We live in an evolving world, especially in online transactions. As maximum people are using digital payments for purchases, paying loan EMIs, credit card bills, etc., it has become imperative to use sophisticated methods to secure these transactions. However, with great power comes certain vulnerabilities, and one such enemy to digital transactions is cyber fraud. The criminals who indulge in such fraudulent activities can easily hide in anonymity and commit frauds like wire fraud, account hack, credential stealing, money laundering, etc.
Therefore, detecting these frauds early and providing top-notch cybersecurity has become a top priority in the digital arena. Let’s discuss 4 strategies that can be used in a fraud management system to provide the best option to detect cyber fraud and mitigate them as quickly as possible.
Top 4 strategies to detect and mitigate cyber fraud
1. Artificial Intelligence
The sheer volume of transactions that financial institutions that occur daily makes it almost impossible to legitimize each transfer manually. Most transactions arise simultaneously, creating multiple tasks that one individual cannot manage in a quick time. In these hundreds of transactions occurring at the same time, it is hard to track and detect any type of fraud.
Moreover, nowadays, customers expect instant transactions, and if fintech institutions must facilitate otherwise, there is a big chance of losing business and customers. Hence, fintech institutions have adopted an AI-assisted automated fraud management system that uses sophisticated programs to track behaviors, identify fraudulent activities, and provide an alert. Using this, an investigation is conducted, and through identity authentication services, they can filter out genuine customers and catch hold of criminals responsible for the fraud.
2. Machine Learning
Fintech firms are finding it challenging to handle complex fraud mechanisms using simple rule-based AI systems. But if you include machine learning in your fraud management system, then you have a system that learns from historical behavior and data and evolves its rules. A standard AI-driven fraud management system may require manual interventions from time to time, but machine learning will create automation that will prevent frequent updating and making changes in security parameters. Through deep learning ML models paired with identity authentication services, you can detect subtle behavioral changes and flag suspicious transactions that are camouflaged to look like genuine transactions.
3. Access Risk Management (ARM)
Access Risk Management (ARM) is a discipline of managing access risks that include ways of detecting, assessing, & prioritizing risks from a compliance access provisioning aspect. With risk-taking occurring at various levels, the ARM method scrupulously monitors your data while maintaining strong security measures to manage access across every user and their accounts. It is highly challenging to correctly identify a transaction fraud in your network without placing an effective fraud management system. ARM does dual work of detecting fraud and also offers a sound understanding of how, when, and where to mitigate a specific breach.
4. Biometric Data
Even if we create fully unique passwords, there are still risks of fraud. There are cyber criminals who are experts in decoding passwords and hacking your account. The best way of mitigating such situations is to use biometrics as a part of identity authentication services. Biometric data uses the user’s physical characteristics, such as fingerprint, palm, face, eye, etc., that simply can’t be replicated. Adding this type of protection will make it harder for cybercriminals to hack the account and can work better than passwords.
There are many strategies that can be utilized as a part of fraud management systems in a digital transaction, but the above four have been regarded as the best options. Cybercriminals are always coming up with new tricks to engage in cyber fraud, which can ruin a fintech institution’s business and brand reputation. Hence, they must be one step ahead of the cybercriminals to beat them and safeguard their customers’ funds. As cybersecurity technology improves, we can see better-equipped fraud management systems in the future; until then, we have to create countermeasures when issues arise using the above 4 strategies.