Application Fraud Challenges and Technology Solutions for Financial Institutions
As we look at new account opening, there are a number of fraud challenges that banks across the globe are facing.
First, we have the global migration to chip cards that we’ve been going through, country by country, for the past multiple decades. As we take billions of dollars of counterfeit fraud out of the ecosystem, the organized crime rings are not going to take a hit to their profit line. They are not going to go and get a day job. They are going to shift their tactics and one of the key things that they shift to is application fraud.
This shift to application fraud is being fueled by 14.7 billion data records that have been breached since 2013. Organized crime rings therefore have ample fodder for third-party fraud and synthetic identity fraud. We're seeing the combination of third-party and synthetic ideneity fraud, plus automation, being brought to bear, and we're seeing a lot of attacks on new account onboarding as the point of entry.
At the same time, we see financial institutions looking to make the onboarding process easier and more frictionless, so that they don't have so much attrition. It's a very tough balancing act to catch more fraud while at the same time removing friction.
One of the interesting findings in the last survey we undertook was that a significant proportion of the respondents are planning to either add additional vendors or replace legacy vendors in their new account opening process. That was a significant jump from when we did the survey two years ago.
The types of technologies we're seeing deployed are risk analytics, to better analyze the customer's static PII data and digital identity data. This is so important given the fact that so much of our identity is out there for sale in the dark web. We are also seeing more and more banks looking to behavioral biometrics as a detection mechanism for new account onboarding. Device recognition and device reputation are important inputs.
You can't rest on any one type of analysis; you must have a layered approach that can really paint the whole picture of the customer’s behavior.