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Finance Fraud

What is Transaction Fraud and How to Prevent Transaction Fraud?

transaction fraud detection

Today, people can use business services globally. Digital transactions allow consumers to connect with brands all over the world and take advantage of eCommerce opportunities.

Building trust in digital commodities is ideal for your business to succeed. Businesses don’t know who exactly they’re transacting with. So, transacting online requires verifying identities and preventing online transaction fraud.

Apart from customer onboarding, businesses have to continue to protect themselves from transaction fraud. Businesses should be able to identify suspicious activities or anomalies intelligently and generate accurate and timely feedback on the transactions.

In this guide, we’ll cover what is transaction fraud and how to detect transaction fraud.

What is Transaction Fraud?

Transaction fraud is a major risk for any business that does business online. The most common types of transactional fraud include identity fraud, fake payment methods, or the use of fake information by a fraudster. 

Transaction fraud committed by organized criminals leads to legit customers being victimized. Individuals that commit transaction fraud seek to abuse the business policies and chargeback policies. 

According to reports, criminals stole more than £609.8 million through authorized and unauthorized transaction fraud.

The biggest problem is that the situation is continuing to get worse.

Types of Transaction Fraud

1. Authorized Fraud

This type of transaction fraud tricks a customer into making a payment. The methods to conduct this type of fraud include:

  • Purchase scams
  • Investment scams
  • Romance and advance fee scams
  • Invoice fraud
  • CEO fraud and impersonation

These frauds rely on social engineering, fake phone calls, text messages, emails, etc. to trick customers into making a payment.

2. Authorized Push Payment (APP) Fraud

Authorized push payment (APP) fraud type of fraud is similar to authorized payment fraud. Fraudsters trick customers into sending payments into an account controlled by a criminal. Fraudsters could act as a government department, debt collection agency, or someone else to get payments.

3. Unauthorized Fraud

Another type of money transfer fraud involves payments that happen without the victim’s knowledge. This type of fraud is also known as account takeover fraud or ATO.

Fraudsters use several techniques to make this type of fraud happen:

  • Phishing emails
  • Fake call centers
  • Device compromise 
  • SIM swap
  • Malware and ID spoofing

4. Account Takeover Fraud

Account takeover fraud is a type of ID theft and a very common type of transaction fraud. Fraudsters can’t take over an account without stealing users’ personal information such as account credentials, security question answers, and other account data.

5. Card Not Present Fraud

CNP is also referred to as ‘remote purchase fraud’, this type of card payment fraud makes unauthorized use of stolen or leaked card details. Most of the information is obtained through data breaches, phishing emails, or purchases on the dark web.

6. Lost or Stolen Card

As the name suggests, this type of fraud happens whenever a user loses their card or it gets stolen. Fraudsters use a card without the user’s permission and usually without the user’s knowledge. 

7. Chargeback Fraud

Chargeback fraud or credit card dispute fraud is an intentional attempt by a cardholder to make an illegitimate chargeback to the card after an online purchase. 

Customers who do chargeback fraud intentionally tend to use these reasons most commonly:

  • The charge on the card is not recognized by the user.
  • The product or service hasn’t been received.
  • The product was damaged, defective, or didn’t match the description.
  • The card was stolen or used without consent.

Strategies to Prevent Transaction Fraud

  1. Verify Customers at Onboarding

The best way to beat fraud is to verify customers during onboarding. The best practice in transaction fraud prevention is to recognize risk during the earliest stages of building a relationship with a customer.

Use online document solutions to onboard customers from all over the globe. Keep track of every small activity that a customer does and flag anything that looks suspicious or out of character.

  1. Take a Risk-Based Approach

Risk assessment is more crucial for businesses than what people think. A risk-based approach to transactions helps in effective and efficient transaction monitoring.

A risk-based approach doesn’t need to cover all scenarios and it should be sufficient to understand each product or service and sales channel. When you segment customers, products, and services in this way, a business can carry out custom-made transaction monitoring.

  1. Refine the Process

You can expect to detect and prevent fraud with any run-of-the-mill process. The entire fraud detection process should be a combination of customizable workflows, adaptive rules, strict rules, CDD and EDD methods, and so much more.

Without combining multiple techniques into a single workflow, it’s almost impossible to detect new-age fraud. There’s no single “perfect fraud detection” solution out there. So as a business, you have to combine multiple solutions to ensure your business and customers are safe from fraud.

Every single component should provide some kind of value. Successful fraud detection and prevention should happen at every step, not just one step.

