Fraud Is Rising in 2020: How Do We Get It Under Control?

Fraud and Financial Crime


Germaine Lang

Nov 19, 2020

“We have to realize that we’re not in a business-as-usual moment in the payments industry…” and so began a compelling discussion about payment innovation and financial crime among a group of heavy-hitting fraud and AML experts. The panel was moderated by American Banker’s contributing editor, Mike Sisk.

That quote was the start of Omri Kletter’s response to a question about upcoming changes in the payments landscape and how they’ll affect fraud. Kletter, the VP of Global Cyber Fraud and Risk Management at Bottomline, went on to say that the industry as a whole is going through enormous changes. One of those transformations—more transactions are being made faster and on digital platforms, forcing the economization of payments as new regulations are put in play.

Faster electronic funds come with their own unique vulnerabilities, and a shorter timeframe to detect and correct suspicious activity. Kletter stressed the importance of using machine learning and data to reduce the typical 8-minute investigation to 3 minutes, giving banks a better chance to stop a fraudulent transaction before it’s made in a faster world.

That need is more important than ever, according to Aite’s David Mattei, a panel member and Senior Analyst of Fraud and AML. Mattei revealed that when it comes to authorized pushed payments scams, over 90% of diverted funds sent through faster payment platforms are unrecoverable.

The conundrum is that as the speed of payments increases so do fraud concerns, but customers increasingly demand and expect that speed – making fraud prevention a priority in the market. Mattei also noted that in 3 months the pandemic increased the move to digitization, a move that would have taken 10 years ‘organically’ in a pre-COVID-19 world.

What’s spurring the acceleration? The clamor for contactless business transactions exploded with the advent of the coronavirus as employees moved to work from home models and could no longer process manual payments and approvals. Accelerating automation and digitization, Mattei suggested, is why banking investments in 2021 will trend towards technology.

Panel member Jeffrey Taylor, SVP, Treasury Management Commercial Fraud Forensics & Payments Strategy at Regions Bank, noted that during the pandemic fraudsters focused on email scams that targeted related topics, but he further warned that it’s important to realize that fraudsters are rapidly pivoting to exploit all available avenues. And with a rapidly changing payments landscape, keeping informed and prepared is imperative. Having a response plan is an essential component of protecting against rising threats.

When asked about how organizations can partner together to fight financial criminals. All three panelists stressed the importance of financial institutions collaborating with their partners and customers to thwart fraudsters.  Taylor explained, “The best approach to remediation is education and collaboration…creating a culture of awareness and education.” To illustrate, he pointed out that “the bad guys are collaborating on the dark web, so why shouldn’t we do the same?” He also pointed to the Cybersecurity and Infrastructure Security Agency (CISA) as a good source of educational toolkits.

It’s also important for banks and businesses to realize that they don’t need to do this alone. Fintechs are becoming trusted partners in the fight against crime. They serve as subject matter experts in areas that most organizations can’t afford to have dedicated, in-house resources, or where expanding resources in the face of threats is not always possible.

Collaboration among payments ecosystem players is critical. After all, the “competition” in today’s fight on financial crime isn’t a bank or a business or a fintech – it’s the fraudster looking to divert your customer’s funds and sensitive data.

Additional Resources

November 15-21, 2020 is International Fraud Awareness Week, check out this round-up of educational resources to keep you up-to-date and in-the-know: "International Fraud Awareness Week: Know the Threats"


For further insight into the topics impacting payments and banking industries, subscribe now and stay up-to-date on the latest tips, trends, and topics. You can also check out The Payments Podcast, where experts engage each other on the real world factors impacting the payments and banking.


Posted by

Germaine Lang

Germaine Lang is the Managing Editor of SmartPayments with a strong creative and technical writing background across many industries. She also works to engage customers and relate their experiences with vendor products and services, positioning them as innovative thought leaders.
Browse all posts
footer curve