Fintech Fraud Is Rising: Here's The Technology Fighting It

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In today’s world, financial crimes are becoming an everyday occurrence. Hackers and fraudsters are finding new ways to manipulate important records and intercept time-sensitive payouts. With fraud attacks against fintech companies seeing an increase of 70% last year, it is top priority for companies to find new ways to combat fraud and keep their customers’ money safe.

As hackers continue to look for gaps in companies’ code and document review processes, fintech companies are stepping up their collective security game. Many are employing risk management strategies to reduce fraud, and some of these strategies aim to increase productivity as well. Technological advancements are allowing organizations to do both in one fell swoop.

Here are some of the latest ways that fintech companies are taking a stand against cybercriminals.

Artificial Intelligence Against Low-Level Fraud

Low-level fraud attempts are made consistently against fintechs and insurance companies. From photoshopping insurance claims to creating false identification documents, it’s difficult for organizations to identify the nuances between tampered files and a legitimate one. Human employees are hired to manually digitize and validate records, which is becoming an ineffective model as financial crimes continue to rise. 

As a result, U.S. consumers lose $80 billion per year to low-level fraud claims.

Fortunately, technological advancements are helping fintechs better authenticate their customers. Inscribe, a company that specializes in fraud detection and risk management, employs automation to help businesses with their account opening and underwriting processes. Their artificial intelligence models can process and verify customer information across all different formats, including invoices, payslips, and identification cards. As the machinery extracts information from each document, it analyzes them for potential risks. If there are anomalies present, it will flag the document and provide the business with data supporting its claim. 

“In our experience, we see many fraudsters using tools like Adobe Photoshop to modify the information on their bank statements, bills, invoices, and claims,” says Ronan Burke, CTO of Inscribe. “When they do this, they are leaving behind a lot of cookie crumbs that our machine learning models are very good at flagging for fraud. Companies using manual document processes may not catch these deviations.”

Perhaps one of the most important aspects of artificial intelligence in the fintech space is automated information matching. This AI function improves fraud detection while increasing productivity and efficiency. With automated information matching, AI can extract data and match information to customers without a single human involved. This frees up employees to do more human-centric tasks and improves fraud detection—a win-win for fintech companies.

Securing Data Across Platforms

As we continue to digitize all elements of the working world, businesses are becoming more reliant on their payment APIs—that’s, application programming interface—to manage funds efficiently and safely. 

The more complex an organization is, the stronger the payment API needs to be to protect its accounts, and fintech companies are taking note. Modern payment platforms, like Dwolla, are taking steps to weave security into their interfaces. Their platform focuses on enabling fast and secure B2B payments through a trusted API. 

All of their API’s data is monitored by a mix of security professionals and artificial solutions. These artificial solutions are internal control certifications that uphold specific data security standards; in Dwolla’s case, SOC 2 (Service Organization Control 2) Type 2 and PCI DSS (Payment Card Industry Data Security Standard) Level 1 certifications. 

So what do these certifications mean? In a nutshell, they keep sensitive data safe and free from human eyes and error. This means that bank account numbers, credit card information, and other sensitive data that needs to be stored and transmitted to various parties is certified, and no one needs to see or make adjustments to the data. These programs keep clients from worrying about their sensitive information being seen or altered in the payouts process. 

Looking Forward

Just as fraudsters use advances in technology to put data at risk, fintech companies and the tools they use are working to secure that data now and into the future. 

Artificial intelligence-based methods for analyzing data and identifying risks will prove useful for any company that deals with data (Hint: All companies do). And fintechs will benefit from strong APIs that have built-in security features to ensure secure and on-time payments. All in all, these technologies are saving fintechs’ money and time—and giving their clients peace of mind. 

This post contains sponsored advertising content. This content is for informational purposes only and not intended to be investing advice.