are the days of the traditional card production model, where a product took months to get to market. Uniting with a true, on-demand card partner allows issuers to produce cards only as needed. It also delivers the speed to print card packaging in just a few days and the flexibility to print whenever needed.
- Reduce risk and cost. Hackers who want to access financial information for their own gain target today’s financial market like never before. The cost of fraud goes well beyond illegitimate charges for card issuers. Nearly 90 percent of card breach victims in 2014 received replacement credit cards. This put hefty costs on issuers to send customer communications, reissue cards and retain the loss of illegitimate charges. Card issuers need to prepare a sound response and wield the flexibility to reissue cards in the most advantageous way for their business.
With card reissuance increases due to breaches and regulatory changes, card issuers need to choose production models that achieve maximum operational efficiency. Managing card inventory is one of the biggest ways to reduce both risk and cost, and eliminate the guesswork of forecasting card inventory by eliminating inventory altogether. In doing so, card issuers avoid substantial secure storage costs and eliminate the risk of card spoilage and destruction cost—both of which can impact the bottom line. Leveraging an on-demand card production model allows issuers the flexibility they need, while managing risk and cost.
- Reissuing? Don’t miss the opportunity. Card issuers should anticipate increased reissuance due to the uptick in breaches and other card events. These include lost or stolen cards, EMV issuance, card inactivity and regulatory changes. Breaches and other card lifecycle events should serve as an opportunity to drive home consumer loyalty and increase card profitability.
Card issuers must implement a calculated marketing strategy so they can remain relevant as they seek to attract and retain cardholders. Rather than reissue the same old card design and generic carrier—with no added incentive to leverage card benefits because you’re astuck with old inventory—view it as a pivotal moment. Replace the card quickly. Take the time to create a custom marketing message and/or card design. This will help drive cardholder loyalty, card use and return from the sunk cost of reissuing cards.
As the financial services market continues to represent a tempting target for hackers, card issuers must implement strategies to foster a quick recovery. Align with technology partners who offer the most flexibility to meet market demands. Keep in mind the benefits that come with this, including decreased risks and cost. All of this is a must.
Breaches represent one of many card lifecycle events that issuers can leverage by creating targeted card campaigns that increase cardholder loyalty. The most successful card issuers look for opportunities to increase the bottom line and expand consumer loyalty. Breaches may be inevitable. But increased reach is more than possible.
Render Dahiya is CEO of Arroweye Solutions, an on-demand provider of credit, debit, prepaid and gift cards with offices in Chicago and Henderson, Nevada.