Banking Fraud Prevention: System Silos Create Gaps for Criminals

In PwC’s Global Economic Crime and Fraud Survey 2022, 44% of financial services organizations surveyed reported customer fraud, 38% reported cybercrime and 29% reported know-your-customer failure. And fraud costs. Every $1 of fraud loss now costs U.S. financial services firms $4.00 (LexisNexis® True Cost of Fraud™ Study: Financial Services & Lending). But it’s not just the financial implications that organizations have to worry about, the impact of fraud can cause customers to lose faith and brand reputation can fall to pieces. Something needs to be done to monitor and control fraudulent activity in banking. 

The rise of mobile and open banking has seen fraud become more prevalent. As technology makes it easier for professionals and consumers to manage their money, it also makes it easier for criminals to take advantage of vulnerabilities in the system. 

Banks particularly struggle with fraud due to the way that their infrastructure has built up over the years. The siloed storage of information has made it hard to (literally) connect the dots and detect fraudulent patterns of behavior.  


Connect disparate systems to detect fraudulent activity 

The inability of controls to ‘talk to one another’ among different parts of the organization is a top barrier to improving fraud prevention, according to a 2021 survey by iSMG Information Security. Businesses need to develop an infrastructure that offers a secure, holistic view across all their information if they want to detect patterns that may indicate fraudulent behavior.  

Another problem is that today’s fraud schemes are too sophisticated and evolve too quickly to keep change of pace. In fact, iSMG’s survey found that it was rated the top vulnerability in banks’ fraud defenses. So, any fraud prevention technology put in place needs to be able to adapt and update at the same rate. 

The solution is an agile platform that allows you to develop processes and integrate applications in fast sprints so that you don’t get left behind by cunning fraudsters. A flexible, agile system will also allow you to connect your existing IT systems in a secure way. This provides visibility over all your information and ensures tighter control on end-to-end processes. 


Defend confidential information  

It’s not just monetary theft that’s a concern. It is a legal responsibility for banks to keep their customer data safe from unauthorized access by implementing comprehensive security measures to prevent data breaches. 

One of America’s largest banks, Flagstar Bank suffered a network security breach in December last year which saw hackers gain access sensitive information of more than 1.5 million customers and resulted in the bank having to pay $5.9 million in out-of-court settlements.  

MIT has warned that AI can ‘enable cybercriminals to direct targeted attacks at unprecedented speed and scale while flying under the radar of traditional, rule-based detection tools’. Scary stuff. 


Protect your brand and assets 

All these threats mean that people are more aware of the vulnerabilities in banking. So customers need to be reassured that their money and information has sufficient protection. 

If you are repeatedly falling victim to fraudsters, it will have an impact on your customer retention and satisfaction. Banks need to instil confidence in their customers that their services cannot be infiltrated by criminals. Carnegie Mellon University has proved that there is a clear relationship between security breaches and loss of customer trust and loyalty. 

If banks want to ensure that their brand remains intact, they need to identify risks with fraud monitoring tools and put real-time integration in place. 


Adhere to compliance to ensure security standards are met 

As threats increase, regulatory standards tighten. Banks must perform appropriate checks during the onboarding phase and continue to monitor behavior throughout the customer journey. And it’s not just external threats – insiders and ex-employees pose the greatest threat, so ensure that you have stringent internal regulations in place too. 

Digital processes can help to diminish these threats by keeping criminals out and prevent any internal human error or intentional misconduct. Automation can help to enforce a central audit system to record data and actions and help you to prove compliance across your channels. 

You can prepare for fraud detection from the outset by using DPA to help you carry out due diligence and Know Your Customer (KYC). If you use the correct tools and analytics during the onboarding phase for customer identification and authentication, you can complete a thorough risk assessment. The signs are often there, you just need to technology to identify them, such as real-time monitoring and other anti-fraud measures. 

If you would like to see fraud control using Bizagi in action, watch our Mortgage Loan Demo on-demand.  

Bizagi’s machine learning capability can be used to predict whether cases need to be sent to fraud preventions professionals or not. 


Don’t become another statistic. Ensure that your disparate systems and data sources are connected with a process layer helps you to gain an agnostic view of client information and activity. This will help you to remain compliant and makes it easier to detect fraudulent activity. You can even anticipate and prevent it from happening, potentially saving any reputational damage and millions in lost revenue. 

To find out how you can connect systems and verify information to prevent fraud and deliver the best possible experiences for your customers download our ebook The Essential Guide to Modernizing Banking Operations.  

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