Fighting Fraud in a Digital Financial Ecosystem – Interview with HID Global
HIDDEN’s Global Security and Technology Evangelist Edwardcher Montreal talks about managing risk in an online environment and finding the right balance to deliver a better user experience
As we move towards a digital, real-time, cashless society, what are the impacts of the digitization of payments on customer behavior and financial crime?
Digitization has brought a lot of new opportunities to the ecosystem. He introduced new players such as neobanks into the mix. It has also prompted traditional banks to innovate in their services while giving businesses the opportunity to deliver solutions that comply with banking regulations in their respective markets.
Digitization has also widened the landscape of financial crime threats. It has provided organized crime and cybercriminals with increased opportunities to prey on every digital consumer. There is an increased risk of identity theft and online fraud in the digital space. If not managed properly, these online risks can erode trust in the banking relationship, which can prevent a smoother transition to digitalization, especially in emerging markets.
Today’s banking community must focus on delivering a seamless experience while effectively securing digital channels to build trust. This is the key to successful adoption in the digital banking age.
How can technology help businesses detect and protect their users from these risks?
Preparation, automation and scalability are essential.
Frankly speaking, financial institutions (FIs) should always assume they are under attack and use technology proactively to prepare.
A key part of a company’s risk management strategy is optimizing fraud prevention, automating online threat detection, and the ability to continuously validate user identities.
Finally, technology must be scalable to help businesses become more dynamic. The technology is there to enable them to grow / partition / isolate and adapt to any regulatory requirements and threats that consumers, banks and fintech providers might face.
The HID Global Risk Management solution is a good example of this technology that detects zero-day malware and prevents identity theft by using behavioral biometrics to constantly identify and authenticate.
Finding the right balance between detecting threats and preventing fraud, complying with regulators and delivering the best UX is always difficult, yet some financial institutions do. What is the recipe for their success?
Balancing usability and security begins with identifying the key internal stakeholders whose operations impact customers.
They can be part of the technical, commercial, security or legal team, an important aspect is that they should all be aligned with the Chief Experience Officer (CXO).
Second, remember that gaining trust is the end goal. The outcome depends on the measure of the success of stakeholders within the confines of their organization and jurisdictions.
How to optimize and deploy on a large scale the monitoring of multiple channels to identify anomalies?
When trying to establish user experience (UX) and strike the right balance between usability and security, the customer experience might not be attributed to a specific channel. For example, when consumers make payments online or just try to apply for a new phone or cell phone account, it usually requires multiple points of contact from the consumer. These entry points that are part of the consumer experience can also add and introduce certain risks.
Having a way to correlate multi-channel consumer behaviors significantly helps to better identify and analyze fraud by looking at all available cross-channel data. This is a very important factor in ensuring that consumers can transact securely throughout their end-to-end journey.
What are the upcoming trends that every financial institution should know about?
Automating – more and more companies and financial ecosystems are adopting technologies such as machine learning which allow them to automate certain decision-making processes ranging from fraud prevention to business processes around financial payments, etc. .
Money is no longer king (COVID-19 taught us that) – digital consumers who traditionally pay their transactions to typical monetary accounts will also begin to be more open to digital forms of payment. Yet this trend is not about finding the next Bitcoin, but rather about finding how consumers can safely store and protect their digital assets from bad actors.
Expand the use and number of digital channels – Consumers adopt not only mobile phone, but also different smart home / IoT devices to conduct their daily business. For example, in the case of online banking, many banks have adopted chatbots to add or re-establish customer channels that bring different user experiences.
Cloud-based identity – more and more service providers, including banks, will rely on trusted cloud-based identities. We see a fleet of open standards including FIDO2, Open ID and federated identity technologies that help identify consumers online by providing stronger consumer authentication, combined with risk management and behavioral biometrics.
Regulations – Open Banking regulations establish ownership of data with customers. This is an opportunity for more players in this ecosystem to participate. The adoption rate will be staggered and influenced by different regulatory regimes around the world.
This editorial first appeared in our Financial Crime and Fraud Report 2021 – How to Fight Fraud and Master KYC, Onboarding & Digital ID, which provides a comprehensive overview of the key trends driving growth in prevention fraud, identity management, digital integration and KYC, transaction monitoring, financial crime compliance, regtech, etc.
About Edwardcher Monreal
Edwardcher, Security and Technology Evangelist – HID Global, IAM Consumer Authentication Solutions, is a highly skilled digital security expert and passionate technologist with an instinctive passion for finding pragmatic technologies to solve practical problems. He has extensive experience in software development and providing solutions to the military, telecommunications, banks, businesses and governments.
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