The end of the year is the traditional time to reflect on your business strategies, congratulate yourself on jobs well done, and identify areas for growth. In the banking sector, that means paying particular attention to your fraud detection and prevention processes. Here are nine signs that you should schedule an end-of-the-year fraud process review.
1. Fraud is rising at your bank.
Fraudsters are always finding novel ways to steal money, and you need fraud-resistant practices that keep up to date with their latest strategies. If fraud is rising at your financial institution, schedule time to review your anti-fraud processes. To protect yourself, you may need to pay more attention to fraud prevention than fraud detection.
2. Fraud costs are up.
Fraud costs include fraud losses, fraud remediation, anti-fraud solutions, and compliance costs. Balancing these elements can be delicate — you need to ensure that your anti-fraud spend reduces fraud losses without unnecessarily consuming resources.
For every dollar lost to fraud, financial institutions pay over $4 in remediation costs. If your total fraud costs are rising, that’s a sign your bank has fallen prey to too much fraud, but it also indicates that you need to devote more resources to fraud prevention. By increasing your fraud prevention costs, you stand to reduce fraud losses and thus save even more on remediation costs.
3. Fraud-related payroll costs have increased.
Well-protected financial institutions have fraud teams, but they also employ automated fraud detection and prevention tools to support their teams. Payroll costs should not be rising in the age of real-time digital fraud prevention. If they are, it’s a sure sign you need to investigate AI-based, machine-learning fraud solutions.
4. You’re paying for expensive hardware.
Your bank doesn’t need to spend money on big servers or other expensive hardware. The most effective fraud detection solutions don’t require you to download software onto your own equipment. Instead, you can get cloud-based solutions and software-as-a-service (SaaS). Then, your service provider hosts the fraud solutions, ensures your software is up-to-date, and provides other services as needed to help you streamline operations and save money.
5. Customers have left your bank due to fraud.
Sometimes, no matter how much you spend on remediation, you cannot buy the trust of your customers. Unfortunately, even if the customer was the weak link that allowed the fraud to happen, they tend to blame their banks. Customers want to trust their banks. They want to believe that their money is as safe as possible.
If customers have left your bank after becoming the victim of fraud, you need to review your fraud processes. You need to identify weak spots in your fraud prevention techniques, but you also need to consider how you communicate with clients after they’ve become the victim of fraud.
6. Customers have complained about false positives.
While you certainly don’t want to lose customers over fraud, you also don’t want to drive them away with your fraud detection processes. False positives put friction into the customer experience. They prevent customers from carrying out legitimate transactions, creating frustration and degrading the customer experience.
If your fraud detection processes are generating a lot of false positives, you may be relying on outdated rule-based fraud detection tools. Bring your processes up to date with anti-fraud solutions that get to know your customers and look for aberrations in customer patterns. This approach decreases fraud while also safeguarding the customer experience.
7. You’ve experienced internal fraud losses.
Your fraud detection tools need to look outward. The most significant threats are external. But that doesn’t mean you should ignore internal issues. There is a lot of internal bank fraud and fraud that’s carried out with the help of employees. You need fraud processes positioned to deal with these threats.
8. Business email compromise has caused internal losses.
Your employees can also unwittingly expose your bank to fraud by falling prey to business email compromise (BEC). If your bank has suffered losses due to BEC, you need to improve awareness training for employees. In that same vein, if a lot of your customer-related fraud losses started with phishing emails, you may also need to pump up educational outreach to your customers.
9. You’re afraid to offer more digital services.
To be competitive, your financial institution needs to offer digital services. Your customers want to deposit checks through apps, apply for lines of credit online, and handle other tasks digitally. If they cannot, they will go to the competition. However, if you’re holding back on these services due to the heightened risk of fraud, you need to revisit your fraud processes.
You need fraud detection and prevention services that work across all payment channels and through all customer interactions. Then, you can move forward confidently with the digital services your customers want, need, and expect from their banks.
Schedule a Fraud Process Review
If any of the above apply, it’s time to schedule a fraud process review. At SQN Banking Systems, we offer free fraud process reviews to new clients. The review helps you assess your strengths and vulnerabilities. Then, we work with you to customize a fraud prevention and detection strategy that works with your needs, goals, and budgets. Ready to learn more? Then, contact us today.