Below Puneet Taneja, Head of Operations at Teleperformance, discusses with Finance Monthly how banks can prevent, detect and protect against fraud.
Trade body UK Finance reports that over £500 million was lost to fraud in the first half of 2018. What is particularly worrying is that of the £500 million lost to fraud, over £385 million was lost with no knowledge or authorisation from the account holder1.
This news seems to cement current fears that fraudsters are becoming increasingly more sophisticated in their efforts to rob banking customers and overcome current financial security and anti-fraud measures. The rise of cybercrime has led to a new generation of fraudsters using technology to come up with new and innovative ways to steal hundreds of millions of pounds from customers, all while remaining undetected.
Although this may be stating the obvious, identifying, investigating and ultimately preventing fraud must continue to be a high priority. When banks consider the technology implementation necessary to drive banking innovation forward, this initiative is still in its infancy, with banks always striving to be on top of the latest and most effective methods to overcome fraudulent activity.
A reassessment of banking technologies and systems is the key to safeguarding customer accounts.
It’s all well and good to harness the power of existing technologies and data analytics to spot irregular data patterns to highlight suspicious transactions but this is only half the story. Employing a greater number of customer service agents who can aid in the risk management process can similarly help banks pre-empt fraud and treat the causes of financial loss, as opposed to the symptoms.
Overcoming fraudulent losses has the natural flow-on effect of boosting customer satisfaction, one of the key factors to banks’ long-term financial health. If customers view banks as being up to date on the relevant technologies to keep on top of inbound fraud, reputational equity builds and so too does customer satisfaction. This relies on banks being able to tackle the issue of fraudulent transactions in real time, in a proactive manner, rather than taking a reactive approach.
Using real-time anomaly techniques to spot suspicious transactions, financial institutions can achieve an astounding 92 percent reduction in fraud losses; in one instance, a UK national bank saved £3.54 million annually from credit and debit card fraud by using analytics technology.
Not only are banks being able to mitigate the financial consequences but also the reputational repercussions from those who have fallen victim. Naturally, it can be very damaging to any organisations reputation when the media publishes an incident involving fraud. Banks need to ensure that customers appreciate the back-office efforts that are put into place to not only prevent fraud, but also support customers who fall victim to fraud.
Nevertheless, fraud is an inescapable risk associated with performing financial services and banks have a responsibility to be well prepared on how they respond to fraudulent activity. From a customer services standpoint, the main driver of this preparedness comes from banks needing to be seen as being on the customer’s side. This concerns being prepared to help consumers through financially troublesome times, like when they fall prey to fraudulent activity. This is an integral part of banks’ customer service efforts.
Overcoming fraud is a nation-wide effort that every organisation in the industry is currently attempting to accomplish. Eliminating fraudulent activity altogether may not yet be possible but firms have the technology available to make a significant difference. Considering a fraud prevention systems overhaul may the key driver to banks detecting fraud faster and more efficiently than in recent times.