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Finance

5 Things You Need to Keep in Mind While Integrating Digital Payments

integration digital payments methods

Digital payments have become the norm when it comes to consumer finance. According to some new reports, emerging payment methods such as account-to-account payments, digital wallets, and Buy Now, Pay Later. More than 80% of all consumers have used digital payment methods in the last 1 year. This number is expected to grow to 93% by the end of the next year.

A lot of these digital payment methods rely on the open banking framework and are a natural progression of shifting landscapes. In our guide, we will be telling you all the ways things you need to consider while integrating digital payments systems into your FinTech solution.

Things to Consider While Building a Digital Payment Method

1. Consumers Want Convenience Over Anything

Consumers all across the globe are using digital payment methods and it’s easy paying bills using this method. Paying bills and managing finances online is easier than any other method.

Subscription bills, utilities, loan repayments, and retail payments are more convenient with open banking-powered apps and services. Around 80% of all customers already know of account-to-account payment, but they may not be aware of the benefits of open banking. Open banking payment methods add speed and efficiency to the process.

2. Consumers Want Flexibility While Making Payments

Almost all global customers want flexibility and control to optimize their digital payments. Similar to the motivations around bill payments, consumers are connecting their accounts to automate the repayment process for BNPL and installment loans. 50% of consumers are currently open to the idea of connecting their bank accounts with other financial services to enable auto payments, and over 52% of customers claim that they want automated repayment solutions to prevent missed payments.

3. Security is the Top Priority for Customers

Consumers understand the value digital payment systems bring to the table. The customers who aren’t on board with digital payment methods are mainly because they think it’s not a secure method of sending money.

If you’re looking to integrate a digital payment system with your FinTech, then you need to build trust about digital payments in your customers. Building comfort with emerging digital payment methods is a key step in supporting future adoption as the two are tied together. Faster transactions, the convenience of payment, transparency, and security are the top reasons for customers to overcome security issues.

4. Consumers Use FinTechs to Keep Track of Their Finances

Consumers are relying on FinTechs and also open baking to get through everyday financial activities. The reason is simple, FinTechs make it easy to handle these tasks than doing them manually. 83% of all consumers have used digital tools at least one time to handle financial activities. Over 50% of customers use technology to complete 4-5 tasks. The majority of users see making payments as the only beneficial use case of FinTech companies and open banking technologies.

5. Latest Technologies are Most Famous Among Gen Z And Millennials

Newer generations are more likely to adopt newer technology compared to older users. When it comes to digital payments younger generations are the ones who pushed forward the use. It’s anticipated that their use case will keep on growing. There are generations who are less likely to make payments compared to younger generations. The percentage is 50 for Gen Z and 78 for Boomers. Younger generations are less likely to use cash for making payments. But security remains a major concern for all generations while using digital payments.

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Finance

Understanding NFC Payments: The Complete Guide

NFC Payments

Near-field communication (NFC) uses radio waves that are similar to radio frequency identification (RFDI), to read and send information between two NFC devices. NFC technologies are mostly used in warehousing labeling and they’re incredibly helpful in tracking applications for simple inventory scanning of shipments, products, and customer orders. NFC is even used in automated toll booths to collect information from crossing vehicles. 

In the FinTech environment, NFC payments lead to contactless, encrypted, and streamlined payment methods. This payment method removes complexity from the process by eliminating the need of carrying cash, credit, and debit cards. Customers can use their smartphones to make purchases. NFC payments are relevant today with growing health and safety concerns.

While NFC technologies are pretty similar to RFID and Bluetooth technology. However, there are some major differences between how the technology is used in the FinTech environment. NFC payments in the FinTech landscape to ensure a streamlined and highly secure checkout process.

What’s an NFC Payment?

Not a lot of consumers know about NFC payments, chances are that you’ve seen these payments working in real-time. It could be advertisements, in person or for some person waiting in line in a store. With contactless payments becoming more and more famous, NFC payments are becoming a common method among consumers. 

NFC payments are contactless and secure payments that use NFC technologies to exchange data between an NFC reader and an NFC payment device. Some common examples of these NFC payment devices are Apple Pay, Google Pay, eWallets, and EMV cars. NFC readers are the payment processors that you can use to make contactless payments anywhere. For an NFC payment to work, both the devices should be equipped with NFC chips.

Apple introduced Apple Pay with the launch of the iPhone 6 in 2014, and it quickly became a sensation. Some consider Apply Pay to be the birth of NFC payments. Since then, most smartphones come equipped with an NFC chip.  When two devices with NFC chips are in close proximity with each other, radio waves transmit data to and from each other to complete a payment instantly. You have to hold your device close to process the payments because the NFC chips inside each device only work when they’re in close proximity to each other.

