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We can all relate to the unsettling feeling of receiving a call from our bank regarding suspicious activity on our account or uncovering a questionable entry in our statement. Fraud and its repercussions have become a constant threat in today’s digital world. Even more concerning, there is no specific demographic that is the focus—we have all become viable targets, and it has only underscored the need for better fraud prevention.

But imagine the bullseye painted on a company’s back. To fraudsters, undoubtedly, the greater the size or wealth of the organisation, the more enticing the target. From fake invoices to sophisticated phishing schemes, businesses now face a relentless barrage of fraud attempts. This constant struggle translates into a growing cost, especially for banks and financial institutions.

The scale of this burden is far from negligible. According to Juniper Research, losses due to payment fraud alone are expected to reach a staggering USD $362 billion between 2023 and 2028.

And the cost reaches far deeper than just dollars and cents. Fraud can:

• Damage your reputation and customer trust: A single incident of fraud can have significant consequences. Customers who feel your organisation is not secure may choose to take their business elsewhere, and this loss of trust can be incredibly difficult to regain.
• Slow down your conversion rates: The double-edged sword arising from either the fear of fraud or overzealous manual verification processes, especially, can deter potential customers from completing transactions, leading to missed sales opportunities and hindering your business’s growth.
• Lead to severe legal ramifications: Data breaches resulting from fraud may lead to violations of cybersecurity and data protection laws, resulting in hefty fines and legal action from affected customers.

Unlike money laundering, which is regulated by law, the legal obligations on fraud prevention and protection are more blurred. Yet, according to Ian Holmes, Global Director for Enterprise Fraud Solutions at SAS, proactive measures are no longer optional. As the fight against fraud intensifies, financial institutions are under immense pressure to implement robust security measures using AI and prioritise customer protection, not just to mitigate financial losses, but to safeguard their very existence in an increasingly competitive and security-conscious landscape.

Leveraging Diverse Data Sources to Combat Fraud

In order for organisations to better defend themselves in this relentless battle, Ian believes that the answer lies in harnessing a vast and varied spectrum of data types, which includes:

• Internal data: Transaction history, customer profile information, login attempts, and internal security logs.
• External data: Credit reports, public records, and social media information.
• Digital data: Website activity, biometrics, and mobile app usage.
• In-person data: Branch interactions and physical verification details.
• Real-time data: Geo-location data, transaction decisioning and device information.
• Third-party data: Consortium data and threat intelligence feeds.

By integrating data from these varied sources, institutions can gain a holistic view of their customers and identify anomalies that indicate risks and might otherwise go unnoticed. Explaining further, Ian states that this comprehensive approach facilitates several key advancements.

• Firstly, enriched customer profiles allow financial institutions to distinguish between legitimate and potentially fraudulent transactions more effectively. For instance, by combining data from various sources, such as internal records, external reports and digital footprints, institutions can build a more detailed understanding of their customers’ typical behaviours and spending patterns. This enables them to identify inconsistencies that might suggest fraudulent activity, such as sudden shifts in spending habits or transactions in unusual locations.
• Secondly, cross-transactional analysis across different channels, like online, mobile, and in-person interactions, allows institutions to uncover hidden patterns that wouldn’t be evident when examining individual transactions in isolation. For example, a customer who typically makes small, in-person deposits suddenly attempting a large online transfer from an unusual location through a newly provisioned device should raise a red flag.
• Thirdly, this allows for the construction of robust predictive models that can learn and adapt over time, identifying subtle anomalies and predicting potential fraud attempts with increasing accuracy. This proactive approach allows institutions to stay ahead of evolving fraudster tactics and prevent attacks before they occur.

In a nutshell, legacy, manual-intensive methods no longer suffice for effective fraud prevention. The threat of fraud has become too pervasive, too dynamic, and relentless. The capabilities that data unlocks empower informed, contextual, risk-based decision-making and facilitate the effective use of AI and machine learning. Ian emphasises that this gives financial institutions the only way forward as they look to combat a wide-ranging array of fraud attempts—even amidst evolving fraudster tactics—in real time.

Navigating the Evolving Fraud Landscape and Fraud Prevention

While harnessing the power of data offers significant advantages in mitigating fraud, Ian acknowledges that many organisations are still in the early stages of adopting this approach. Hence, they may lack the necessary expertise or experience to fully leverage diverse data sources and implement advanced analytics for effective fraud prevention

Fortunately, partnering with experienced companies like SAS can bridge this gap. With years of experience in helping businesses leverage data for various objectives, SAS also offers specialised solutions tailor-made for dealing with fraud, all with embedded analytical IP and ML models. Their expertise empowers businesses to harness the power of diverse data to detect, prevent, and manage fraud attempts across their entire enterprise.

Ready to learn more about how SAS can help your organisation fortify its defences against fraud? Click HERE to explore their comprehensive solutions and discover how you can safeguard your customers and your business in today’s ever-evolving threat landscape.

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