Say ‘Yes’ to Good Customers and ‘No’ to Digital Fraud––Why a Holistic Approach is Needed

The shift to digital banking has created new strategies and priorities for banks. First and foremost among them is allowing honest customer transactions to clear without fail while closing the gap on digital fraud.

Recent research has found that banking fraud was up 159% in Q1 of 2021, with online banking accounting for 93% of all fraud attempts. The manners in which fraud is carried out have multiplied, and banks must find ways to protect themselves and their customers from every angle. 

In a recent American Banker webinar, sponsored by DataVisor, we shared more insights into the banking fraud landscape and how banks can support their good customers while shutting out digital fraud.

What is a Top Challenge Banks Face When Fighting Digital Fraud?

Traditionally, banks have taken a reactionary approach to managing fraud; they don’t always know a bad action has been taken until after the fact, at which point they retrace the steps and seek resolution. However, the proliferation of digital fraud in banking makes it hard to keep pace with this method. A better approach is to stop fraud at the gate, allowing banks to save time and mitigate costs.

DataVisor’s Yinglian Xie noted that holistic fraud detection can fill the gaps. Assessing customers on a continuous basis, not just during a single transaction, can help to identify patterns and behaviors that might indicate fraud. Having real-time insights into holistic customer data allows banks to take quick action with high accuracy.

Why Does a Holistic Approach Matter in Modern Banking?

In banking fraud detection, “holistic” refers to looking beyond single transactions. In the past, banks would collect every attribute possible on a single transaction and use these attributes to make decisions. But there are only limited data available at the transaction level, and many times, transaction data can appear legitimate.

A holistic approach works differently in that it provides a continuous snapshot of a customer. You can look beyond transactions to see when accounts are created, events leading to transactions, and other key details. This helps to discern between legitimate transactions and fraudulent events (e.g., account takeovers), allowing for better decision-making.\

What Does the Ideal Fraud Management Detection System Look Like in Banking?

The siloed activity of traditional fraud detection systems isn’t enough in modern banking. The shift to digital has increased the expectations of banking customers for real-time transactions, and bank fraud systems must be able to deliver. 

Xie shared that a single fraud management platform should be able to collect, enrich, and analyze data from a variety of sources — including all channels a customer uses for banking. This way, no matter what new product or capabilities a bank offers in the future, the platform can accommodate those new features without losing any functionality or data from previous features. It continues to build on the customer lifecycle from a data perspective while enabling banks to make intelligent decisions from the data.

DataVisor exemplifies the ideal fraud management system in banking by providing holistic, real-time insights that enable data-driven decision-making, high accuracy, and low false positives. 

Hear the full conversation on the DataVisor/American Banker webinar: Say ‘Yes’ to Good Customers and ‘No’ to Digital Fraud.