RFID can transmit data from up to 100 meters away, but the frequency used for NFC payments ensures you must be close by to communicate between devices. This makes sure that NFC chips nearby are unable to transmit data for secure payment processing.

Are NFC Mobile Payments Secure?

If you compare NFC payments to debit and credit card payments, they’re equally as secure. Here are some factors that will help you understand how secure NFC payments are?

  1. Device Proximity

NFC payments rely on a radio frequency of 13.56 MHz, and NFC payments happen only when two devices are incredibly close to each other. Consumers don’t need to worry about someone intercepting the signal to interrupt payments or steal data. 

  1. User Initiation

A user needs to activate NFC in their device before making a payment. Users can secure this NFC activation process with a passcode, fingerprint, or facial unlock. This makes the NFC payments process extremely secure. 

  1. Secure Element Authentication

This is what makes NFC payments incredibly secure. Once a user approves that they’re making an NFC payment, the data is transmitted and validated via a separate physical chip or cloud element known as the secure element. Secure elements are protected by a unique digital signature that relies on an OTP to move requested data.

  1. Encrypted Information

Any transmitted NFC payment information is encrypted and secured, this means a specific account or amount details can’t be hacked or cloned.

Why Should You Use NFC Payments?

There are several reasons to use NFC payments, the first being convenience. Businesses that use NFC payments are promoting themselves as NFC payments being their primary checkout process. Not just that, they allow customers to make payments without limiting them to cash, and card payments.

  1. Security

As with any electronic payment process, consumer security is the first and foremost concern. NFC payments are highly secure for both consumers and businesses. They leverage an identity verification required to even initiate payments.

  1. Payment Speed

Speeds of NFC payments are almost instantaneous similar to credit or debit cards. It takes just a few seconds for the information to be transmitted. This information is read by a secure element for authorization to process the payment. 

  1. Convenience for Consumers

Consumers can now use smartphones to send and receive money. Most smartphones launched today come equipped with NFC chips, so they can make contactless payments. With NFC payments, consumers can make purchases even if they don’t have cash or cards with them. 

Future of NFC Payments

Once NFC payments became a common practice, several services that revolve around NFC payments popped up in markets. The preference of NFC payments are at an all-time high. It only makes sense for mobile payment options to be available to consumers. There’s no need to carry debit or credit cards when you already have cash with you.

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Finance

UK Payments Changes after Brexit

impact of brexit on uk payment

For businesses operating globally, UK payments are some of the most challenging types of payments after the implementation of Brexit. While the vote that decided the UK’s departure from Europe took place in 2016, the changes brought forth by Brexit only came into existence in January 2021. Not just customers, but the impact of Brexit is going to be a challenge for international eCommerce businesses that also operate in the UK.

Online shopping was incredibly popular in the UK even before the Covid-19 pandemic. After the pandemic, the online shopping industry has become supercharged, and compared to their European counterparts, UK shoppers spend on average per capita (€3,344 compared to €2,184.24 spent by the average European).

As a matter of fact, the UK is the third-largest global eCommerce market, right behind the USA and China. eCommerce businesses selling to the UK have to make sure that they’re keeping up with the potential impact of Brexit on payments and shipping procedures.

How does Brexit Impact eCommerce Merchants?

If you sell products to the UK from Europe or any other country, you need to know about all the ways Brexit can impact your eCommerce business. Brexit can impact a business’s ability to accept payments from UK customers. 

  • Currency Fluctuations: The volatility in pound sterling exchange could impact the profits you make from your sales. If you charge in your native currency, while the pound is performing low, the UK customers will feel the prices are expensive and they’ll search somewhere else. Another option is to charge customers in Pound sterling, after looking at whether you need to adjust prices to consider the price fluctuations. Generally, charging in native currencies is a great practice for cross-border eCommerce that can improve sales and profit margins while reducing the sale abandonment process.
  • EU Passporting: Financial services businesses operating in the UK will no longer be entitled to provide in the EU without additional authority. The UK leaving the EU makes it a “third country” and thus businesses there lose the “EU Passport”, in turn limiting the international payments between the two countries.
  • Changes in Local Payments: As the definition of European countries can differ between card schemes and other payment methods, local online payment methods are sure to be affected. Using a payment method that provides you access to local payment methods can help with local currency settlements and cross-border fees acceptance makes the process much better for merchants.
  • No Freedom of Movement: Now that the UK has removed itself from the EU, there are stricter customs regulations, and goods from global merchants are taking longer to arrive. To mitigate this challenge, if your business has lots of customers from the UK, it’s worth keeping a percentage of it at a local warehouse to reduce shipping time to customers. Using a third-party fulfillment service in the UK for storage to avoid future issues.
  • Volatile Trade Rules: With the relationships between the EU and UK in jeopardy, merchants will stay up to date on new changes and all the situations surrounding them. The UK government website is a good start in terms of staying informed.

