Fighting Financial Fraud in an Increasingly Digital World
Everywhere we look, we see some form of digital technology. People have access to computers, cellphones, televisions and even Wi-Fi-enabled smart appliances. Technology advances every day, giving way to exciting, innovative and life-changing experiences.
Take cellphones, for example. Not too long ago, cellphones were a luxury. They were used simply to call people — texting didn’t exist, and social media and apps had yet to be developed. The devices themselves were large, expensive and took hours to charge. Now, everyone from children to the elderly use cellphones. They come in many styles and sizes and do much more than simply send and receive calls. They also expose customers to brand new forms of identity theft and financial fraud.
Adapting to Evolving Technologies
As technology advances, organizations must adapt to new platforms and devices. Competition is rampant. New market entrants with agile infrastructures and digital mindsets are driving increased competition and putting pressure on banking profitability. Evolving regulations, such as the second Payment Services Directive (PSD2) in Europe, will add more competition by enabling consumers to give third parties direct access to their account and payment data.
Financial organizations are finding it harder to build brand loyalty using traditional methods. This has triggered an industrywide digital revolution. Institutions are applying technology in new and creative ways, offering multiple methods to access their sites and services, developing new and innovative products and services, and finding new ways to connect with customers to deliver the type of experience they want.
These innovative forms of digital technology are giving cybercriminals many fresh opportunities to be more aggressive and confrontational. New forms of malware, Trojans, botnets and phishing attacks are on the rise. The Internet of Things (IoT) also leaves many consumers unknowingly vulnerable to remote takeovers due to faulty or poorly secured software.
Financial Services: Fraudsters’ Favorite Target
The financial industry is always a prime target. In 2016, malicious actors hit the financial services sector more often than any other business segment. The latest “Cost of Data Breach Study” from Ponemon Institute found that the cost of a data breach for financial institutions was approximately 1.7 times higher than the average.
Financial institutions must deliver transparent authentication and strong digital fraud detection capabilities. Incorporating these solutions seamlessly is very important to customer satisfaction. One way to do this is through the use of behavioral biometrics, which can analyze and understand subtle mouse movements and clicks in context and meaning, and are continuously getting smarter and more accurate. Behavioral biometrics help financial institutions detect when someone other than the account owner tries to log in to a bank account. The ability to accurately identify suspected fraudulent behavior can lower false positive alert rates for overwhelmed investigation teams.
Today’s consumers want options. With millennials and members of Generation Z, all of whom grew up in a world of connectivity and technology, flooding the consumer space, organizations that do not adapt run the risk of losing customers. Organizations need solutions that can detect fraud across users, sessions, devices, including anomalous behavior, suspicious user patterns, cross-channel account takeover attempts, device geolocation and logins from different geographical locations, and malware-infected devices. Analyzing account activity over time and across multiple channels can help reveal connections that signal a higher risk and the need for increased research.
Fighting Financial Fraud With Threat Intelligence
Financial institutions must stay alert to current and emerging threats. Having access to real-time, global threat intelligence can help organizations watch for suspicious activity and get a better picture of the who, what, when and where of cybercriminal activities. However, this data is useless if your organization’s systems are cumbersome and hard to update.
The ability to tweak systems’ threat and risk levels is paramount to ensure security. Leveraging a white box approach, as opposed to a black box in which inner workings are hidden, allows security teams to examine and update fraud detection and response rules. This approach can help organizations provide timely, dynamic response to evolving regulatory requirements and financial fraud indicators.
We live in a technological and digital world. Financial services are aware of this and have already begun adapting to this revolution. Consumers have more options than ever to conduct their financial needs from multiple platforms and devices. Delivering a safe and seamless user experience is the key to keeping financial institutions competitive and customers happy.