Dear reader,
Welcome to the latest edition of The Forum File. In this edition, we are highlighting the vital work the nation’s largest banks are doing to protect customers from financial fraud, the Forum’s work on bank capital requirements, and a look at our contributions to communities across the country and to promoting a diverse workforce.
We hope you enjoy reading this edition and please do not hesitate to share your feedback.
Kevin Fromer, President and CEO, Financial Services Forum
Penny For Your Thoughts
Combating Financial Frauds and Protecting Customers: Insights from Mike Steinbach, Citi’s Head of Global Fraud Prevention
What fraud trends is Citi monitoring right now?
At Citi, we serve as a trusted partner for our clients in the fight against fraud by offering dedicated services and easy-to-use, effective tools to stay ahead of scammers. As the Head of Global Fraud Prevention, I have seen financial fraud’s ongoing and rapid evolution from classic physical card theft and account data compromise to sophisticated social engineering schemes.
Unfortunately, the impact of cyberattacks and cyber-enabled fraud on global consumers’ finances grows yearly. The U.S. Federal Trade Commission data show consumers reported losing $8.8 billion in 2022, a 30 percent annual increase from 2021. Although all fraud is on the rise, like many financial institutions, we are combatting a significant increase in several types:
- Check fraud: Criminals create or alter checks to illegally withdraw funds from a victim’s account, using techniques such as forging signatures, altering check amounts, or creating counterfeit checks.
- Authorized payment frauds: Fraudsters trick individuals into making payments to them, often posing as a trusted entity.
- Money mules: Criminals recruit people to move illicit funds through their bank accounts, often without the individual being fully aware of the scope of the activity.
- First-party fraud: Individuals intentionally defraud financial institutions by submitting incorrect information or abusing credit facilities.
Given the rapid growth in fraud, what tools does Citi offer to help customers protect their accounts?
Citi offers tools to prevent, identify, and stop fraud, most of which are opt-in to accommodate customer preferences and reduce friction:
- Biometric Authentication: Citi Trusted Identity allows enrolled customers the ability to securely manage and monitor their trusted devices. Biometric authentication allows customers to sign onto the Citi Mobile App with their fingerprint, facial recognition, or an iris scan.
- Comprehensive Fraud Management: Citi proactively notifies credit card customers of potential suspicious account activity, and customers can choose to deny suspicious transactions before they happen.
- Account alerts: Highly customizable alerts via Citi Mobile push notifications, email or text help customers monitor their account activity for anything unusual with their balance, payments, spending, and more.
- Citi Quick Lock: This feature allows customers to temporarily freeze misplaced debit and credit cards, blocking new purchases and ATM withdrawals while allowing recurring transactions to continue.
What is the broader industry’s outlook on the future of fraud?
Fraud has become increasingly sophisticated in the past five to 10 years, with cyber tools enabling criminals to steal at an unprecedented speed and scale. This trend is only growing, as cyber security experts anticipate global fraud and cybercrime costs may grow by 15 percent annually over the next five years. Today’s criminals range from individuals to nation states and sophisticated criminal enterprises – and they are all eager to get ahead in this increasingly lucrative shadow industry.
To combat their efforts, Citi uses an intelligence-led, threat-driven approach to target fraud throughout the customer journey and fraud lifecycle. This strategy, combined with state-of-the-art tools and top talent, contributes to Citi’s position as an industry leader for maintaining low fraud rates, demonstrating our commitment to our customers’ financial security.
Value Add
At Citi, our customers are part of our fraud team
Citi customers themselves play a crucial role in fighting fraud, as they are often the most knowledgeable about their spending habits and can quickly detect suspicious activity.
Our research shows that customers feel a shared responsibility for preventing fraud on their accounts and do their part by monitoring their accounts and signing up for alerts. We see alerts as a crucial tool – among many – in helping customers stay ahead of scammers and keeping their accounts safe.
Still, customers vary in their knowledge of best practices to avoid fraud, creating an opportunity for Citi and other financial institutions to educate them on fraud prevention and provide clear, actionable solutions.
Put simply, proactive customer education is essential for preventing, detecting, and tackling fraudulent transactions. As such, we continually work to stay ahead of scammers and empower consumers with knowledge and information for fraud prevention.
