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Prepare for Continuing Trends and New Developments
By Rob Tharle
Regulatory
Regulatory interest in fraud will increase in the U.S. The level of stimulus fraud will drive this, as $100 billion in fraud gets politicians’ interest. This is likely to concentrate on mule accounts—without them, most of these frauds would not have occurred.
We’ll also see regulatory or commercial pressure to move from open banking to open finance. This may also make life easier for fraudsters. However, firms that show they can improve customers’ finances and security may be on to something.
Payment fraud
We are likely to see an uptick in remote frauds, such as account takeover (ATO) and e-commerce.
The level of compromised card data and digital credentials is huge as lockdowns recede, allowing mules to cash out. The increase in real-time payments, payment requests, and users new to digital security will make this an attractive avenue for fraudsters. Improved, risk-based authentication will be key as volumes of genuine transactions grow.
Remote access to payments for corporate treasury and payments teams will increase. This is likely to be abused by fraudsters if education, training, authentication, and detection is not put in place.
Voice and video deep fakes make these schemes more sophisticated. Financial services organizations (FSOs) will need to protect corporate customers.
Consolidation of end points
FSOs will consolidate systems and build roadmaps to become true enterprise fraud management systems. Fraud types are interlinked, and if the data is removed from silos, the improvement in prevention can be huge.
Some FSOs are sitting on 20- to 30-point solutions. With device profiling, behavioral biometrics, telecommunications data, and about 150 vendors in the ecosystem, managing cost and risk is a key area.
In case management, giving the agent all the information creates better decisions and reduces fraud. It also allows for greater automation to improve customer experiences and support increased digital banking and e-commerce.
Cloud first
Cloud allows for flexibility and lower running costs. The elasticity is perfect for faster model-building, and upgrades are easier, quicker, and safer.
The ability to support large amounts of data and remove silos is also important. Many FSOs and regulators are gaining a better understanding of the risks and how to mitigate them.
We will also see collaboration and collective intelligence take off.
Application and first-party fraud
Customers demand end-to-end digital account opening and servicing. Many financial institutions have digitized existing paper processes, creating control gaps and poor experiences.
With customers going elsewhere and fraudsters persevering, fraud rates remain the same—but with lower sales.
To prevent identity theft, synthetic identities, and first-party fraud, FSOs will invest in solutions to identify, verify, and score applications up front, with links to multiple data sources.
With continued stimulus packages likely, fraudsters will attack Small Business Administration loans and unemployment benefits. Firms must detect mule behavior before the money moves.
For more of the latest fraud and AML insights, visit niceactimize.com.
Rob Tharle is a fraud and authentication industry expert with NICE Actimize
