Payment fraud risks and its potential minimization tools
Even as countries slowly open back up, economists predict the disruption caused by the coronavirus pandemic will be felt well into 2021. Banks have been left vulnerable and have to contend with fraudsters who are using Covid-19 as an opportunity to commit financial crime, exploiting consumer fear and the increase in digital payments.
Fraud losses need to be anticipated and prevented as banks move from the lockdown to the recovery phase. Today, banks all over the world have temporarily closed their branches and contactless limits have been raised, but what more must be done to ensure secure use of alternative payment options? For fraudsters, accustomed to the working from home lifestyle, to a certain extent, it is business as usual. However, hackers can infiltrate gaps between channels within large financial institutions and use customer concern to target vulnerable consumers by ‘hiding in the crowd’ amid increased online activity.
In the age of open banking and real time payments, funds can be transferred to fraudsters’ accounts immediately and the victim does not notice suspicious movements until it is too late. It is evident that with faster payments methods, the benefits for consumers far outweigh the disadvantages, but hackers will continue to exploit this area. Fraud analysts within a bank must pivot and adapt to working in a new environment to ensure that teams integrate efficiently and decrease human error through a lack of physical communication.
In fact, banks must maintain staff even if transactions are falling to not be recognised as being in a weaker position in the market to their peers. Data is a vital tool in a bank’s armoury and must be considered an asset. AI and machine learning can also play a part in fraud and financial crime prevention, consuming disparate unstructured data and creating structured insight and conclusions. Coupled with traditional fraud techniques, banks need to pivot their payments fraud strategy to a tech-driven approach.
