Connect with us
Our website publishes news, press releases, opinion and advertorials on various financial organizations, products and services which are commissioned from various Companies, Organizations, PR agencies, Bloggers etc. These commissioned articles are commercial in nature. This is not to be considered as financial advice and should be considered only for information purposes. It does not reflect the views or opinion of our website and is not to be considered an endorsement or a recommendation. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third-party websites, affiliate sales networks, and to our advertising partners websites. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish advertised or sponsored articles or links, you may consider all articles or links hosted on our site as a commercial article placement. We will not be responsible for any loss you may suffer as a result of any omission or inaccuracy on the website.

Finance

Fraud Detection and Protection in 2022: What Lies Ahead

Fraud Detection and Protection in 2022: What Lies Ahead 1

By David Mirfield, Director of Product Management, AyasdiAI

COVID-19 has had a significant impact on the financial services industry, in terms of both how fraud has changed and the fact that it forced a significant amount of fast-tracked digital transformation. Many of these shifts were made to solve a problem quickly without necessarily being the optimal solution; they were in some instances more of an interim approach.

In the coming months, banks and other financial services organizations will likely start to come back to a more normal way of budgeting and provisioning as they consider their planning cycle.

We will see them start to focus far more materially on how to manage a less accelerated cycle. That allows leaders to make a more strategic assessment of what the landscape looks like. Until now, most of the focus has been on the customers, but now organizations will be thinking about how to protect themselves as well as they protect their customers.

Let’s look at what financial services executives need to think about in the coming year in terms of preventing fraud and what to be aware of.

The Great Bank Reset

Banks have begun to and will continue to focus internally at how to protect themselves from fraud, but without just passing the buck to the customer, either. For instance, first-party fraud will be a great focus area. In this type of fraud, customers, or at least very well fabricated false identities, deliberately attempt to commit fraud inside the bank.

Moving away from endpoint solutions will be an important step. The rapid move to cloud-based models has opened security gaps. Many organizations have tried to solve the more immediate fraud problems with endpoint solutions, but this approach is unsustainable. They need to optimize the use of data, optimize the use of analytics, and get a 360-degree view of fraud risk – as opposed to having different teams or different solutions working in silos.

Another important step is the combination of anti-money laundering (AML) and fraud into one holistic view. This isn’t going to happen overnight, but change is coming. We’ve seen the need to use more and more advanced techniques in AML. And with the familiarity of using those techniques already in the fraud space, we’re going to see more organizations start to consider how to tie these together more strategically and more aggressively than they ever have.

Overcoming the siloed roles of fraud experts and AML professionals 

Strategically and from an investment perspective, bank leaders are looking for a more overarching solution that works better than single solutions roles possibly can. That doesn’t mean fraud prevention and AML experts can’t act autonomously to ensure they manage their business teams effectively, but rather, they have the ability to draw down from data, analytics and technology insights across both areas. How criminals act is ring-fenced, but the way banks combat it shouldn’t be.

How to move forward into 2022

There are two areas to focus on to achieve stronger fraud protection in the new year.

Have a future-proofed approach: A future-proof approach is an evolution based on a modern technology choice. In this new paradigm, you’re not locked into one particular approach, and that gives you the flexibility to add new data sources and new models – and evolve your strategy as you see fit.

A holistic view: One of the key aspects of fighting fraud is being able to look across sophisticated patterns of risk – even if you haven’t seen that pattern of risk before. This allows you to understand what new risks could be occurring. This includes the recognition that the problem may be coming from within. The biggest risk that you’re going to see in terms of fraud or financial crime is insider fraud from current customers. Banks are going to need to be able to look inward and evaluate if the fraud is coming from within.

Ready for the unknown

Fraud protection continues to grow harder and harder in the financial services world as technology advances and bad actors find new methodologies. As financial institutions begin to re-assess their initial attempts at digital transformation and take the longer view, it’s an ideal time to focus on securing themselves, not just their customers, against fraud. This requires a more comprehensive approach to fraud prevention technologies that removes siloes as well as vendor lock-in. It will enable banks to see the larger risk patterns they wouldn’t be able to otherwise – including those coming from their own customers. These guidelines will help us move into the new year and its as-yet-unknown challenges with greater confidence.

Global Banking and Finance Review Awards Nominations 2022
2022 Awards now open. Click Here to Nominate

Advertisement

Newsletters with Secrets & Analysis. Subscribe Now