Why every bank needs a proven fraud protection solution: a tale of two banks

Fraud and Financial Crime


Germaine Lang

Jan 15, 2021

As consumers are exposed to more sophisticated technology in their personal lives and interactions, tech innovation becomes the standard by which they evaluate all aspects of their lives. That includes how they begin to think as business leaders and owners. Tech giants such as Amazon, Google, and PayPal all reinforce the immediate gratification of next day shipping, information at your fingertips, and secure instant fund transfers…it’s no surprise that, as business people, we expect the same types of services and fraud protection solutions from the banks and companies that ours do business with. That includes our commercial banking partners.

Smart financial institutions began the ‘digital transformation’ trail-blazing some time ago to meet customer desire for flexible online account opening and onboarding options, faster, and real-time payment capability, payments and cash management services with access from any device of their choice. For those that hadn’t begun that journey for business customers, 2020 proved the year when needs became necessity.

And if meeting those needs didn’t add enough pressure to banks fighting to remain competitive, the very nature of those technological innovations comes with its own host of problems including increased exposure to the bad actors of fraud and financial crime who are waiting in the wings to exploit those digital channels.

So why is crime of such concern? The very technology that’s enabling consumers and businesses is empowering them as well. It empowers them to perpetrate “crime as a service” syndicates.  Just as digital technology allows banks and financial institutions to provide customers faster transactions across multiple platforms, it also allows criminals to deploy multiple attacks to multiple targets with just a push of a button. Business Email Compromise (BEC) is a perfect example of a tactic criminals use to send blasts of false emails directing employees to misdirect funds or change banking account information. Even with a low success rate, multi-pronged attacks like these can be very lucrative.

It may seem like it’s all bad news when it comes to fighting financial crime. But there are ways to protect your organization against BEC and other types of attacks while preventing the diversion of funds into the accounts of bad actors. In fact, according to the 2020 Treasury Fraud and Controls Survey, organizations with payment fraud detection solutions that incorporate interdiction technologies see 75% fewer losses in certain types of fraud.

The value of fraud protection solutions

The importance and effectiveness of a payments fraud prevention solution is further illustrated by the following real-world examples of customers who are now protecting their financial institutions and customers from attacks.

Although these featured banks had very different profiles, the requirements for a fraud prevention solution were the same:

• Proactively detect and prevent payment fraud attacks
• Employ rules-based detection and behavioral profiling
• Generate real-time alerts for suspicious events

Community bank example

In the ongoing fight against fraud, an award-winning community bank regularly evaluates its fraud prevention measures to ensure it has the strongest defenses in place to protect customers and their funds from multi-faceted attacks.

This particular community bank, with 150 branches, partnered with a fintech to digitally transform their product and services offerings and simultaneously ensure the latest fraud prevention measures are deployed to deter cyber-criminals.

Their digital transformation journey began with adoption of a customer-centric digital banking and payments cloud solution that provides cash management capabilities, allows for payments innovation, and enhances customer relationships with rich insights derived from data analytics. The out-of-the-box solution included a fraud and risk management enterprise solution tailored for financial institutions.

The bank understood the importance of risk scoring payments. To that end, it worked with partners to make the integration seamless, with the ability to risk score Fedwire payments processed through the bank’s 3rd party Payment Hub. The bank also needed to risk score and identify anomalies in ACH files that are processed independent of the e-banking solution (“offline” ACH).

One major advantage of a multi-faceted, cloud-based solution is that as an out-of-the-box solution, it does not require customization or tailoring. This minimizes the effort and time to go live. It’s also cost-effective. Instead of installing and deploying, the solution can be activated and onboarded which lowers the total cost of ownership. The bank enjoyed another major advantage, the ability to risk score based on a “bigger picture” of payments arriving from multiple additional online and offline channels. This capability helps detect sophisticated fraud schemes that can span multiple channels.

Global commercial bank example

In this second example, the customer is a global commercial bank with a banking network that spans 6 continents. In addition to the objectives above, the bank was also looking to consolidate different fraud solutions into one enterprise fraud management solution. This consolidation would give the bank a holistic view of all payments’ activity across all locations –an exceptionally high volume of more than 1 million daily transactions. This allows for a more accurate and efficient risk scoring process to detect and block anomalous activity before funds could be diverted.

Like the community bank previously referenced, this global commercial bank chose to partner with a fintech for its online banking needs, and to protect its multiple channels (ACH, Bacs, Wires, check and more) in the U.S. and across the globe. Unlike the community bank, it started with hosting the multi-faceted solution on its private cloud.

At every phase of the project, the bank and its partner held design sessions to clarify objectives and tailor the solution to meet those objectives. Once the scope of the project was outlined, the deployment of features was prioritized to maximize value and efficiency. Training was also provided to empower the end-user teams to be self-sufficient once the solution was live.

With the new solution in place, the bank is now able to monitor the majority of payment activity and transactions throughout the enterprise. The behavior of customers, employees and other users is tracked and profiled by an analytics engine that correlates the activities between Bacs, Wire and payments. When suspicious activity is detected, real-time alerts are generated and displayed in an investigation center, which provides a centralized dashboard for easier investigation.

For further insight into the 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 industries.


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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.
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