New ways financial institutions can detect fraud faster

Financial institutions need to balance creating a fast, frictionless onboarding experience for customers with super-robust compliance processes. Thinking about a fuller range of checks in the path to onboarding can help.

Posted by: 
Alexis Fox-Mills
Aug 19, 2020

In an age when the customer is king and there is an abundance of choice in the market, digital retail and ecommerce experiences need to be fast, responsive and frictionless. It’s what customers expect. This is equally relevant to customers applying for retail financial products online.

However, financial institutions at the other end of the transaction - those offering the product or service - have key compliance obligations to meet. They need to be satisfied they aren’t, for example, enabling money laundering or welcoming fraudulent customers into their fold.

This means financial services companies offering retail solutions have two potentially competing objectives when processing new applications:

  • Creating a seamless due diligence experience for new customers applying for a product
  • Carrying out rigorous checks to manage risk and thwart fraud

Fraud detection

Fraud detection is important to all financial services businesses, and device-based fraud detection can offer a huge advantage to retail businesses.

Each time a device is used to apply for a product, the ID of the device can be checked against a watchlist to make sure it hasn’t been registered with any type of fraudulent activity.  

Individuals don’t use their devices in isolation either, they have profiles and these can be present on numerous devices. So, if an application is made on a laptop that’s linked to a profile on a smartphone previously involved in fraud, this connection can be established and flagged.

Manage cost. Maintain control.

Verifying individual IDs electronically can be an expensive process. Running a device fraud detection check is relatively inexpensive by comparison.

Financial services companies can therefore save money because, before a due diligence process even begins, a potential fraudster can be caught at the first point of contact. This is via the device they are using to attempt to make the application. Device checks happen instantly, without holding up the onboarding flow, however if the device being used is suspect, the application can be prevented from continuing because a flag is raised to compliance teams.

If a flag is raised, highlighting someone is making an application on a device previously associated with fraudulent activity, this gives the financial institution control. They can choose what to do next.

Depending on risk appetite, they can block or decline the application or they can choose to take a deeper look at the individual, accepting that the device could, for instance, be second hand. If this is the case, the customer can continue with their application, unaware there has even been a bump in the road.

Powerful due diligence

Having all due diligence checks managed through a single platform can create a powerful solution for retail financial services businesses. The right combination of checks can ensure a smooth and seamless onboarding journey that is also stringent in meeting compliance criteria.

Device-based fraud detection is a check to consider, as it’s fast, comprehensive and unobtrusive -  it can be completed before the applicant has even finished entering their name into an online form.  

For those making genuine applications this ensures the process and experience is frictionless. For those perpetrating fraud, the risk is flagged instantly and the financial institution can decide what to do next.

Get in touch

To talk about the full range of checks that could work for your business and its budget, get in touch.

We can run through your objectives for customer onboarding journeys; the type of audience you serve; the regulations you need to meet and devise the right solution that fights fraudsters and secures great new customers.

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