The innovation and technology are taking the world to another dimension, providing various new opportunities to the financial institutes including banks and credit card unions. Moving towards the era of digitization, the financial services, and products in the ecosystem are looking forward to improved customer experience and convenience for the customers. The fintech industry has already set the grounds in the digital economy.
The increasing trend of fintech companies in the market is grabbing the undivided attention of the cybercriminals. The new pathways to access financial information through digital platforms are opening new doors of possibility for perpetrators to implement their advanced fraud strategies to exploit the consumer accounts and information, harming the entire business. According to the global Identity and Fraud Report 2019, 55% of the businesses claimed an increase in fraud-related losses – particularly account takeover attacks and account opening through fake identities – that too over the past year.
Moving into the fourth industrial revolution with all the advancements and innovative services that a fintech industry is providing, they must stay ahead of the cybercriminals and fraudsters to ensure the enhanced customer experience. The fintech companies need to position themselves in this ever-changing fraud environment to get a long-term advantage in the finance industry.
The Response to Dynamic Fraud Threat
With the increased fraud ratio, the businesses are becoming proactive in investing in technology and security to keep the fraudsters at bay. However, as per the global identity fraud report, the losses from identity fraud are still on the rise and will continue to grow. The reason is the lack of proper understanding of the dynamic fraud threats and how they impact the businesses. Increasing the security budget and investing in the technology isn’t enough to combat fraud; instead, the businesses need to look at the problems holistically and then take the steps accordingly. Without the extensive knowledge of emerging fraud trends and the vulnerabilities that lead to frauds, the organizations can’t come up with an effective defense mechanism.
The Competitive Edge of Fintech over Traditional Financial Institutes
Over the past few years, there has been a relative increase in data breaches no matter what the industry is. The records exploited in the breach means that all the personally identifiable information including name, address, social security number, even credit card numbers, and account information is compromised. With our lives revolving around the digital sphere, we are left vulnerable to fraudsters and cybercriminals since they can use our information for any illegal purpose. That’s the reason cybercriminals are always looking out for loopholes in the system and organization so that they can exploit the customer information.
Fintech, as the term describes, is the combination of finance and technology that is all set to reshape the future of the financial industry. Due to its customer-oriented approach and agility fintech industry has a great advantage over the traditional banking industry. Organizations need to be proactive in adopting new technologies to fight emerging frauds. Not to forget that in all this adoption of strategies, the customer experience must not be compromised. The convenience and security are combined together to promote the “secure growth” of the business.
Building the Consumers Trust – So what should be the next step?
The best way to build trust among customers is by protecting their data and providing a seamless and enjoyable experience. The traditional methodologies are no longer effective. Instead, there is a need for a multi-layered approach for achieving the security milestone. Implementing a single solution or technology can never guarantee a safe and fraud-free environment however incorporating multiple strategies can help the fintech industry (AMLD5) to fight digital fraud and provide a secure marketplace to consumers.
The advanced technology, like artificial intelligence and machine learning, is being used by the authentication and verification service providers fro improved security and customer experience. The biometrics, identity verification, and digital KYC verification can now be integrated with the fintechs to efficiently verify and authenticate the customers. Customers are always looking for organizations that can ensure their security and provide frictionless services. Implementing real-time verification solutions, with passive authentication capabilities can hinder the presence of fraudsters and cybercriminals from intervening in the organization and disrupting the operations.