That’s why we regularly update citi.com/fraudprevention, for example, to keep customers informed of emerging and common frauds and make it easy for customers to spot red flags to remain secure.
Our commitment to empowering and educating our customers in the evolving fight against fraud is unwavering, and we always seek out new ways to safeguard their financial wellbeing.
Capital Gains
What we’re doing in Washington
The Securities and Exchange Commission’s proposed rule “Safeguarding Advisory Client Assets” would significantly harm investors and financial markets and exceeds the commission’s regulatory authority, according to a new comment letter filed by the Forum, the American Bankers Association, ABA Securities Association, and the Bank Policy Institute. The associations urged the commission to withdraw and resubmit a proposal that is better targeted to the commission’s objectives.
Forum President and CEO Kevin Fromer issued a statement in response to the Federal Reserve’s review of its supervision and regulation of Silicon Valley Bank: “One should not conflate a liquidity-driven event marked by management failures and supervisory shortcomings with capital adequacy at the largest U.S. banks. The assertion in the introduction that the Fed should focus on large bank capital requirements is disconnected from the report’s conclusions.” Fromer highlighted the stringent capital and liquidity requirements the largest U.S. banks meet, and how these banks have remained a source of strength and support.
Our Two Cents
Research from the Forum
The BankNotes Blog Spotlighted:
- The unlevel playing field created by the existing capital disparity between large U.S. and European banks, and how further regulatory tightening by U.S. regulators will increase the cost of lending by U.S. banks while diminishing their ability to compete with their foreign competitors.
- A discussion of why recent bank failures had no connection to the existing capital regime for the largest U.S. banks, and how these banks have acted as a source of strength and supported the broader banking sector to avoid further turmoil and cost to the economy.
Checking the Balance
Members in the news
Bank of America awarded a $1 million grant to the Negro League Baseball Museum’s capital campaign to build a new 30,000 square-foot facility in Kansas City, Mo. The grant will support the museum’s work to expand programming, create new interactive displays and build a larger archival and storage space.
BNY Mellon has been recognized by Global Custodian publication as Global Custodian of the Year and was also awarded Deal of the Year for its work with Aviva Investors. “When considering the nominees across our Editors’ Choice Awards this year, BNY Mellon stood out in multiple categories, underscoring what we already knew was a stellar year for the organization,” Global Custodian managing editor Jonathan Watkins said.
Citi was recognized as the Top U.S. Affordable Housing Lender for the 13th straight year in Affordable Housing Finance Magazine’s annual ranking. Citi Community Capital provided approximately $6 billion to finance more than 35,000 affordable housing units in 2022 throughout the United States, and over $7.4 billion to finance multifamily affordable housing, education, and other community development projects in 2022.
Goldman Sachs announced that its One Million Black Women initiative has deployed $2.1 billion in investment capital over the past two years. The program has supported a total of 137 organizations and projects to date, providing over $23 million in philanthropic capital, with the goal of positively impacting the lives of one million Black women across the United States by 2030.
JPMorgan Chase, in partnership with the Center for Nonprofit Advancement, invested $350,000 in eight D.C.-based nonprofit organizations led by Black women. The organizations will receive technical assistance, health and wellness support, and leadership and business coaching and training. “This will help me with my general operating budget, hire staff and keep the venue up,” Congress Heights Arts and Culture Center executive director Keyonna Jones said.
Morgan Stanley announced a successful first year of “The Equity Collective,” a 27-member group of wealth and asset management businesses who joined together to educate, empower and develop diverse leaders in the finance industry. To date, more than 3,900 students have been impacted through the group’s partnership with organizations such as hellohive, Team IMPACT and Boys & Girls Clubs of America.
State Street was recently included in Diversity Inc’s 2023 Top 50 Companies for Diversity list for the second consecutive year. The list recognizes companies that perform well in six areas of workplace fairness, including talent programs, philanthropy, workplace practices, human capital metrics, supplier diversity and human capital metrics.
Wells Fargo and the T.D. Jakes Group announced a strategic partnership to drive economic vitality and inclusivity in communities across America. Over the next 10 years, the partnership between these organizations could result in up to $1 billion in capital and financing from Wells Fargo, as well as grants from the Wells Fargo Foundation, with the goal of revitalizing neighborhoods, fostering economic opportunity and creating long-term change in communities most in need.