A Practical Look at Fraud Prevention in the Banking Industry

Jan 24, 2024 Hunter Croft
Fraud Prevention and Detection in Banking

Fraud Detection and Prevention (FDP) is big business. Juniper Research reports that FDP spending shot up to $9.3 billion in 2022, an increase of 22% over the year before. And there’s no shortage of articles extolling the virtues of AI and other fraud prevention technologies for use in the banking industry. In fact, 75% of banks and financial services organizations currently use AI to detect and prevent fraud.

Yet, notwithstanding this investment, the Federal Trade Commission reports that fraud is still at an all-time high. In fact, the American Banker recently wrote that banks are seeing a “tidal wave of fraud,” with costs topping $500B and illicit money topping $3T last year – despite an industry-wide 50% increase in cybersecurity budgets. And for banks not using ChexSystems or participating in the Early Warning Service, the exposure to synthetic identity fraud is even greater, which reached roughly $20 billion in 2022. Banks in this latter category are likely to rely on static data intelligence and device-based security such as biometrics, facial recognition, or two-factor authentication (2FA), which can be bypassed or outsmarted, placing these banks and their customers at particular risk of fraud.

Until such time that technology can stop all financial fraud, banks, credit unions and financial services organizations will need outsourcing partners like ACT to cost effectively help with the manual lifting, fulfilling seasonal headcount needs, leveraging world-class practices, and supplementing technology gaps. 

Ways that ACT (Advanced Call Center Technologies) can supplement the banking sector’s Fraud Detection and Prevention (FDP) efforts:

  • Consumer Account Management: Elevate customer loyalty with expert management of consumer accounts. ACT’s specialists handle transactional functions, such as online, telephone, and mail customer service, plus retail banking, originations, lending, mortgages, and more, with robust fraud detection and AML support.
  • Commercial Account Solutions: Optimize support for multiple banking products with cost-effective offshore commercial account servicing. ACT’s fraud detection & prevention services include payment processing, commercial loans, and trade finance, covering fund transfers, fraud analysis, credit evaluation, origination, and reconciliation.
  • Credit Risk Mitigation: Minimize credit risks and fraud with ACT’s onshore, nearshore or offshore support, offering risk profiling, re-verification, payback assessment, and advanced credit decision models.
  • Comprehensive Fraud Risk Management and AML: Navigate high-risk accounts with expert fraud risk management and AML services. ACT’s services include CDD, regulatory compliance, fraud risk review, AML monitoring, and more, optimizing fund recovery and enhancing risk management.
  • Back Office Transaction Management: Let ACT streamline your back-office financial transactions, encompassing fraud detection, AML, compliance monitoring, custody services, portfolio analytics, and IT management for various banking products.
  • Personalization and Customer Experiences: It’s important to remember that customer experiences are more important than ever and should not be sacrificed in the name of security. ACT can help you differentiate your services with personalized experiences, utilizing customer data and AI-powered algorithms to offer tailored financial solutions, product recommendations, and customized communication, enhancing customer satisfaction and loyalty.

What to look for when selecting a BPO to supplement Banking Fraud Detection and Prevention programs: 

Not all BPOs are created equal. Variances in solutions, operational model, quality controls and performance all set them apart. If you are a bank looking for help with your FDP program, here are factors to consider as you evaluate who to select as your BPO partner:

