How Can FIs Improve Fraud Mitigation? Start By Asking Better Questions

By Karen Buell, SVP Operations

Death, taxes and fraud following the flow of money. FIs may not be able to do much about the two former inevitabilities of life, but there is a great deal they can do about the latter. As we often say, prevention is the best form of recovery, especially in the era of real-time payments, where money is gone the instant a payment is made. 

But prevention is easier said than done. FIs must balance the competing priorities of delivering a seamless customer experience and expanding their payment methods and channels to win new customers and drive new revenues. If your fraud mitigation strategy is too restrictive or adds friction to the payments experience, there’s a good chance that customers will become frustrated and leave — no matter how safe they are. 

So how can FIs bring added security to customers that evolves with the latest trends, maintains a positive UX and meets the latest compliance regulations? It starts by asking these questions of your internal teams and your fraud mitigation partners. 

How flexible, dynamic and configurable is your fraud mitigation solution?

If there’s one word that defines today’s payments world, it might just be “unprecedented.” From the pace of change to the number of ways to pay, FIs have never faced so many challenges or been presented with more opportunities in how they serve their customers. But in a world where change is constant and hyperconnectivity is the norm, agility, flexibility, scalability, and configurability are now (or should be) table stakes when it comes to fraud mitigation. 

FIs must deploy fraud management that fits their business needs and customer base. Rules-based systems allow FIs to maintain greater control of their consumer experience by allowing them to set unique parameters for flagging fraud. These can involve everything from transaction limits to atypical use behavior. If a fraud prevention solution is too rigid or cumbersome to change, it will inevitably fall behind and place customers at risk.

At Payveris, a key part of our fraud mitigation solution is our segmentation capability. This allows FIs to create unique parameters for everything from bill payments to P2P and A2A payments, based around the specific customer. A small business with many monthly financial obligations will have drastically different needs than an everyday consumer with a modest account. With segmentation, the FI can mitigate their risk by tailoring the transaction limits based upon the account holder’s financial information. 

How multilayered is your fraud mitigation solution?

When it comes to fraud mitigation, there is no silver bullet or one-size-fits-all solution. The ideal solution brings together several layers of prevention that each work in harmony to make any payment or user interaction both seamless and secure. 

For instance, let’s say that every month you use your laptop to log into your bank account to make your utility payment. Your monthly payment can range from $150-$250 and you always use your checking account to pay. A multilayered solution will recognize your login information and connect it to your device, account, payment methods and payment amount. 

Should everything fall within typical parameters, the payment will be processed and approved. But, let’s say that this payment is suddenly made through a mobile device, is for $500 instead of $150, or is made through a credit card not connected to your account. The system will recognize and potentially flag any of these behaviors, depending on the fraud parameters set by the FI. This is also true of P2P payments, where similar anomalies can trip fraud alerts. A multilayered solution recognizes these many data points, quickly sending notifications when something isn’t right.

And though technology is great, combining it with human expertise gives FIs the best chance to stop as much fraud as possible. Dedicated risk experts are an essential piece of any multilayered fraud strategy. While tools such as machine learning can identify risks and emerging threats, FIs should prioritize this particular piece of the fraud mitigation puzzle as a strategic imperative, on par with more traditional imperatives like increasing deposits or loans. 

How can you optimize the use of data?

Simply put, data is the lifeblood of any fraud mitigation solution. But the ability to capture data is one thing, making it usable is another — to say nothing of incorporating external data to optimize performance. 

The ideal fraud mitigation solution goes beyond simply collecting payments data by making this data actionable. Timely reporting is key, as is the ability to recognize emerging threats as they’re happening. Consider a situation where payments originate from a geographical location often associated with fraud or a user suddenly begins sending P2P payments at their maximum transaction limit. These are telltale signs that something is amiss, and yet, if the platform is unable to recognize these patterns or surface them in time, there’s little hope of preventing fraud. 

Of course, this is just a small sampling of questions to ask when considering a fraud partner or solution. Nobody knows your business or your customers better than you, so it’s important that any conversation revolves around your specific needs. The ideal fraud mitigation partner is one that will have answers to these questions, as well as a solution that’s truly tailored for your organization. 

Ready to see how Payveris can help you answer your fraud challenges? Let’s talk! Request some time to speak with a member of our team.

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