The thing about fraud is that you don’t want to have to calculate the ROI of fraud until it’s too late, because the flip side is dangerous. Unfortunately, the prevailing thinking at banks and other businesses is that they don’t have the resources to invest in fraud prevention unless they’re under attack.
Garrett Laird, director of product management at Amount, a digital origination and decisioning SaaS platform that helps consumers and small businesses open deposit accounts and originate loans, told PYMNTS that many financial institutions (FIs) don’t rethink their fraud prevention measures until it’s too late.
“You may not realize it yet, but they’re going to hit you,” Laird said, adding, “Scammers are nasty people. They like to hit on holidays, weekends, and at 2 a.m.”
This conversation is part of our “What’s Next in Payments” series, which focuses on protecting the perimeter of various organizations from cyber attacks and hacks — keeping fraudsters out, while letting good customers in and enabling them to transact with ease and speed.
Working with banks and credit unions to help them develop credit products digitally means that decisioning, pricing, fraud and validation all have to be considered simultaneously and in real time, Laird said. For banks, when new applications come in and someone opens a new deposit account or applies for a loan or credit card, the impacts can be severe if a fraudster gets through.
He said a single account could create a “gap” or “loophole” that a wider range of criminals could exploit, and fraudsters are notorious for looking for “weak spots” in banks, so one application can give way to a wave of hundreds of others all trying to provide an entry point for fraud and infiltration.
“We’ve done direct lending ourselves,” he said of the platform’s capabilities. “We’ve built the technology that we used and are confident in offering it to other financial institutions to help them launch new products.”
Technology-enabled onboarding
According to Laird, an onboarding experience that leverages technology powered by artificial intelligence (AI) and machine learning can not only enhance security, but also foster positive customer reactions and create lasting, legitimate relationships.
“Keeping your customers happy leads to better conversions,” Laird said, because otherwise they’ll lose those same potential customers to financial institutions that offer a better user experience.
He noted that there are multiple data sources that can be used to gather information about emails, passwords, linked bank accounts, uploaded documents, etc. to verify identity.
“There’s a waterfall that we put applicants through,” he said. “Let’s say we discover a fraud group. They’re very good at forging documents, and they’re doing some [of an FI’s] “We can put an extra layer of friction in front of them,” he said, “escalate them to a manual review queue so our fraud team can ‘watch’ how fraud groups are evolving… and keep them from getting in through the front door in the first place.” He said AI can help third-party fraud models to detect fraudulent claims, becoming another tool in the (rules-driven) fraud prevention toolbox.
“We’ve been proactive in putting the right data and processes in place to make decisions in a smart way,” he said, adding, “It’s not just about getting rid of the ‘bad’ things, it’s about getting the ‘good’ things in and making it as painless as possible for them.”
