It is crucial that financial services industry take cyber-fraud seriously and stop pretending that siloed approaches to fraud prevention are still effective. Organizations can only hope to stop cyber-fraud by working together – both internally and externally.
There has never been a time when the world has been more interconnected. As businesses and individuals become increasingly connected, their finances unavoidably follow them online as well.
Without a doubt, technological advancements have brought unparalleled levels of reliability, convenience, and speed for the flow of money, as well as the creation of new and historic wealth. The move to online banking has increased the demand for digital transformation.
As a result, to ensure business continuity, financial institutions are implementing a variety of new technological solutions.
However, it is also necessary to acknowledge that technology has benefited cybercriminals, who are now using increasingly sophisticated techniques to commit fraud.
Teams in charge of cybersecurity and anti-fraud must collaborate more effectively
Many of the world’s major financial institutions have considered financial fraud and cybersecurity as different departments with distinct duties, responsibilities, and threats, for years.
Financial services institutions that employ a traditional approach for handling cyber-fraud usually have their information security teams handle the technical issues, while fraud teams focus on the customer, their accounts and how money will be retrieved. The two teams rarely collaborate, let alone communicate on a regular basis.
Criminals have discovered this vulnerability and are now combining approaches that would normally be handled by different departments. Criminals leverage AI to perfect fraudulent credit applications while also employing cybersecurity strategies to carry out large-scale fraud.
While this method may have served well in the past, there is now a better option. The financial community will benefit from a combined security approach in a variety of ways.
Internal anti-fraud and cyber teams require greater education about the issue. They must understand their opponents, which range from organized crime groups that utilize automated technologies to steal millions of dollars from accounts to small-time criminals who believe they are smarter than the system.
They must reassess their strategy once they have a firm understanding of the types of criminals and attacks they are dealing with. What contribution does each department make? Is there any duplication of effort that can be cut out? Where are the loopholes that are being exploited? Is it time for their departments to merge into a single macro department that can deal with all threats at once?
If financial institutions are to have a hope of preventing cyber-fraud, these are the first issues that must be answered.
Also Read: The State of Enterprise Security in 2022
Part of the thinking that cybersecurity and anti-fraud teams must bring to the table should include strategies to work with peers outside of their organization. One of the most typical traits of fraudsters is the use of the same identity across multiple banks. This is a flaw that can be readily closed by collaborating and communicating with other financial institutions, law enforcement and regulators.
Previously, concerns regarding confidentiality and privacy hindered any attempts at collaboration. However, the rise in cyber-crime and the amount of money lost is prompting banks and financial institutions to reconsider collaboration beyond their own walls. New technology, methods, and organizations are emerging to assist those who are ready to take the next step.