Global collaboration boosts detection of high-risk bank transactions, research shows

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It reveals how businesses can build strong digital trust and prevent fraud before it occurs through collaborative digital identity intelligence and details several examples of success, including one organisation that lifted customer recognition rates to 94%. Another, integrated digital identity and email intelligence to help lift fraud capture rates by a quarter (26%).

The global report also explores the impact of criminal activity on consumer trust, compounded by the fact that fewer than 10% of mules identified by law enforcement are arrested and fewer than 1% are charged.

Fraudsters exploit technology

Rapid adoption of AI-powered technology by fraudsters to automate phishing and deepfakes is helping make scams more efficient and convincing, thereby eroding consumer trust in digital services. Global fraud attacks rose by 19% year on year, according to analysis of the LexisNexis Digital Identity Network platform.

A shared collaborative network enables organisations to flag suspicious activity and confirmed fraud events with other members, to help make it harder for fraudsters to operate.

This can include data about the device being used, IP addresses and other digital signals, as well as the email address provided. Analysing the potential risk associated with these signals can significantly boost organisations’ effectiveness at capturing high-risk transactions.

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In one case a major global bank boosted its detection capability 17-fold (1700%). In another, a card issuer improved its risk assessments by a factor of 23 (2300%). In both cases, collaborative data was used.

Despite this, just six in 10 (60%) organisations have technological fraud prevention solutions in place across all transaction channels, and only one in four (27%) organisations in the EMEA and APAC regions use consortia or data-exchange initiatives as part of their fraud-prevention activities, according to the report.

This comes despite a majority of firms saying integrating digital experience and fraud-prevention efforts (72%) and minimising customer friction during checkout (68%) are ‘critical or high’ priority.

Balancing trust, convenience

“Consumers’ desire for faster, instant service is driving demand for change, including the creation of alternative payment solutions. In response, regulators and central banks are enabling systems, such as instant payment rails, which make transactions easier,” said Stephen Topliss, vice president of fraud and identity, LexisNexis Risk Solutions.

“However, every attempt to make transactions easier for consumers is also making life easier for fraudsters. Societal demand for convenience has left financial institutions facing a difficult balancing act to deliver technological innovation and convenience, while maintaining trust and system integrity.”

Broader insights are also essential in the fight against synthetic identities – fake digital profiles created for fraud. Robust intelligence can reveal telltale signs, such as synthetic identities are seven times more likely to have no first-degree relatives and 20 times more likely to appear in multiple credit applications over a short time period.

The report reflects that human beings continue to be a weak link in the trust chain, with an army of money mules – around 40% of whom are typically under the age of 25 – helping cybercriminals launder between 2 and 5% of global GDP each year.

Topliss continued, “The worst-case scenario is that consumers cease engaging digitally because they don’t trust the process. Tackling this global issue requires a multi-layered approach, as there is no silver bullet anti-fraud solution.”