Harness onboarding intelligence for a holistic fraud and risk approach

A version of this article first appeared in the July BAI Executive Report: Modernizing payment methods. Find more insight within the issue on topics including consumer payment preferences, FedNow and RTP, check fraud and more.

Fraudsters have become experts at navigating across industries with stolen data, the goal being to maximize their bounty and evade physical and digital roadblocks.

In a recent global fraud report, most financial institutions reported an increase in fraud attempts across all channels. Additionally, over half of executives see fraud attempts costing their organization $5,000 or more per attempt.

The elevated volume and cost of fraud highlight the increasing need for financial institutions to establish an effective strategy to quickly detect a wide range of risky transactions. The true challenge comes with managing risk without negatively impacting the onboarding process. By incorporating a holistic approach to identity verification, institutions can manage risk effectively while fostering trust with legitimate customers.

The true measure of every story

Trust is a powerful and fundamental aspect of creating safe and efficient digital consumer journeys in an era of heightened risk. Some 37% of consumers abandoned signing up for a new online account because the process was untrustworthy, according to some measures.

A deeper understanding of consumer identity gives institutions a complete view of the potential risk, allowing them to confidently onboard trusted identities while applying step-up authentication to higher-risk applicants. Getting this delicate balance right is critical since as necessary as it is to establish trust, the more tests used to validate consumers during onboarding, the greater the inconvenience. An automated risk-based approach to identity verification powered by enhanced data sources is essential for adding extra checks as needed and allowing financial institutions to put trustworthy users in the fast lane.

Unlock high-speed velocity monitors

Implementing real-time velocity alerts is a critical first step in detecting and stopping suspicious activities. With accurate alerts, institutions can gain visibility into fraud patterns and monitor high-velocity attempts. They can then set limit-specific attributes associated with known frauds, such as synthetic identity fraud (SIF).

Real-time velocity alerts are designed to monitor specific data elements that businesses can determine. These alerts track the rate of occurrence or repetition of these elements within a given period. By pairing internal intelligence with expert guidance from fraud experts, institutions can effectively monitor potentially abnormal behavior.

A robust verification strategy can help financial services providers to manage risk without introducing unnecessary friction. Accomplishing both is increasingly difficult yet remains crucial to conducting business in the digital realm. By correctly implementing the right tools, institutions can achieve a high degree of trust.

Track risky transactions across networks

While pairing a velocity tool with internal intelligence can create an effective approach to managing risk, institutions can elevate their mitigation strategy by going a step further.

Fraud prevention teams typically focus on historical data from within their business. This makes sense since it’s what they know. But it is also limiting. Institutions are naturally siloed from fraud trends that may start in one industry before potentially moving into their sector.

Criminals exhibit a high level of ingenuity, leveraging artificial intelligence (AI) to perfect fraudulent activities. Collaboration between fraud prevention teams across different industries is more crucial than ever.

Combining real-time alerts with additional fraud tools like human-supervised AI and advanced biometrics allows for a more accurate picture of your customers. A layered approach can empower institutions to fight back against trending SIF, protect against identity theft and minimize other fraud threats.

Cross-industry intelligence amplifies real-time fraud intelligence between companies and industries. With key insights into fraud threats trending in other industries, institutions strengthen their fraud management system while decreasing the risk of fraud and the costs associated with managing it. Real-time, cross-industry intelligence empowers organizations to stay ahead of shifting fraud tactics and improve decisioning accuracy.

A holistic approach to risk management

Institutions need deeper onboarding intelligence, considering the risk posed by the volume and cost of fraud. A fraud prevention strategy powered by velocity alerts and cross-industry intelligence are powerful tools on their own. However, their true potential comes into play when implemented together as part of a layered identity verification strategy.

Ultimately, institutions can tailor consumer journeys with a holistic platform based on their unique risk tolerance. An advanced set of solutions enables institutions to make accurate decisions and rapidly identify trusted consumers while adding more steps only when necessary to ensure trust.

Staying safe in the financial space means effectively managing risk during onboarding. Institutions can rely on an extensive identity network to monitor repeat instances of identity data and high-risk transactions and track suspicious trends and activity. A layered approach to identity verification empowers institutions to fight back against the risk of fraud and create trusting and inclusive digital journeys.

Joel Sequeira is Director of Product at IDology, a GBG company.