Five Evolving Areas of Global Fraud Management
Fraud detection is an evolving challenge for enterprises around the world. Fraudsters are constantly looking for new types of fraud and methods of attack to defraud companies or their customers.
The types of scams that you might see are something we’ve touched on before on our blog. That includes an insight into the key types of scam calls through to a summary of the six essential areas of telecoms coverage.
At Neural Technologie we have over 30 years’ experience staying ahead of fraudsters by pioneering innovative fraud detection and protection solutions. In a changing global landscape, operators need to keep track of emerging trends and industry evolution. Here are five evolving areas of the fraud landscape which are of particular interest moving forward.
1 – COVID-19 fraud threats
COVID-19 has unlocked new opportunities for scammers to defraud individuals. These threats take many forms, from applications seeking to slip between the tracks of pressured business systems through to impersonation of authority figures to compel or influence victims.
Call spoofing is one avenue of attack through which these frauds can occur. Fraudsters use technologies to ‘spoof’ caller IDs, tricking the recipient into believing that a call is from a legitimate number. Fraudsters can then use that belief to unlock key personal information or financial details. Neural Technologies’ SCAMBlock solution is designed to eliminate these calls, tackling the threat before it reaches customers.
Application risk is another potential area of threat, as fraudsters try to leverage cracks in systems strained by workforce absences or new remote working conditions in businesses. Analysts may be overstretched by the sheer volume of applications, particularly in industries or operational teams dealing with elements such as financial relief due to COVID-19 impacts. An automated solution like our own Application Risk technology can help balance that vulnerability by providing customisable risk thresholds for automated decision making.
2 – Growing confidence in biometric
Customers were once hesitant about the seemingly science-fiction nature of biometric technologies such as facial recognition or fingerprint scanning. The reality today is far different, and the growing consumer confidence in biometric security technologies is changing the fraud landscape.
Mobile smartphone technology is a major driver of this trend, as users are increasingly exposed to secure but intuitive biometric technologies to unlock phones or sign into sensitive apps such as those for banking.
One study undertaken across the US, UK, France, Germany and the Netherlands reported in October 2021 that more than half (57%) of customers had increased their use of biometrics over the previous 12 months. Just under half (48%) report that they are more comfortable using biometric technologies now than they did prior to the COVID-19 pandemic, with approximately a third of customers now using biometrics of some kind to access their mobile phone. This growing confidence is a notable shift in the global fraud landscape.
3 – Rapid rise of e-wallets and mobile money
Smartphones aren’t only responsible for a shift in biometric security technologies, they’re also driving a remarkable change in our financial landscape. Industry association GSMA reports that the number of registered mobile money accounts grew by 12.7% globally in 2020, part of the USD5tril contribution mobile technologies are expected to add to the global economy by 2025.
The growing reliance on mobile technologies for our everyday needs is transforming our use of money, as users turn to e-wallets and mobile money apps for their payment needs. Daily mobile money transactions are expected to surpass USD3bil by the end of 2022, a rise of almost 50% from 2020.
This trend showcases the significant need for secure mobile money solutions that can verify, secure, and manage the huge mobile money market. That includes those like our own Mobile Money offering, which provides an adaptive solution to protect against mobile fraud risks. This rapidly evolving mobile money landscape will require analysts and fraud experts to quickly adapt and scale up their capabilities in order to keep track with customer usage.
4 – Virtual reality with very real risks
Virtual reality has been something of a technological what-if on the horizon for decades, but recent commitments by major technology companies like Meta (once Facebook) are likely to rapidly accelerate adoption, and the inevitable fraud risks.
Visionaries promise a world where every human interaction can take place in a virtual space, from the slightly uneasy idea of shopping for groceries in a virtual supermarket to attending rock concerts on the digital plane.
Like any new technology, widespread adoption of virtual reality is certain to draw in fraudsters looking for new ways to target users. That could be elements like a virtual version of call spoofing where fraudsters replicate and imitate virtual avatars to steal personal and financial information, emotional manipulation using virtual environments, and more standard financial fraud through hacked accounts and payment information.
With the number of VR devices shipped projected to rise from 13.5 million in 2020 to 112.6 million by 2026, the need for innovative and evolving fraud management is key.
5 – Buy now pay later needs to protect now
Buy Now Pay Later (BNPL) is a payment mechanism primarily used in retail, whereby customers can purchase a product today on credit, with the promise of paying off the debt through payments in future.
The growth of BNPL has been remarkable in recent years, driven by the simplicity and user-friendly nature of the mechanism. Data by WorldPay shows BNPL accounted for around 2% of total global e-commerce transactions in 2020, and is expected to reach a total market value of USD700bil by 2023 according to Boston Consulting Group.
The simplicity of BNPL also demonstrates its vulnerability to fraud. It is essentially an application risk product where application processes must be undertaken rapidly at the point of sale—be that online or in person—in order to encourage use by customers.
This demand for rapid processing time can lead to BNPL providers being vulnerable to fraudulent applications, often using faked customer details. Tackling this risk requires sophisticated real-time and near-real-time solutions like our own Application Risk product, which provides customizable and rapid accept/decline/defer decisions which offers functionality adjacent to the needs of the growing BNPL landscape.
Discover more about fraud
The types of frauds in business and society are constantly changing. Explore some further reading to keep pace with the landscape: