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FRAUD PROTECTION

Chris ScheelsNovember 19, 2021

Key Takeaways for International Fraud Awareness Week

Scam attempts are on the rise, especially as the pandemic has spurred a rise in online banking. But financial institutions don’t need to choose between stepping up their fraud protection game and ensuring a superior customer experience.

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This week marks International Fraud Awareness Week, a global effort spearheaded by the Association of Certified Fraud Examiners to minimize the impact of fraud by promoting anti-fraud awareness and education.

Companies lose an estimated 5% of their annual revenue to fraud, and last year, scam attempts rose by 33%.As we head into the flurry of Black Friday sales and holiday shopping, it’s certainly a good time to practice fraud mindfulness.

Appgate’s 2021 Faces of Fraud Report, released in conjunction with Information Security Media Group (ISMG), surveyed 120 financial institution security professionals regarding their fraud challenges, gaps and future strategies. It found that while 60% of respondents grade themselves as “above average” or “superior” when it comes to identifying and mitigating fraud, 55% say their customers and/or partners lack sufficient awareness to protect themselves from socially engineered fraud schemes.

This challenge has only become more pronounced during the pandemic, as financial institutions and their customers have embraced online/mobile banking in unprecedented numbers. More than two-thirds of survey respondents (68%) say online (web or mobile) banking is their customers’ primary channel for conducting business with their organizations. This shift away from brick-and-mortar interactions is most likely permanent.

The online channel is, of course, the most impacted by fraud. Institutions identified account takeover (45%), phishing (42%) and business email compromise (36%) as the top three most concerning fraud schemes.

While financial institutions are increasingly embracing anti-fraud controls in customer-facing solutions, the customer experience still reigns king … more than twice the number of survey respondents rated customer experience as their organization’s top priority over fraud prevention.

Institutions are hesitant to add anti-fraud controls that would inconvenience customers in any way. But the reality is that today’s accelerated volume of attacks is no match for traditional controls, and organizations can’t afford to not take an aggressive stance to combat them.

“It’s interesting that [financial institutions] feel they’re doing a better job, yet even the environment itself is almost outpacing our ability to keep up,” said Bryan Jardine, Appgate’s Director of Product Management.

While the challenge is significant, there are several strategies organizations can employ to reduce fraud risk while maintaining a seamless customer experience:

  • Move toward Zero Trust: we must assume compromise, and at the same time, we can’t do business without third-party applications and services. Rather than evaluating each individual third-party app, organizations should build a holistic, standardized strategy around how applications are managed and protected from a Zero Trust perspective
  • Explore behavioral biometrics: organizations need to understand their customer segmentation and tailor the experience to the user by implementing the types of controls that are most beneficial for them. Behavioral biometrics, artificial intelligence and machine learning are the path forward for authentication – and will make for a more seamless user experience across interaction channels
  • Embrace orchestration as the future of fraud management: data fusion tools and environments will help organizations automate fraud management processes across customer segments and solutions, giving them the information they need to make decisions based on actual intelligence
  • Seek support: institutions should find a partner or service provider that can help them understand where they stand in relation to their peers and what they truly need to combat fraud in their environment

Financial institutions don’t need to go it alone as they look to balance fraud protection with a superior customer experience. Learn how Appgate provides a layered protection strategy across the multi-step fraud lifecycle, and check out the full findings of the 2021 Faces of Fraud report.

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