  1. Employee Ownership: Employee ownership generates a vested interest in the success of clients and uniquely aligns employee motivation to client goals. It transforms employee attitudes, work ethic, and dedication to excellence. ACT is the largest employee-owned (ESOP) company in the Business Process Outsourcing Industry. Since becoming Employee Owned, ACT’s employee attrition dropped by more than 31% thereby improving knowledge base retention and service quality. This also empowers our employees with the empathy needed to deal with nuanced situations and accommodate non-standard requests, such as customers who are concerned about their money and privacy.
  2. Delayered Business Model: Top-heavy organizational hierarchies reduce innovation and vendor responsiveness. By eliminating client solutions, ACT provides greater nimbleness and a consistent leadership focus on the client. It allows us to react more quickly to crises like cyberattacks and to be more innovative in our solutions. By removing profit & loss responsibilities from Operations, ACT’s primary focus becomes green scorecards and delivering on SLAs.
  3. Data-Rich Foundation: Fraud Detection & Prevention requires that partners maintain a data-rich foundation to help their clients quickly deal with the data-related challenges of cyberattacks and fraud. ACT has built a contact center technology platform that allows us to rapidly build flexible, composable applications that are tailored to meet the client’s needs in hours, instead of weeks. This platform allows ACT to quickly configure a solution that exactly matches client needs without massive time, cost or complexity. For example, in some cases we’ve helped a client restore contact center operations of their captive centers by supplying essential hardware and a custom dashboard for real-time data and analysis. In so doing, ACT empowered the client to regain visibility, control, and trust during a critical period.
  4. AI Enablement: At ACT, we specialize in providing comprehensive AI Enablement services to our banking clients, with a primary focus on fraud detection and prevention. Leveraging advanced analytics and machine learning expertise, we seamlessly integrate AI technologies into banking operations. Our Agent Co-Pilot prompts agents on “next best actions” and our solutions ensure real-time monitoring, scalability, and customization to address unique fraud challenges. With a commitment to data security, compliance, and continuous improvement, ACT empowers banks to harness the full potential of artificial intelligence in enhancing their fraud prevention strategies.

Fraud Solutions Within a Total Experience Perspective:

  1. Compliance Expertise: A critical aspect of fraud prevention is compliance and our expertise in navigating bank compliance issues sets industry standards. ACT looks at compliance using our Total Experience Formula™.  With this, we comprehensively explore every touch point, process, tool and screen – including 240+ employee touchpoints, to identify and remove potential compliance violations and process friction points that slow down turnaround time. It is common among our larger clients to retain several BPO companies simultaneously to meet their compliance and FDP needs. Consistently, ACT surpasses the performance of other BPO providers, and in many cases, we surpass the performance of their in-house FDP teams. And this is not an occasional occurrence. With many of our banking clients, our performance exceeds other BPOs for upwards of 26 consecutive months.  
  2. Increased Speed:  If your customer review and approval process is slow, you are at risk of losing the customer. We help banks speed up the KYC and approval process with the redesign of the application process, the introduction of intelligent automation, and ACT Assembly allowing banks to know if the customer applied elsewhere in the bank. In some cases, we have helped banks speed up their loan application review and approval process by as much as 400%.
  3. Customized & Scalable Solutions: ACT provides customized fraud detection and prevention solutions by tailoring our services and proprietary technologies to meet your unique needs and challenges, based on the comprehensive view made possible by the Total Experience Formula™. Not only do we scale our solutions to meet the scope of our clients’ needs, but we also adjust our fraud prevention efforts to match the growth and or changes in our clients’ business.
  4. Proactive Approach: It’s not just about detecting fraud after it happens but also about preventing it from occurring in the first place. Our Total Experience Formula™ allows ACT to proactively identify potential vulnerabilities to fraud ahead of time and recommend ways to modify procedures, change security or configure / add technologies to thwart the likelihood of fraud ahead of time.
  5. Data Security: We are committed to our clients’ data security and confidentiality.  To safeguard your sensitive information, ACT is PCI, ISO 27001, GDPR, GLBA, SOC1 and SOC 2 compliant. 

Looking for more information on fraud solutions for banks, credit unions, and financial service organizations?

We have 3,000 fraud agents handling 4 million fraud cases per month for 7 of the top 22 banks. ACT has been helping the banking industry protect their customers and avoid penalties and fines with our Banking Fraud Detection & Prevention services for the past 27 years. This has earned the trust of nearly one-third of the nation’s top 22 banks, among others. Check out our Total Experience Solutions for Banking and Financial Services to learn more.

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