3 Reasons Financial Service Firms Are Investing in Fraud Prevention Today

With fraud rates on the rise, investing in fraud prevention solutions is no longer optional. Tools such as authentication controls have seen considerable investment in the last few years, according to an Aite Group report. Identity verification for applications and digital identity authentication are receiving the most funding in terms of investment and transformation, as controls to combat increasing application fraud sit high on most priority lists.

There are several factors contributing to how decisions are made regarding fraud prevention investments today:

Factor One: The Need to Support Revenue Growth

Today’s revenue growth spans across multiple channels as a way to optimize new client acquisition and provide better service to existing clients. However, channel proliferation has made the work of fraud teams more complex. Many institutions face the decision of improving legacy systems or starting from scratch in favor of a newer, more comprehensive solution.  

As new client acquisition becomes a greater priority, so will the need for verifying new customer identities. This will most likely require the expansion of data points used to identify customers that can separate them from stolen or synthetic identities.

Factor Two: The Need to Re-engineer the Customer Experience

Supporting revenue objectives through new customer acquisition and existing customer retention requires FIs to re-examine how their fraud tools affect the customer experience. A high false-positive rate can create unnecessary friction for good customers, but allowing too much fraud to slip through the cracks could leave them vulnerable and damage your reputation. 

Aite Group cites Apple as an example of how the customer experience can be re-engineered in such a way that fraud prevention doesn’t lead to higher friction. Product managers and process engineers for the Apple Card paid especially close attention to the application process in an effort to minimize many of the high friction verification steps that are present in most application processes. Now, more companies are showing interest in eschewing overtly invasive verification steps in favor of those that operate largely “behind the curtain.” 

In terms of investment by financial institutions, these steps could take the form of behavioral biometrics, device fingerprinting, and mobile device authentication. 

Factor Three: The Need to Defend Against Bigger, Broader Attacks

Bot attacks, money mules, and acts of downstream fraud (e.g. changing details once an account has been established) are giving fraud teams plenty of food for thought. Because fraud can take various forms across multiple channels, FIs need a 360-degree fraud prevention solution that can address them all, both at scale and in real time.

FIs Are Choosing Comprehensive Fraud Prevention Solutions

The silver lining of the growing rate of application fraud is the urgency it’s created for FIs to find newer, comprehensive, robust solutions that will help them mitigate the effects of fraud. The fragmented fraud landscape is encouraging leaders to select full-service platforms like DataVisor that can provide 360 degrees of defense at scale and in real time and also satisfy the key drivers of fraud detection investments like revenue growth, customer experience, and the presence of bigger, broader attacks.

DataVisor’s multi-layered approach to fraud detection checks all the boxes for financial institutions looking for comprehensive fraud detection. Using both supervised and unsupervised machine learning technologies, rapid data integration and quality checks, advanced feature engineering, powerful model development, validation capability, case management, and Knowledge Graph functionality, DataVisor enables proactive fraud prevention and detection. 

Want to see it in action? Watch DataVisor fight fraud. Get a free demo.