Financial services remain a favoured target of skilled cybercriminals, which has left the industry scrambling to keep pace. Yet, if we consider the recent advancements in technologies such as artificial intelligence and the pressing reality that fraud is likely to become more targeted, could fraud actually be calculated and predicted?
There’s no doubt that fraud places a heavy cost on financial institutions as they struggle to combat attacks and outright theft, as outlined in McAfee’s report which estimates cybercrime currently costs the global economy $600 billion, or 0.8% of global gross domestic product. Not only are financial institutions under pressure to leverage digital capabilities to provide added-value services, usually via online offerings to customers, but they must also protect the increased volume of consumer data that has been created as a result. This data pot has become just as lucrative to cybercriminals as physical theft and hard currency.
As a result of some high profile cybersecurity breaches and threats, the UK general public has become much more security conscious when it comes to their own data protection, but also the approach service providers take to security and the protection of their data. In fact, recent research revealed 41% of British consumers said they will stop all spending with a business or brand following a data security breach. This means financial institutions must ensure attention is paid to addressing consumer concerns and security must be a priority in all customer engagement initiatives and across all channels - placing even more importance upon the ability to leverage innovative technology to calculate threats.
At the same time, it’s vital to ensure that the usability of digital services don’t suffer as a result of multiple layers of security. For example, when a consumer logs into a banking app they need to feel confident that adequate security is in place - but it needs to be integrated into the experience seamlessly and not feel like an onerous task for the customer. Maintaining a balance between usability and security is imperative to putting customers first and also to providing differentiation of offerings in the market, and ultimately stand out from competitors.
To move on, we must consider the reality that the digital revolution has presented financial institutions with equal opportunities and risks, and likewise for cybercriminals and fraudsters. However as security threats evolve, so do counteracting solutions. For example, while AI technology is in a juvenile state when it comes to its learning and development, this and other automated fraud detection tools are getting smarter by the day. These types of technology can play a key role in detecting threats early, which is key. Financial institutions can leverage AI to bolster their security posture and identify anomalous behaviour to manage targeted fraudulent attacks before they arise and dent the customer’s wallet.
Thanks to advancements in technology, being able to monitor and audit activity across the organisation means fraud can be caught in real-time and even in certain scenarios calculated in advance. Combining science, technology, structure – and a good measure of expertise – is certainly allowing some organisations to manage fraud with much greater certainty. Whilst we’ll never be able to predict all attacks, the right approach is certainly helping to stop crime in its tracks.