How to detect fraud in banking: key takeaways

• 4 key areas to cover include monitoring for unusual patterns, encouraging reporting, staying abreast of the latest trends, and taking a collaborative approach
• Fraud is directly linked to account holder satisfaction and loyalty

‍

Most guides on how to detect fraud in banking focus on the financial damage that fraud causes. And of course, these can be serious numbers: one credit card fraud scam involved $200m. There’s another element of fraud detection that’s equally important however: the feeling of account holders when they’ve been the victims of fraud.

‍

Recent research points to the fact that fraud is one of the leading reasons for people switching banks. Take the CLV of such a person into account over the course of the relationship and the numbers start adding up. This can be compounded by reputational issues that can plague a financial institution for years. Conversely, financial institutions that can demonstrate that they’re being proactive about account holders’ safety are likely to increase account holder loyalty.

‍

In this Guide on how to detect fraud in banking, we’ll explore the high-level options available to financial institutions and in particular what fraud teams can do to clamp down on fraud, and thereby increase satisfaction and retention. 

How To Detect Fraud In Banking

While there are multiple methods to detect fraud, we’ve distilled these into four main categories. 

Monitor unusual transaction patterns

With the volume of data available today, coupled with AI and machine learning, technology can be leveraged to find patterns and detect anomalies. One of the best use cases for such technology is in the fraud detection space. This can be in the form of unusually large transactions, rapid transfers, or sudden activity in previously dormant accounts.

‍

Action item: Explore options around accessing best-of-breed AI and machine learning capabilities to detect fraud. 

‍

Leverage account holder-reported fraud intelligence

One of a fraud team's most important force multipliers is account holders themselves. In many cases, anyone seeing a suspicious transaction will report it to their financial institution immediately. This allows fraud teams critical early intelligence to explore the scope of the attack and decide on mitigating steps to address this fraud.

‍

Action item: Financial institutions in turn should make it as easy as possible for account holders to report fraud and communicate effectively throughout the reporting and resolution process. 

Maintain situational awareness of fraud events

Staying informed when it comes to trends and alerts is a critical way to detect banking fraud. Alerts about a new scam or increased fraudulent activity around a particular time of year help teams learn and understand about market activity 

‍

Action item: Subscribe to popular fraud update newsletters to stay in the know. 

Explore cross-institutional collaboration

Relying on their own data, financial institutions have limited visibility into fraud events, and their capability to proactively address fraud is limited. By pooling resources and consolidating data from thousands of financial institutions processing millions of transactions a day, a data-informed, richer picture emerges – and everyone benefits. 

‍

Action item: Consider payment fraud solutions that are based on consortium data and have visibility into as many transactions as possible.

In a Word: Rippleshot 

All of these key requirements to detect fraud in banking are incorporated into the Rippleshot solution. 

Rippleshot delivers an unparalleled advantage by combining cutting-edge technology, a robust data consortium, and actionable insights tailored to financial institutions. Here’s how Rippleshot makes a difference:

Monitor Unusual Transaction Patterns: Rippleshot uses AI and machine learning to analyze over 50 million daily transactions from a consortium of 5,000+ financial institutions. 

Encourage Customer Reporting: While customer reporting is an essential layer, Rippleshot reduces the reliance on customer-initiated reports by preemptively detecting fraud, while providing assurance to account holders that their financial institution is proactively protecting them – enhancing account holder trust and satisfaction. 

Stay on Top of the Latest Fraud News: Rippleshot’s proprietary consortium data ensures institutions stay ahead of fraud trends. Its AI and ML capabilities continuously adapt to new fraud tactics and patterns, keeping fraud teams informed about the latest threats. Rippleshot provides actionable intelligence on emerging fraud trends, enabling institutions to implement proactive rule changes without waiting for broader industry alerts​​.

Take a Collaborative Approach: Rippleshot’s solutions are built on a consortium of data shared by 5,000+ financial institutions. This collective data pool enables unparalleled visibility into fraud events across the industry, enriching individual institutions’ insights and enabling far greater coverage and accuracy than has ever been possible.

To learn more about what’s possible with Rippleshot, get in touch with the team. 

Summary: How to Detect Fraud in Banking

By focusing on these key areas financial institutions will be sufficiently armed to take on fraud and protect account holders. 

‍

Rippleshot not only aligns with these methods, but enhances them by providing a technological edge that enables faster, more precise and proactive fraud detection. This approach reduces losses, elevates the account holder experience, leads to higher customer satisfaction and retention rates and improves fraud team efficiency.

‍