Insights CSI Digital (1) - Flipbook - Page 2
PAYMENTS FRAUD
INSIGHTS
K EY ME TR ICS
Top Fraud Prevention Challenges
Source: Bank Director’s 2023
Technolog y Survey
Staying current on emerging threats
73%
Customer communication
66%
Inadequate staff training
24%
High incidence of false positives
Fraud is a constantly evolving risk for the banking industry. Even as new
technologies reduce fraud in one channel, bad actors quickly circumvent it in
another. While fraud mitigation can never be 100% foolproof, bankers can benefit
by leveraging technology as well as relationships with vendors that work with
multiple institutions.
23%
Insufficient back-office staff to handle alerts
20%
The Cecilian Bank’s adoption of EMV chips in credit and debit cards made
Emily Burks’ job easier in at least one respect: As senior vice president and
KEY TAKEAWAYS
customer support officer at the Cecilia, Kentucky-based bank, she no longer
receives frequent lists of compromised cards that have potentially been
• Payments fraud ballooned over the past
decade. Banks must deal with everrising volumes of fraud in P2P channels,
digital transactions, checks and account
takeovers.
• Moving to a zero-trust environment, in
which a customer must verify several
disparate pieces of data in a transaction, is
one tactic that can help reduce fraud.
• Technologies such as real-time denials
may help cut down on payments fraud.
• Fraud prevention and mitigation efforts
should include a human component,
including staff training and customer
education.
• Banks can’t rely on technology alone to
stop fraud. Collaboration with vendors and
other organizations can strengthen the
industry’s understanding of current threats.
counterfeited.
But in spite of that technological improvement, overall payments fraud has
ballooned in the years since, says Burks. Like many of its peers, the $1.5 billion
subsidiary of First Cecilian Bancorp has contended with greater volumes of
card-not-present fraud, check fraud and scams taking place over person-toperson payment channels.
Fraud prevention can feel like a game of Whac-A-Mole for community
banks. Once one channel has been secured or fortified, bad actors find another
way to rip people off — and send banks scrambling. Emerging technologies,
including artificial intelligence, show some promise for fraud prevention and
mitigation. But AI also presents a double-edged sword: Burks says The Cecilian
Bank recently encountered its first instance of AI-generated fraud.
Striking a Balance
A zero-trust model, in which a customer must regularly verify several
separate pieces of data, can be a tough pill for many community banks to swallow but the alternative — customers getting scammed and losing trust in their
financial institution because of those losses — is even less appealing.
“It’s a hard road to take,” says Burks, “but you’re going to have huge losses if
you don’t have that zero-trust environment.”
Fraud mitigation necessarily inserts friction into financial transactions,
