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Why prevention is key when it comes to the fraud risks posed by rapid digitisation

Canva connections pen touch fraud prevention - Global Banking | Finance

By Tamas Kadar, CEO of SEON

Since the outbreak of COVID-19 has forced people across the globe to stay at home, industries have moved almost entirely online wherever possible. Even restaurants which didn’t previously have any sort of takeaway capacity have put their menu onto apps such as Uber Eats and Just Eat, and retailers without online stores have scrambled to turn their business digital, causing a huge boom for the e-commerce industry.

For many large organisations the shift online wasn’t huge, but for others such an unprecedented move away from physical stores and face to face interactions has left them vulnerable.

Because the fact is, moving online isn’t as simple as it might seem – and many of the companies who have made this leap will now know this. Opening your business up to take payments online also opens up your business to new, and more subtle types of risk. Because while outright theft within a physical setting is relatively easy to monitor and prevent, data theft and other types of online fraud sit behind a screen and can be extremely difficult to spot. And many businesses moving online are simply not ready for these threats, and any precautions they do have is unlikely to be enough.

As a result, businesses facing increasing fraud threats are turning to companies in the business of preventing fraud, and these companies are now on the front line against serious criminal organisations.

However, stopping ‘bad people’ is a cat and mouse game, and right now fraudsters are still up in front. Recent history shows us that fraud prevention methods are not really fit for purpose in combatting the growth of the problem. In fact, we already identified 2020 as a year that was going to see a rise in cybercrimes, and this was before COVID-19 made the problem more acute. So, if anything, this fight has revealed that it’s not enough to just analyse the behaviour of fraudsters, but we need more relevant data points to be able to predict fraud before it even occurs. Especially as more and more businesses are quickly transforming to take advantage of digital opportunities during this global crisis.

The worrying truth is that some tech advancements actually help, and even harbour fraudsters. For example, the anonymity movement, while playing an important data protection role, is also creating a safe haven for fraudsters and criminals to collaborate and expand. So, while innovations such as machine learning and AI are hugely important, they should be balanced with the need to take time to understand what’s next on the fraud agenda. After all, if the fraud fighting industry is to win, it needs to stay one step ahead at all times.

Simply put, fraud prevention businesses, in-house risk professionals, technology providers and industry consultants are all in the job for one reason – to prevent crime. And this work is vital to support businesses as the economy feels the impact of COVID-19. Because the people coming out of this crisis stronger than they went in should be hardworking, genuine businesses, not the fraudsters who target them.

As well as this, fraud concerning financial and identity theft often provides funding for more serious criminal activity – such as the drug trade and terrorism. And that’s not to mention the significant personal impact of fraud on members of the public, and the reputational and financial damage caused to businesses. So, fraud prevention is paramount to running a business online.

But the fact remains that due to the current pandemic, businesses will continue to go digital at an unprecedented rate, leapfrogging previous processes and protocol in order to digitise more quickly. To add to this, across many industries we are seeing something we call ‘data breach fatigue’ taking place, due to the vast and sensationalist media coverage when a known brand falls victim. This has the power to create a sense of inevitability or even acceptance when it comes to facing fraud. In some industries fraud prevention has become a tick box exercise, thereby decreasing the amount of budget spent on it.

With the rapid digitisation of business, if the need for fraud prevention is not addressed on a cultural level, as well as on a technological level, we will soon be standing at the edge of an unbridgeable chasm. So, the pressure on businesses and fraud professionals to better protect these vital digital environments is mounting.

This is why it’s vital for digital businesses to acknowledge their risk exposure and work with a specialist to assess the best way to protect themselves and their customers. At the moment too many businesses risk having their digital potential strangled by growing fraud, even though we all know that prevention is always better than cure.

Global Banking & Finance Review


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