What to Consider While Accepting Payments in the UK?

  • Keeping up-to-date on current situations and regulations around accepting payments from the UK.
  • Make sure that the price you offer to consumers considers potential changes – or do you need to adjust prices for UK consumers?
  • Offer preferred local payment methods to encourage UK consumers to stay loyal.
  • Check new VAT rules for the EU and other countries selling products and services to the UK.
  • If you already sell to both the UK and EU, you’ll now need a UK EORI (Economic Operator Registration and Identification Number) as well as EU EORI.

Brexit and New Payments: Keeping Your Business Ready

The complete impact of Brexit on accepting UK payments may not be clear, but it’s also worth being ready in advance to avoid making crucial mistakes. Many UK consumers will be experiencing a variety of challenges because of the changes, and if you can make their eCommerce experience as smooth as possible, they won’t leave your business for other customers.

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Finance

Financial API Integration

Financial API Integration

Over the last decade, a new financial landscape has come into existence using APIs. This ecosystem is interconnected, and open, and leads to building an array of new financial services that offer people more freedom to handle their finances. In this guide, we’ll walk you through what financial API integrations are and how they work. Also, how financial API integrations help both businesses and consumers.

Understanding Financial API Integrations

Application programming interfaces (APIs) are a set of tools and protocols that allow software programs to communicate with each other. API integration helps in connecting two or more applications together and allows for seamless exchange of data. 

Financial APIs are most often made to integrate a bank’s and financial institution’s core banking platform with third-party data networks and applications. This allows for safe and secure consumer-consented third-party access to essential account information such as account and routing numbers, balances, and transactional history. These financial API integrations allow these trusted third parties, be it FinTechs, mortgage, and auto lenders, or any other financial institutions, to build data-driven financial solutions.

How does Financial API Integration Work?

Based on how they’re used, financial API integrations can serve several roles, such as:

1. Partner API (One-to-One)

When financial API integrations are built directly to work between a financial institution and a financial app or service they’re known as partner APIs. These types of APIs are built when a financial institution uses a third-party vendor that builds a FinTech solution for them. These solutions are perfect for customers of a single institution, instead of being available to the general public.

2. Open API (Many-to-Many)

Open banking APIs are usually built by data networks, rather than by financial institutions or by a third-party vendor. By building API integrations with several financial institutions, the data network creates an open API that can connect several financial institutions for many FinTechs and services. 

In this situation, a FinTech app wants to allow customers from several financial institutions to connect their accounts to the app. The work of building API connections to each financial institution is carried out by a data network.

The term Open Finance comes from open banking APIs. In the open finance ecosystem, consumers have complete control over their financial data, and by letting third-party access consumer data, consumers can gain access to personalized services.

Types of API Integrations

There’s no limit on the type of APIs and the role they serve for businesses and consumers. Below, we have mentioned some of the most useful APIs that have been changing the financial landscape:

1. Account Verification

Account takeover fraud has become a common instance in recent times. Financial institutions have no way to verify if a consumer who’s trying to access a new FinTech app or service is legit or not. The new account that’s being created needs to be verified. This is the first step toward funding a new account on a trading app or connecting a bank account to a P2P payments platform.

The account verification process then verifies if the person using the account actually owns the account. This is crucial for preventing account takeover fraud. DIRO’s bank account verification fraud helps banks and FinTechs in verifying if an account is being used by the legit owner or not.

2. Balance

Once consumers authenticate their accounts, they can grant permission to different types of account data to digital financial tools that they want to use. One of these data is the account balance, by verifying a user has enough funds in their account, FinTechs can prevent users from going into a loss by making a transaction over their account balance. 

Balance-checking APIs also offer pre-funding, and if a new customer wants to add money to the FinTech app, the API will check if the person has enough balance in your account to handle the cost. Thus saving the consumer from the risk of non-sufficient fees. 

3. Transactions

A transaction API allows a bank, financial institution, or FinTechs to access a customer’s transaction data going from the past couple of months and years. This crucial data is vital for making personalized financial services possible. 

