Cross Channel Fraud
With access to sensitive customer information and assets, the banking and financial services sector has traditionally been a target for fraudsters. The evolving fraud landscape, characterized by individual fraudsters turning into hacker syndicates, and their use of a variety of sophisticated tools to remain a step ahead of enterprise security measures, poses significant threats to banks. The widespread use of multi- channel banking has expanded the attack surface of banks and created fresh fraud prevention challenges for individual channels. As a result, banks are witnessing rising instances of fraud across products and channels, which are adversely impacting organizational credibility and reputation.Cross-channel fraud is a threat, and it underscores the need for banks to deploy robust defense mechanisms like automated detection systems, that monitor suspicious activities and initiate corrective actions.
Fraud landscape in the banking and financial services industry
The banking and financial services industry is grappling with an ever expanding fraud landscape ranging from card fraud, payment fraud, data breaches, and application fraud, to ATM skimming and targeted phishing schemes. In addition, the growing trend of cross-channel fraud has further complicated the landscape.
Cross-channel fraud involves fraudsters utilizing sophisticated tools to exploit the vulnerabilities of one channel to steal customer data, and using it in another channel to siphon funds from the associated account. With multi-channel banking paving the way for multiple access points, and competitive pressures forcing banks to introduce new products and services within crunched go-to-market timelines, installing adequate defense mechanisms takes a backseat, thus expanding the attack surface. Even as new offerings create fresh opportunities for fraudsters to exploit vulnerabilities, conventional fraud detection tools are insufficient to offer protection. Though banks have implemented cutting edge authentication mechanisms, fraudsters are acquiring confidential account data by targeting the customer – the weakest link in the information security chain – through a combination of technological innovation and social engineering. With fraudsters foraying into the customer environment, differentiating between fraudulent and genuine transactions has become a big challenge.
Banks are finding it increasingly difficult to detect adept fraudsters who, with the ability to move nimbly across channels and products, impersonate genuine customers. Also, they launch innovative schemes targeted at specific channels to defraud customers. The proliferation of access points has made channel-specific monitoring strategies inadequate, necessitating the implementation of cross-channel fraud prevention solutions. Such solutions should have account and customer level monitoring capabilities to ensure a holistic security management. With fraudsters constantly innovating new methods of attack to exploit vulnerabilities in the customer environment, bankseed to expand their defenses beyond the organizational periphery. In addition, banks need to continually adapt to technological advancements to keep up with fraudsters.
Due to advanced attacks by fraudsters, banks continue to fall prey, resulting in significant financial losses, considerable reputational damage, and loss of customer trust. Recurrent fraud cases could raise questions about the credibility of fraud management processes of banks. This in turn exposes an organization to negative media publicity, compromising its brand image and inviting increased regulatory scrutiny.
You may like to read a point of view document on "Combating cross channel fraud"
Views by Gagan Bhatia