All industries are undergoing a digital transformation, and Fintech is leading the way. The days of customers visiting physical branches of banks for every transaction and operational need are over. Today, online services through multi-channels like web, mobile, ATMs, POS machines, and smartwatches are provided by almost all banks and NBFCs. The financial industry is now connected globally which creates an opportunity for growth but unfortunately, it also increases the complexity of detecting fraud.
The same technology that banks and customers rely on is available to fraudsters and cybercriminals as well. In the past, thieves needed to counterfeit client IDs, but now a person’s password may be enough to steal money. Loyalty and conversion rate are therefore affected both in the digital and physical environment.
Fintech firms have therefore been forced to come up with solutions using advanced technologies like Artificial Intelligence (MI), Robotic Process Automation (RPA), and Machine Learning (ML) to tackle fraud management. These are some of the solutions:
Automated Bank Statement Analysers During KYC (Know Your Customer)
It is important to screen fraudsters well during onboarding to prevent them from exploiting the platform. Banks and NBFCs typically require bank statements from potential borrowers when onboarding them. Analyzing the bank statement in detail provides a lot of insight into the customer’s financial behaviour.
Using Multi-factor Authentication And Biometrics
Banks can no longer have a simple user ID and password as the authentication technique with the wide variety of banking channels like physical, telephonic, online, mobile, and ATM. Digital wallets eliminate the need to expose credit and debit cards to anyone. Digital payment systems can also use advanced biometrics that cannot be forged to authorise the transactions in addition to the regular authentication methods.
Advanced Transaction Monitoring And Instant Notifications
Banking institutions can use Fintech products based on AI and Machine Learning to trace customers’ transactional behaviour. The transaction is to be allowed only after additional authorisation from the customer, should any transaction seem abnormal.
Building Firewalls In Email And Text Servers
A common means fraudsters use to steal personal financial information is Phishing (using fraudulent communications such as emails and text messages). Using advanced firewall technology, fintechs can integrate email inboxes and text messaging systems. They scan through emails and alert the customers whenever they click on a link from the emails.
Leveraging Digital Footprint Data During Customer Screening
Enhanced technologies like data mining, analysis, and machine learning can be used for customer screening. They use the digital footprint data and compare it with a fraudster’s behaviour to arrive at a more accurate creditworthiness score.
Fraud detection and prevention is a continuous process. Just as fraudsters are continually coming up with ways to outwit financial products, the Fintech industry is also evolving with newer products using advanced technologies to prevent and detect fraud.
With technological innovation, financial products that use these technologies should also improve and become more efficient, allowing the financial industry to build a digital fortress that is safe and secure from fraudsters.