Show Me the Money: 3 Strategies for When Finance Comes for Your Fraud Stack

Strategy 1:
Emphasize the Evolution

“Generative AI and other tools that were previously the purview of nation-state actors and high-level researchers with access to a ton of computing power and a ton of subject matter experts can now [be accessed directly through] Discord. These are criminal enterprises, not lone actors, and the speed with which they are able to use these new technologies to hit vulnerable companies and extract financial gain is only going to accelerate.” 

– Cameron D’Ambrosi, Senior Principal at Liminal market intelligence and strategy firm

Nation-state caliber cybercrime tools are now available for your next-door neighbor to use casually when they’re bored on a Saturday night. On the other extreme are rigidly organized and scalable cybercrime rings who are highly efficient and dedicated to their cause. Citizen fraudsters and cybercrime rings that use automation, artificial intelligence, and other advanced technologies are weighed on the same highly threatening and highly advanced level. Although purse strings may be tightening, now is not the time to loosen fraud vigilance.

But finance teams have no reason to know this. Which is why any discussion with finance should start with a level-set. As D’Ambrosi explained during the webinar, “Thinking of your adversary as a random guy sitting in his mother’s basement is not the way you should be thinking about this. Think of them as a bunch of cubicle farms with managers and KPIs and budgets and quotas of fraud goals that they need to hit for the quarter.” Being in the fraud field, it’s easy to forget how other departments might not realize the speed and scale at which cyber attacks can evolve, and how “any hole can be exploited extremely fast,” as ADDI Head of Data Science Mauricio Jacome put it during the webinar. Starting at a place of education on the current landscape and the potential cost of not having the right set of fraud loss prevention tools is crucial. 

Strategy 2:
Measure the Hard Value of Soft Numbers 

“There’s often a big price to pay for cutting corners in fraud prevention.” – Mitul Parmar, VP of Product and Strategy at NeuroID 

Research consistently proves a good user experience is key to customer conversion—with one study finding a 45% increase in customer registration when the onboarding journey was streamlined for friction reduction. Your digital onboarding process cannot be oversold as a revenue optimization opportunity. But it’s not always easy to show numbers of potential loss; how do you measure the cost of the friction and fraud that you’ve successfully prevented from happening?

Jacome walked through a cost-matrix to analyze fraud spend as a valuable approach to ensuring that fraud stacks don’t become overengineered without adding value. He suggests starting simple by asking questions that evaluate your current fraud prevention data: “Will I become more efficient at catching fraud? Will I detect more fraud? Or will I detect fraud that I didn’t detect in the past? You take the new provider and your decisioning service and you layer them on top of it,” explains Jacome. For his further deep dive into how to value the percentage points and look at the best ways to show that the true “value you’re getting is more than what you’re paying for” (or how to find the weak spots to cut if the value isn’t there) check out the webinar replay.

Strategy 3:
Optimize Efficiency vs. Over-Engineer

“We’re seeing a gravitation toward platforms that can provide a more holistic view of identities over the customer lifecycle that allows for sharing of signals and information across those multiple steps.” – Cameron D’Ambrosi, Senior Partner at Liminal market intelligence and strategy firm

In yesterday’s market, when fintechs focused on growth at any cost, they could afford to continually build vendor layers into a heavily enriched fraud stack. But that’s no longer the case. Disjointed point solutions can’t provide the holistic view that experts say is the best defense, and even worse, they’re starting to become an issue themselves as friction piles up in the customer onboarding cycle.

Behavioral analytics, with its ability to use customer’s pre-submit digital body language of taps, keystrokes, swipes, backspaces, pastes, tabs, clicks, etc. as users complete online forms has helped provide a way to see more holistic user identities in ways that expand beyond prevention and into proven conversion support. Bringing behavioral analytics to the fore of the identity verification path is a way to optimize efficiency of the rest of the fraud stack by helping flag genuine vs. risky applicants, then moving through the fraud stack for streamlined or step-up authentication, without adding friction. Emphasizing orchestration in tough conversations can also help untangle and unlayer point solutions that aren’t showing true value.

“You’re Going to Get Teams Battling it Out.” – D’Ambrosi