How to Prevent Bank FraudYour Action Plan Against Financial Fraud
Tips & Best Practices to Help You Prevent Bank Fraud Before it Happens
As they say, “the best defense is a good offense.”
Instead of waiting for fraudsters to strike, you need to be proactive. That means putting in place the policies, procedures, and technologies that can stop fraudsters in their tracks, well before they decide to attack you or your customers.
Here, I’ll lay out a comprehensive action plan that you can use to protect and defend your business against bank fraud.
Bank Fraud
It’s easy to understand why fraudsters often target financial institutions. After all, banks are where money is deposited, stored, and withdrawn. What’s less well-understood, though, is how bank fraud occurs, and how often it happens.
Payment Verification Protocols
As your first line of defense, these protocols can help you monitor and validate the legitimacy of every transaction passing through your system. Deploy measures like:
Internal Controls
Strong internal controls are the policies and procedures that govern access to your financial systems and protect against both external and internal threats. Consider:
Technology Solutions
Use technology to automate fraud detection and secure your payment infrastructure from end-to-end. I recommend that you deploy:
Tips & Tricks for Integrated Bank Fraud Prevention
Creating a unified defense where your banking and payment systems work in concert can make your business much more resilient against bank fraud. That’s because integrating these systems together can help you eliminate blind spots and allows you to take a more proactive stance against financial fraud.
Specifically, I recommend that you consider:
Unified Dashboards
Combine alerts and data from banks and processors into a single dashboard. This gives you a holistic view of your financial activity and can potentially allow you to spot anomalies and correlated fraudulent behaviors that would be missed if you view the information in a disjointed manner.
Automated Triggers
Set up automated response triggers that span across your platforms. For instance, a suspicious login attempt could automatically trigger a higher level of scrutiny for subsequent ACH transactions from your business bank account.
Data Sharing
Establish protocols for data sharing between your banking and payment providers. When your bank flags a potential fraudulent transaction, that information can be used to adjust the fraud rules set in your eCommerce platform’s checkout environment, and vice versa.
Holistic Risk Scoring
Develop a fraud scoring model that incorporates banking behavior into payment transaction analysis. A cardholder’s relationship with their issuer or their credit utilization ratio, for example, may be correlated to their risk of committing friendly fraud on your site.
System Feedback Loops
Create feedback loops where the outcome of a transaction on one platform informs the rules on another. For example, if a payment is confirmed as fraudulent, that information should be used to automatically update and tighten the fraud rules in your banking portal.
Cost-Effective Integration
You don’t need a complete system overhaul to achieve integration. Start with simple, cost-effective approaches like using APIs to connect key data points or implementing middleware that can translate alerts between your different systems.
