When financial institutions contact us about fraud prevention and detection, we don’t offer them a one-size-fits-all solution. Instead, we work closely with them to develop a suite of tools and services that address the unique risk profile of their bank.
To gather this information, we provide a fraud process review for new customers. A review helps to identify vulnerabilities and decide what measures a bank needs to improve. Wondering if your financial institution is optimizing its fraud processes? Then, consider the following:
1. Do you monitor all transactions for bank fraud?
Bank fraud occurs across all types of transactions. To protect your financial institution, you need to monitor all types of transactions including checks, debit card, and ATM transactions, but you also need to watch for signs of fraud when customers open accounts or apply for loans.
2. Do you look beyond payments for signs of fraud?
Beyond monitoring payment transactions, you should have tools in place that help you monitor all customer interactions with your bank to look for signs of fraud. Often, the signs come before the money exchanges hands. This is particularly prevalent with account takeover.
Rather than waiting until the thief uses your customers’ cards or writes checks from their accounts, you should have safeguards in place that look for signs of account takeover. For instance, this may include a string of actions such as signing into a banking app from an unrecognized device on an IP address from a different country and then changing the customer’s address.
3. Do you leverage artificial intelligence?
All bank fraud detection and prevention solutions use algorithms to detect fraud. However, if you’re using a solution that uses algorithms on their own without artificial intelligence, you are compromising the security of your financial institution and your customers.
To give you an example, imagine that your algorithm flags all international transactions as potentially fraudulent. One of your banking customers regularly travels to Turkey. When they try to use their card, their transaction gets flagged as potentially fraudulent, and they must verify that they initiated the transaction. The next month when they return to Turkey, they have to repeat the process. This can get cumbersome and annoying for bank customers.
In contrast, if your fraud solution incorporates AI and machine learning, it will adjust the algorithm to reflect the usage patterns of this customer. The solution will learn that this customer travels to Turkey, and it will stop flagging those transactions as potential fraud. At the same time, it will continue to understand that a transaction in a foreign country may signify fraud on your other customers’ accounts.
Anti-fraud solutions that leverage artificial intelligence learn the differences between legitimate and fraudulent transactions in general. But they also learn about the specific patterns of your individual customers. This safeguards the customer experience, while also boosting your fraud detection capabilities.
4. Do your solutions work in real-time?
If you detect fraud after it happens, the money is gone, and often, it’s unrecoverable. To minimize your losses, you need a fraud solution that works in real time. It should scan transactions as they happen and alert you about the risk of fraud instantly. This allows you to stop transactions that may be fraudulent until you receive confirmation from your customers.
5. Do you offer an easy verification process for customers?
Some financial institutions simply deny transactions that look fraudulent. To get the transaction to go through, the customer has to contact the bank and let them know that fraud wasn’t an issue. This can be extremely frustrating for customers when they’re trying to initiate a legitimate transaction.
To minimize frustrations, you need convenient processes for customers to authenticate their transactions. For most customers, a text is the easiest option. When a transaction gets denied because of potential fraud, your system should automatically send a text to the person, and they should be able to authenticate the transaction with a simple yes or no response.
6. Are your fraud solutions integrated?
A lot of financial institutions inadvertently end up with multiple fraud detection solutions. This happens when financial institutions take a piecemeal approach to fraud detection and add services one by one as they become aware of different risks.
These silos can compromise your ability to detect fraud effectively. In particular, you will end up missing advanced signs of fraud that include different signals in distinct areas. Integrating your solution can also help you save money on maintenance and service.
7. Are you combining automation and human talent?
Effective fraud solutions rely on automation. This reduces the labor costs you need to devote to fraud prevention, and it increases the accuracy of your efforts. However, you also need to get humans involved.
For example, you may want your employees to do a manual review of transactions that have been flagged as fraudulent. At the same time, you should also train your employees on how to talk with customers about fraud. For instance, a teller who asks the right questions can help protect a customer who’s depositing a money order from a scam artist or letting a thief use them as a mule.
The fraud vendor you select should also use a blend of humans and technology. For example, the best fraud prevention companies leverage fraud intelligence to improve their products. Gathering fraud intelligence requires analysts to monitor places where scam artists share information.
8. Do you educate your customers about bank fraud?
To prevent fraud, you can’t just look for unauthorized transactions. A lot of fraud is perpetuated by thieves who trick customers into taking certain actions. Customer education is critical for minimizing risks associated with social engineering. Unfortunately, a lot of scammers even pretend to be bank fraud employees to trick your customers into sharing sensitive information.
9. Do you have a strategic fraud partner?
The company you select to protect you from fraud plays a significant role in shaping your security. Their efforts have a direct impact on your risk and your reputation. You need to ensure that you’re working with a reputable company that can customize a fraud prevention strategy for you.
If you answered no to any of the questions above, it’s time to improve your fraud processes. Ready to learn more? Then, contact us at SQN Banking Systems today. We offer a range of fraud detection and prevention tools and solutions, and we can customize a solution that meets your unique needs. Let’s start with a fraud process review and find the best protection for you and your customers.