As fraudsters grow increasingly more sophisticated, reports of cybersecurity attacks and bank fraud are on the rise. To protect vulnerable customer data and bank assets, financial institutions have developed a variety of techniques for monitoring fraudulent money movement within online banking. But, the days of pouring through manual reports for anomalous customer behaviors are falling to the wayside, making way for more advanced anomaly detection techniques, like automated fraud detection software.
With a litany of online banking fraud detection technologies emerging, CSI sat down with Business Banking Product Manager Jonathan Ferguson to get an expert’s opinion on the latest automated bank fraud detection software on the market.
- What is fraud anomaly detection software and what does it monitor?
When integrated with your digital banking services, fraud anomaly detection software provides reporting to banks on a day-to-day basis, highlighting any abnormal customer behaviors by comparing all current activities against historical activities. Depending on the type of fraud anomaly detection software your bank uses, you may even have the ability to challenge customers exhibiting anomalous behavior (in real-time) through the use of security questions, token authentication or out-of-band authentication.
Given the variety of fraud detection systems on the market, it’s important to select a product that monitors a variety of areas of your Internet banking services: ACH, wires, transfers (internal and external), loan payments, loan advances and user behavior.
- How does fraud anomaly detection software help prevent fraudulent money movement and bank fraud?
Fraud anomaly detection software that offers real-time authentication can stop digital banking fraud in its tracks by:
- Updating banks and their customers with real-time alerts
- Offering session-level reporting for any high-risk digital banking customers, so banks can make an informed decision (in real-time) on whether or not true fraud is occurring
For example, if the system determines a customer to be high risk, the system will require additional authentication from the customer, like answering a security question, completing out-of-band authentication or using token authentication. Should the customer fail the real-time authentication challenge, he or she will be locked out of digital banking for a bank-specified amount of time.
- What are the benefits of using automated software to detect anomalous behavior within online banking vs. manual reporting?
Traditionally, community banks look for fraud manually. This is a time-consuming process, which leaves a large margin for human error. That means there’s a huge risk for potential fraudulent activity slipping through the cracks.
By deploying an automated fraud anomaly detection program, banks experience significant advantages:
- Real-time monitoring of all money movement within digital banking for both business and consumer customers
- Behavioral- and transaction-based monitoring
- Fully customizable settings on a bank-wide level and on a per-customer basis
- Real-time anomaly reporting and alerts
- Real-time authentication challenges
- How does fraud anomaly detection software help banks meet FFIEC requirements?
FFIEC guidance requires all banks offering online banking solutions (no matter how big or small the bank) to have a process in place to monitor for anomalies. Most banks do this by reading through numerous reports manually. But, as regulatory pressures increase, many banks have found manual processes to be viewed as inadequate by their auditors and examiners.
Fraud anomaly detection systems often remove the human error factor from the scenario, while keeping the bank interactive and in touch with those customer activities that create the most potential risk for the bank.
- Why should banks look for a fraud detection system that’s integrated with the bank’s other digital banking solutions?
When an institution’s fraud anomaly detection system is integrated with the bank’s digital banking solutions, the provider can cumulatively evaluate all of that data. This enables the provider to examine not only transaction-related anomalies, but also bank customers’ Internet banking behaviors. Certain services even offer one centralized admin portal for managing all digital banking solutions.
- Are banks going to see an increase in fraudulent behavior online?
Yes, many will. EMV and tokenized digital payments are starting to block a significant portion of card fraud in the industry, so the fraudsters are going to be looking for additional forms of revenue. It’s likely that they’ll change their tactics and move their efforts toward online banking fraud, including account takeover.
- Do you anticipate an increase in fraudulent behavior during the upcoming holiday season? And if so, why?
I do. It’s fairly common to see increased fraud around the holiday season as there is often increased spending; however, the risk of online banking account takeover should be a year-round concern for any bank.
Jonathan Ferguson is the Business Banking Product Manager for CSI.