Intelligence Report | November 2026 - Flipbook - Page 11
THE POWER OF (SOME) FRICTION
By: Emily McCormick
For Austin Capital Bank’s high-yield savings account, adding
friction and slowing things down is by design.
The account, announced in July, is called Fort Knox, named for the U.S.
Gold Bullion Depository in Kentucky. “What we built with Fort Knox is a
bank at the end of a one-way street with a vault,” says Erik Beguin, CEO
and founder of Austin Capital Bank, the $485 million digital banking subsidiary of Austin, Texas-based Greenback Fincorp. “And the only place that
money in that account can go is back to you.”
At what part of the
customer lifecycle do
you most commonly
detect fraud events?
Numbers don’t add up to 100%
due to rounding.
It’s not intended to be the customer’s primary transaction account.
Instead, it’s an attractive product for those looking to keep a significant
amount of money safe. Fort Knox requires the account holder to have a
12%
checking account with another bank; money from the Fort Knox account
can only be transferred to that external account. That prevents the customer
from transferring funds directly to a fraudster and can be the difference,
he says, between losing roughly 60 days of money in a primary checking
account versus the life savings held in Fort Knox.
It’s a level of friction not commonly seen in financial services today. An
33%
increasingly digital environment means accounts can be opened in mere minutes, and payments are almost instantaneous. But that also means it’s harder for banks to slow down processes to ensure customers or transactions are
legitimate.
At the time of the transaction in
real time
In response, banks must weigh competitive concerns against their risk
appetites. A zero-tolerance approach to this risk could keep a bank from
At the time of onboarding
offering instant payments capabilities to their customers or limit online
account opening; that institution could lose out on customers who are seeking those capabilities. “If you can’t make a fraud decision in milliseconds,
After the transaction (fraud) has
occurred
that’s going to be disrupting the customer experience,” says Andy Lapp,
senior director of fraud and managed services at CSI.
Source: Alloy, 2025 State of Fraud Report
Chris Mastrangelo, chief risk officer at New York-based Grasshopper Bank,
doesn’t believe the $1.4 billion subsidiary of Grasshopper Bancorp has to sacrifice fraud prevention for customer experience. “I think we can achieve our
goals for both,” he says. That means being realistic about risk and understanding that some fraud will get through, and that the bank will get complaints
when an account or loan has been denied due to the bank’s risk criteria.
Some friction can be good, and banks and credit unions could do a
better job of explaining how slowing the process makes customers safe.
Financial institutions “should be positioning themselves as the experts on
security … by saying, ‘We’re going to ask you some questions that are going
to slow the process down a little bit, but we are doing this because we care
80%
of fraud events happened
online or through mobile
banking
Source: Alloy, 2025 State of Fraud Report
about your security, we care about your money, we care about your identity,’” says Steve Sanders, chief risk officer and chief information security
THE FRAUD MENACE: PROTECTING YOUR BANK | 9
56%
