How can banks protect a new breed of fraud victims?

Our daily routine is getting online, and how we deal with our money is no exception.


The boom in online banking has provided more opportunities for fraud to customers

The days of visiting a branch for our everyday banking needs are long gone, from online banking to Buy Now, Pay Later (BNPL) services for cashless and contactless payments are on the rise. Last year alone, 93% of customers used one or more digital payment methods and BNPL services contributed $100 billion in purchases.

This boom in online banking can make the lives of customers more convenient. However, it also opens them up to more opportunities to cheat.

Major events in the world combined with the advancement of scamming techniques have shifted the idea of ​​the typical ‘vulnerable customer’. Scammers now have a wider range of goals, identifying new victims and exploiting the vulnerabilities of different demographics.

It is one thing to cover a customer’s financial costs when fraud occurs, but once consumer trust is broken and they feel that their data is not sufficiently secure, it is nearly impossible to recover the reputation damage. could. Adding more layers of security online and in applications can have the unintended consequence of degrading the experience and turning users to other providers.

As financial institutions, both established and new, are looking for new ways to protect vulnerable people from attacks, solutions such as behavioral biometrics are poised to play a major role in building digital trust and security.

Cybercriminals are around every digital corner

The way online criminals operate is constantly evolving. Although the rollout of two-factor authentication is a significant step forward for online banking globally, scammers are beginning to infiltrate and undermine these security efforts and find more devious ways to reach their targets.

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Fraud methods vary depending on the intended victim. For example, social engineering scams, where victims are emotionally and psychologically manipulated to obtain money or confidential information, have evolved to understand human inclinations and instincts. Our research shows these plans are expected to increase by 57% in 2021, with an average loss of $1,029 per victim, targeting consumers at the exact right time when they are most vulnerable to the temptation of romance or friendship. There are.

The threats don’t stop there, with scammers moving to a multi-layer hybrid model to defraud unsuspecting victims. Often using a mix of smishing or SMS phishing, voice scams and remote access scams, fraudsters reach thousands of victims within minutes, using bots to intercept one-time passcodes from the victim’s device and bank security. goes beyond the controls.

The development of the ‘weak customer’

In the current economic scenario, cybercriminals are taking advantage of vulnerable and traditionally non-sensitive individuals. It is governed by four factors – health, life events, resilience and potential. All factors can change suddenly and dramatically, and this has never been so apparent in our lifetimes as during a pandemic.

Elderly customers remain a primary demographic for fraud, with an estimated $3 billion per year being scammed due to their superior credit scores, plentiful wealth, trustworthy nature and lack of technical know-how. The most prevalent methods in this age group include romance scams, fraud scams, and lottery and sweepstakes scams, with 40% of identity theft fraud victims over the age of 60.

However, Gen Z has become a new target for financial crimes mainly through social media. Young customers, who value convenience over privacy, are falling prey to so-called ‘mule shepherds’ who slip into their direct messages, recruiting them into laundering schemes for the lure of quick and easy cash.

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This method can be very challenging to detect as the scammer does not interact directly with the banking platform and instead convinces the user to take action. Mobile malware is also a key feature in Gen Z fraud, in which scammers intercept multi-factor authentication, hijacking their operating systems through fake apps.

All customers need protection

Customers want convenience, and financial providers need to be able to provide the security they need. If you keep putting the burden on the customer to jump through hoops, they’re going to go to a provider who takes the burden of security off their hands.

Thanks to the dynamic nature of cybercrime, managing fraud risk is a significant and ever-evolving challenge. As scammers have gotten smarter, authentication methods have remained stagnant, leaving customers vulnerable to attack. To provide robust security, financial institutions must recognize the vulnerability of one-time passcode and knowledge-based authentication and seek solutions that go beyond device, IP, and network-based approaches. They must watch the behavior of the user to catch the criminals before they strike.

Behavioral biometrics technology seeks out scammers to track how they interact with online platforms, while ensuring that customers still have the frictionless banking experience they want. Working passively in the background of a user web or mobile session, this technology monitors thousands of parameters such as the pressure used while typing, how online forms are navigated, and whether multiple fields are copied and pasted. go.

For example, in practice, behavioral biometrics can look for anomalies in digital interactions to reduce the risk of account acquisition and identify ‘mule individuals’ on social media to seek potential mule herders. It can also detect potential social engineering scams, seeing typing hesitation and session length as indicators of dishonesty.

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Scammers are constantly changing their tactics and goals. Equipped with the technology to defraud financial institutions and infiltrate two-step authentication, it has become clear that new solutions are needed to protect vulnerable customers.

Whether it’s veterans falling prey to social engineering scams, or Gen Zs falling prey to mule herders in their DMs, the most effective way to catch fraudsters is by monitoring and detecting their behavior online. Equipped with practical biometrics technology, financial institutions can provide frictionless, yet secure, banking, protecting their customers from ever-increasing threats.

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