You can invest all kinds of capital into fraud detection and prevention solutions, but in many situations, the staff at your financial institution is your first line of defense. If they don’t understand the risk of fraud and the importance of being diligent, your financial institution may suffer.
To strengthen your defenses against bank fraud, you need to create a risk-aware culture. Here are tips to help you.
1. Educate Your Employees
Educate your employees about how fraud affects financial institutions and make sure they understand the most prevalent fraud scenarios. They should understand how to spot red flags of fraud when processing a deposit or cashing a check, but they should also be aware of the risk of phishing scams and other social engineering attacks.
Consider holding regular training sessions for your employees and make risk awareness part of your onboarding materials.
2. Get Management Involved
Everyone in your organization needs to be dedicated to your anti-fraud measures. Lower-level employees are less likely to take fraud risks seriously if they see senior employees and management bending the rules. Make sure management understands the importance of their role both in terms of minimizing risks and leading by example.
3. Have Multiple Departments Work Together
If all of your departments are working in silos, they are more likely to overlook certain risks. Centralize your fraud-reduction efforts by breaking down silos and creating coordinated responses to fraud. You may even want to create a fraud committee with people from different areas of your financial institution.
4. Segregate Risky Activities
Also, make sure that you segregate duties that have the potential for abuse. For instance, if the same person approves accounts payables expenses and drafts checks, that individual could relatively easily commit invoice fraud. However, if two different people handle these functions, the risk of fraud decreases.
In that same vein, all employees should be required to take a certain amount of time off each year. That gives another person a chance to step into their role and ensure they aren’t running any malicious scams.
5. Establish incentives
Sales incentives have often worked against fraud-fighting efforts. For instance, when personal bankers are trying to reach aggressive goals related to opening new accounts, they may overlook signs of identity theft, new account fraud, or synthetic identities.
Consider where this might be happening in your organization and put the emphasis back on creating a balance between sales goals and fraud reduction activities. Also, consider using incentives to promote employee engagement with fraud reduction strategies. For instance, you may want to offer bonuses for reducing a certain type of fraud.
6. Communicate Expectations Clearly
Make sure that your employees know what they are supposed to do to minimize the risk of fraud. This can include a range of different techniques from how they check paper notes for signs of counterfeiting to not opening email attachments from unknown senders.
Also, make sure that employees know what to do if they spot suspicious activity. Who are they supposed to contact? Which details should they provide? An easy reporting process helps to create a risk-aware culture, and it also helps to increase the likelihood of your employees notifying you when something is amiss.
7. Leverage Technology
Finally, make sure that you’re using technology to reduce your risks. Fraud detection and prevention solutions can look at all of your financial institution’s transactions in real-time and flag suspicious transactions for manual review. The right technology expands your fraud detection efforts, but it also elevates your risk-aware culture by showing your team that your organization is committed to fighting fraud.
Bank fraud is not going away, but it is constantly changing as criminals discover new ways to commit fraud. Your financial institution needs fraud detection and prevention solutions that can keep pace with established and emerging threats, and we can help you find the best solutions for your needs.
At SQN Banking Systems, we offer the solutions and services financial institutions need to reduce their risk of fraud and support a risk-aware organizational culture. To learn more, contact us today.