You’ve heard stories about how fraud affects real people through scams, identity theft, account takeover attacks, and other means.
What can financial institutions do right now to protect their businesses and customers from fraud?
1. Keep Fraud Prevention Education Up to Date
Banks can keep their customers’ education up to date. Make it fit the situation. As Christmas approaches, there is an opportunity to lean on the key messages. So keep education current and assist customers in understanding the risks they face without becoming alarmed.
2. Be Proactive With New Merchants to Prevent Purchase Scams
Throughout the year, purchase scams are common. But, as we approach the holiday season, fraudsters will be looking for opportunities to exploit that risk. Customers are likely to use new merchants that they are unfamiliar with.
So, how do banks change their strategies to reflect this without exposing themselves to risk? One option is to look for new merchants who are emerging and develop proactive strategies around them. Increase your trust in merchants that you know and trust. AI and machine learning are obvious ways to capitalize on this. Another thing we’ll see is delivery scams, such as “my parcel did not arrive.” So developing active strategies for having these conversations with customers about their rights to
3. Have Active Strategies to Prevent 1st, 2nd Party Fraud
Now, on to a less upbeat note: the cost of living is increasing. And what results from this? Unfortunately, this causes customers to act in ways they would not . Any opportunity to make a quick buck, pound, or euro will be available. Staying aware of this will be critical for banks. Another consideration is potential first- or second-party fraud.
So having active strategies and doing that analysis to look for customers who are starting to claim things are fraudulent that aren’t or who are actually starting to move from being victims of fraud to unfortunately participating due to desperation around the cost of living would be fantastic.
4. Take part in Regulatory Discussions
Moving on to broader regulatory areas. Regulation is still evolving, particularly refund rights and who is liable. It is critical to have a regulatory change strategy. But, in reality, my advice is to take part. Get involved in the consultative process wherever you can to help shape those regulations and get your point of view across. Regulations cannot be written at the center without context, and banks and financial institutions can provide that rich context on a daily basis.
5. Invest in Real-Time Fraud Prevention
As a new payment architecture emerges and payment types begin to become embedded, the use of ISO 20022—particularly in the SWIFT network—becomes more prevalent. So, if there is anywhere in your organization where you don’t have a real-time by design strategy or don’t know how you’re going to pivot to a real-time basis, we would advise you to get proactive now.
You’re approaching budget season and want to figure out what you’ll fund in 2023. Examine your end-to-end controls to see if they are not designed to be real-time. Begin that discovery and research and figure out how your organization can be effective in the future.
