Dealing with fraudsters is the main challenge that lenders face in the finance industry. With the illegal activities rapidly growing, fraudsters are using more and more advanced techniques to achieve their goals. The need of the hour is for a fraud fighting technology that will not just enable these financial institutions stop fraud attacks, but also to make them ensure better customer satisfaction.
Online fraud is something that even banks find difficult to prevent. So if providers of alternative funding solutions have to stop fraud attacks, they will have to find a fraud fighting technology that makes them smarter than the fraudsters. Clever algorithms need to be applied not just to identify fraudulent transactions but also to predict potential fraudulent behavior. As far as possible the algorithms must be free from human interventions and adjustments, in order to beat innovative fraudsters.
Yellowstone Capital LLC, a company that is into funding small businesses, believes in real time analysis of big data to detect potential fraud. As per them, adopting cloud based computing and machine learning is crucial to manage these continuous real time analyses. This can help in performing operations such as data visualization, text mining, anomaly detection, link analysis, and predictive modeling, easily and quickly.
Most financial organizations focus on fraud fighting technology that help them counter emerging threats such as cyber frauds, money laundering and underwriting scams. However, the main priority in fraud-fighting should be to detect fraud before the claims are paid and upgrade the risk analysis while acquiring the client.
Big amounts of relevant data will have to be collected in order to perform actions that stop fraud attacks. While calculating the risk, one has to look at internal data, unstructured data, public records, industry fraud-watch lists, social media data, data from connected devices, and third-party data aggregators. Anti-fraud systems should be constructed after collecting and analyzing big data.
More than fighting frauds it is to build customer trust and loyalty that becomes crucial for financial institutions. With a variety of options available for the customers, it gets difficult to these businesses to enjoy a competitive edge. This is where anti-fraud systems come into the picture. By guaranteeing precise and fast risk analysis during acquisition and by supporting the security of online banking and credit card usage, such a system can help financial institutions manage customer satisfaction efficiently.
Yellowstone Capital recommends an anti-fraud system that goes through five steps:
The first step is detection where in the system measures the risk associated with the transaction.
The second step is where the system assesses the score of the customer activity, based on his historical data or that of a group of similar clients. Risk needs to be calculated and analyzed individually.
The third step is about using the information gathered to figure out if the system can cope with the potential threat on its own. If not, it goes to the fourth step.
Here the customer will be contacted in an appropriate and convenient way and notified about the potential threat.
The last step will be about resolving the issue based on the information transferred or feedback received from the customer, so as to prevent losses, whether to customer or the institution.
Installing a fraud fighting technology not just limits the losses of the lenders, but also makes their customers feel more secure.