Reviewing the fraud landscape and evolution of techniques and tactics to stay ahead

Mauriceo Castanheiro, Fraud Industry ExpertVerafin

Below is an insight into what can be expected from Mauriceo’s session at Fraud and Financial Crime Europe 2023.

The views and opinions expressed in this article are those of the thought leader as an individual, and are not attributed to CeFPro or any particular organization.

How can financial institutions effectively manage the increased tactics of criminals?

Criminals are growing their tactics by working together and abusing emerging technologies. As an industry, we must respond by embracing collaboration and innovation. This means coming together to fight financial crime through approaches such as consortium analytics, where we use insights from a network of thousands of financial institutions to overcome the data silos within institutions and between institutions. With a consortium approach, financial institutions can see the full picture of customer behavior and relationships, and this translates into stronger fraud prevention with fewer false positives.

Payments fraud prevention is a good example of the power of a consortium approach. By providing holistic insights into payer and payee risk, consortium analytics allow financial institutions to prevent fraud more effectively while maintaining transaction speed and convenience for customers. Suspicious transactions can be rapidly identified for interdiction before funds are released, while legitimate transfers can proceed uninterrupted. This is especially important as consumers and fraudsters migrate to instant, irrevocable faster payment options.

In what ways have developments in technology changed the fraud landscape?

Technology has a powerful influence on the fraud landscape. On one hand, fraudsters are quick to abuse the technology we use every day and emerging innovations to make their scams more effective. For example, Business Email Compromise is grounded in exploiting our reliance on email services and the internet, and we’ve seen criminals abusing artificial intelligence through deep fake phone calls to evolve the scam further.

In contrast, technology and innovation are also key to the financial industry’s ability to address the fraud challenges of today and tomorrow. Consortium analytics use artificial intelligence and big data in a cloud environment to help financial institutions prevent payment fraud with a degree of effectiveness that was previously impossible, given the limitations of isolated systems and siloed data sets.

What are the key financial impacts as fraud techniques evolve?

As an industry, we face constant pressure related to loss avoidance, cost avoidance, and maintaining our customers’ experience. These challenges have remained constant regardless of the evolution of fraud. It is critical that solutions evolve as quickly as fraudsters do. As new trends emerge, we can work with impacted institutions to develop new detection strategies and deploy them to the entire consortium. This managed analytics approach allows the entire network of financial institutions to react quicker to emerging trends and reduces the ability of fraudsters to move from institution to institution and replay their attack. This becomes even more critical in an interconnected, global challenge like fraud where new trends can emerge in different jurisdictions.

What are the main impacts that fraud attempts can have on customer experience and reputation?

As fraud attempts increase, maintaining a positive customer experience and reputation means ensuring strong fraud prevention without creating added friction for customers. Financial institutions must effectively detect true fraud to protect their customers from loss, while reducing false positive alerts to lessen unnecessary call backs and interrupted payments. Failure to sufficiently balance these priorities can negatively impact a financial institution’s reputation and customer experience.