Manual Approaches To Fraud Prevention
Are complex and manual approaches to fraud prevention still threatening the commercial viability of many companies?
I’m almost 6 months into my new role at LexisNexis® Risk Solutions and whilst my learning process is far from over, one of the things that I’ve enjoyed most in my new role is helping customers to overcome the often overlooked ‘fraud problems’ that they are impacted by.
I’ve noticed that many fraud and financial crime strategies are written in a manner which understandably focuses on just managing risk and financial losses. However, to maintain or grow their market share, and meet client demand, there are all too often secondary fraud problems that clients overlook that need to be incorporated if their fraud prevention strategy is going to be effective over the long-term.
Without a fraud strategy that aligns to their organisation’s broader commercial goals, market share and growth can suffer if the fraud controls deployed come at the expense of customer and partner expectations in terms of experience. This can also add obstacles to collaborative working across the organisations change and project teams.
Whilst the priority of a strategy will be to keep the organisation safe from risk, it’s businesses who put their own customers at the heart of their control framework who grow sustainably and benefit from great customer and partner feedback and testimonies.
Balancing threat with reality when it comes to fraud
With increased regulatory pressure alongside industry expectation for more efficient counter fraud controls at customer onboarding and through to ongoing monitoring of accounts, businesses all too often approach their fraud strategy with a level of technical complexity and an over reliance on manual controls to evidence adherence.
Businesses are constantly improving detection and prevention methods until bad actors change MO leading to further increased measures and controls. Whilst this will continue to bring fraud losses within an organisation’s appetite for risk, the often overlooked problem is the increased cost of these overly complex and manual controls in terms of the impact they have on customer experience from an operational demand perspective.
Customer expectation in the current climate
It’s true that customers expect a business to deploy counter fraud and financial crime measures to protect them. However, 99.9% of customers aren’t fraudsters or have any criminal intent, and so the risks need to be balanced against the likelihood of a customer’s request being problematic against this backdrop.
The reason why paying more attention to customer experience has become so important in respect of balancing fraud controls is because of the plethora of choice that now exists for customers to take their business elsewhere when it comes to financial services. There has never been a time where increased competition in the form of challenger banks and ‘fintech’s’ in the finance space or ‘InsureTech’s’ (in the insurance space), have been so prolific.
Each firm with a new brand offers all forms of the service tailored to ever more niche customer demographics. In addition to new market entrants, established brands have had to adapt their outlook in the fraud and financial crime sphere by introducing fraud guarantees and scam advice. As consumers we are even getting frustrated at the prospect of entering a 4-digit pin when we make our purchases. The customer experience and a business’s approach to fraud and financial crime have never been so closely related than in the current climate.
Creating a better balance between CX and appropriate fraud risk controls
With heightened expectations from regulators and industry bodies to apply more controls yet increased consumer demand in terms of seamless experiences, business may feel that they are stuck in between these two opposing forces.
This is why firms need to invest in technical measures which are easily controllable, harness the broadest set of data and make the most of automation opportunities. The LexisNexis® RiskNarrative™ platform is the market leading orchestration platform that brings together over 50 different fraud and financial crime risk data sources and enables the configuration of multiple customer journeys in a code free environment.
Fraud and financial crime risks at both onboarding, payments and event triggered monitoring can be addressed through both internal validation rules and external data sources, all configured within the same strategy through one API call.
These controls coupled with a fully customisable case management system mean the operational and strategic problems can be addressed through one platform with efficiencies also achieved through the ability to share data with peer groups within a consortium or third-party suppliers such as Cifas (Autofile).
The key takeaway from this is efficiency. Efficiency through simplified technology, simplified configuration and simplified customer experiences. There is no better opportunity to do this than by having all of your Fraud & Financial Crime technology on one orchestration platform.
Gary Billingham, Client Director. LexisNexis® Risk Solutions
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