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Four ways FIs can boost confidence in fraud detection

By : Dena Hamilton

November 07, 2017 08:00 AM

Detecting and preventing fraud should be a key focus for all financial institutions (FIs). It's an area where the stakes are extremely high, not only in terms of financial and data losses, but also in the potential damage that can be inflicted on a company's brand and reputation.

 

According to the latest Faces of Fraud survey by Information Security Media Group, only 38 percent of banking and security leaders have a high level of confidence in their organization's ability to detect and prevent fraud - a broad and varied landscape that now encompasses everything from ATM skimming to phishing schemes to mobile malware.

 

It's safe to assume all FIs would like this percentage to be higher, so what can be done to strengthen confidence in fraud detection and prevention capabilities?

 

Monitor risk across all channels
It's crucial to keep up with the latest trends and threats in all channels, not just those that are developing the quickest.

 

Of course, fast-growing channels such as online banking and mobile payments demand close attention from a fraud detection perspective, since the rapid growth in usage and new technologies could open up potential weaknesses for fraudsters to exploit.

 

However, it's equally important for FIs to stay vigilant against threats from established channels because fraud will move to the weakest channel, such as attacks targeting ATMs or credit card fraud. One of the most effective ways to combat threats on various fronts is by deploying a single solution that protects multiple channels and provides an organization the ability to view data and activity across all of the channels.

 

Invest early
It is becoming increasingly important for financial services organizations to make early investments in fraud solutions and to think strategically. Forward-thinking firms will have an understanding of how customer commerce activity will change, as well as emerging fraud threats.

 

Speaking to Information Security Media Group about the growing risk of mobile exploits, John Gunn, chief marketing officer at VASCO Data Security, said smart institutions are "trying to stay ahead of this game".

 

"They are making the investment now in new tools to stop the coming wave of mobile attacks," he added. "I think the fact that it hasn't just overwhelmed them doesn't mean they can drop their guard and relax. Everyone agrees it's coming, it's just going to increase."

 

Leverage the latest technologies
New, increasingly powerful technology can be an invaluable weapon for FIs in the ongoing battle against fraud.

 

Advanced data analytics, for example, can help your business to prevent fraud before a financial loss has occurred, based on a wide range of indicators and historical knowledge of the normal activity expected from the customer, the device or payment instrument

 

Identifying potentially fraudulent activity early is vital to provide maximum protection for your organization and your customers.

 

Exciting technology concepts such as artificial intelligence and machine learning are also playing an increasingly prominent role in fraud prevention. The ongoing development of these technologies will help FIs to achieve real-time, reliable fraud detection with maximum efficiency.

 

Don't compromise security for customer experience
There is a lot of emphasis on the frictionless
 customer experience these days, but the big challenge for organizations is to deliver the seamless experience  without making any compromises on security. 

 

With so much at stake, it's clear that security must not be overlooked in the race to deliver maximum convenience and accessibility for customers. For FIs, the ideal scenario is one where security processes and safeguards are operating in the background, delivering advanced, evolving protection without hindering the experience of the end user.

 

Once again, technological advances could come to the rescue here. Innovations such as passive biometrics can enable banks to pick up on the subtlest nuances in customer behavior, strengthen authentication and help to detect anomalous activity.

 

With next-generation technologies and dependable security solutions on their side, FIs should feel confident in their ability to detect and prevent fraud.

Dena Hamilton

GM/Director, Enterprise Fraud & Security Software Solutions

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Dena specializes in fraud, risk, compliance and security with over 35 years in the financial services space. Her focus is in the development and deployment of enterprise financial crime solutions optimized in prevention, detection and back office efficiency.