The Future State of Fraud Operations: Securing Digital Banking

Apr. 23, 2020 | by Heidi Bleau

There is one word that lives in the vocabulary of every fraud and security operations team: collaboration. All you have to do is read about the takedown of some of the most notorious cybercrime gangs to know success relies on the ability to work well with one another. While this might be an extreme example, the nature of collaboration is no different and no less important for teams on the front lines of fighting fraud every day.

In light of the current healthcare crisis, adjusting to operating in a distributed, remote work environment is creating many challenges for fraud and security operations teams. For financial institutions, the problem is even more pronounced. With branches closed and call centers working with reduced staff, the increase in online and mobile banking is inevitable. Consumers are turning to digital channels for services, such as opening a new account or applying for a loan, that they typically prefer to complete face-to-face in their local branch. Also, with many in need of instant cash to pay bills or cover day-to-day expenses, the use of real-time payment apps are on the rise. 

As fraud and security teams prepare to support the increase in digital banking activity, they must also prepare to manage the increase in fraud that comes along with it. Cyber attacks are on the rise as criminals take advantage of vulnerable consumers in these trying times. It’s not necessarily new types of attack that are the issue, but rather the sheer volume of them, and some that are harder to detect. For example, with people adhering to social distancing and stay-at-home mandates, voice scams are more prevalent. Being able to identify these sophisticated social engineering scams and distinguish whether a genuine user is conducting a transaction under duress is a fraud attack that cannot be identified with most traditional fraud prevention tools. 

Financial institutions are also relaxing some security controls to adjust for the increase in digital transactions and to avoid disrupting the user experience. Some financial institutions have loosened the extra steps required for consumers to identify themselves online. Security teams are grappling with how to strike a balance between managing fraud risk and optimizing the user experience in order to account for the growth in digital transactions.

More transactions, more fraud, and an entirely new way of working — financial institutions are having to figure out how to manage each of these challenges along the way. Some were better prepared than others to make the transition. A recent report by Aite Group suggests that a majority of financial institutions have been successful in migrating 85% or more of their fraud or AML operations to remote work.

Next Steps for Addressing Digital Banking Fraud

Fraud and security operations teams have experience dealing with many of the challenges mentioned above. Think about Black Friday and Cyber Monday; an increase in transactions and fraud are a hallmark of the holiday shopping season. The difference is they have time to plan for such big events, whereas the COVID-19 pandemic was entirely unexpected. Adding to the equation is the need to juggle risk management priorities in the midst of transitioning to working in an entirely remote environment.

How current events will affect how fraud and security operations teams work moving forward is still to be determined. One thing this crisis has highlighted, however, is the importance of and need for digital products and services that enable institutions to serve customers anytime and anywhere. With an economic downturn looming and organizations likely having to reduce or reallocate budget in technology investments, it won’t be surprising to see priority given to projects that better secure digital channels and enable more automation.

In our upcoming webinar, BioCatch and Julie Conroy, Research Director at Aite Group, will touch on these exact concerns, highlighting best practices for building a remote fraud operations team, lessons learned from financial institutions who are undergoing this rapid transition, and future strategies for automating fraud operations. Join us on May 5th, 2020.

Topics: Fraud