4. Account Aggregation

Most consumers have several accounts for checking, savings, loans, investments, credit cards, and more. It can get hard for users to manage all this data, so account aggregation APIs create a dashboard for users to manage their data in one place. 

Let’s say someone wants to access their entire investment portfolio in one place and show changes made in real-time. API integration between their investment accounts and a FinTech app could offer a solution.

An API integration that can automatically connect all the information and share it with the lender during the application process can greatly reduce manual efforts.

Benefits of API Integrations

Financial API integrations make it possible to fill the gaps left by basic banking services. This leaves room for private companies to create personalized financial services with ease. These services help in making several processes faster, more efficient, and more secure for consumers. 

The benefits of financial APIs can be broken down into 4 groups such as:

  • Financial institutions
  • FinTech companies
  • Consumers
  • Non-financial businesses

Need for a Connected Ecosystem

Financial APIs are becoming more and more essential for financial institutions, FinTechs, and consumers. Financial APIs allow for new possibilities that financial institutions and FinTech apps alone couldn’t provide. 

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Finance

Information about New Indian Digital Currency

Indian digital rupee

If you don’t know already, the Digital Rupee is India’s own regulated cryptocurrency that will be soon launched by the RBI. On February 1, while announcing the annual budget for 2022-23, Union Finance Minister “Nirmala Sitharaman” announced to the whole country that RBI will be launching an Indian digital currency in the financial year 2022-23. The currency will be called “Digital Rupee” and will be based on blockchain technology. Digital Rupee will be the rival for other cryptocurrencies such as Bitcoin, Ethereum, and more. There’s a lot of speculation about the Indian Digital Rupee. 

During the budget announcement, the finance minister said that India’s digital currency will be launched by the Reserve Bank of India (RBI). She also stated that the Indian rupee digital currency will be a cheaper and more efficient method of sending and receiving money throughout the country. The launch of the new Indian digital currency is already under work with RBI making sure every step is followed through carefully. The RBI is working on an implementation strategy that makes sure that every part of the general populace has access to the currency while ensuring the safety of the users. As of now, there’s no set/fixed Indian digital currency launch date.  

The Digital Rupee can help the country lessen the usage of the older cash system.

Indian Digital Rupee: Coming This Year?

New Indian digital currency will operate on the well-known blockchain technology, which is the basis for all the other cryptocurrencies globally. There’s no news on whether or not users will be able to mine the currency, if yes, will it be considered legal?

India isn’t the first country to launch its own cryptocurrency. Before the Indian rupee digital currency, China already started and tested its cryptocurrency in several cities. The US and UK governments have also been considering starting their own cryptocurrency. 

While the government hasn’t proposed any bills on crypto, the two primary regulatory clarifications from the finance minister have made it clear that digital currency is a growing industry. As RBI will be launching the cryptocurrency, there will be some heavy regulations surrounding the currency, ensuring safety, efficiency, and fair transactions. Plus, as RBI will be entering the blockchain scene, it suggests that governments are seeing the benefits of blockchain technology and how it can help the consumers. 

Although, the hefty 30% tax on crypto transfer gains is sure to halt the new users entering the space. From here on, we can only wait and see where this Digital Rupee idea proposed by the Indian Government will head to.

What is CBDC in India?

Central Bank Digital Currency is what CBDC stands for. CBDC is the legal tender issued by a central bank in digital form, it’s the same as a fiat currency and is exchangeable one-to-one with fiat currency. The only difference between the two is their form.

What’s the Difference Between CBD & Cryptocurrency?

CBDC is a digital or virtual currency, but it’s not similar to other private currencies that have gained popularity over the last decade. As per the RBI, virtual currencies aren’t as useful as traditional money as they aren’t commodities and they have no intrinsic value. Whereas a CBDC is centralized, cryptocurrencies are decentralized and don’t represent the finances of a particular person or entity. 

The CBDC can also reduce transaction demand for bank deposits, but they reduce settlement risks, being-risk free, CBDC can lead to a shift from traditional banking services. If banks lose deposits, their ability to create credit will be limited and central banks can’t provide credit to the private sector. 

What’s the Need for CBDC in India?

There’s been a slow yet accelerating shift of digital payments combined with an all-time low interest in cash usage, especially for small value transactions. While CBDC is highly unlikely to replace the use of cash, the currency to GDP ratio, if switched to CBDC, would cut the cost of printing, transporting, storing, and distribution of physical currency.

Future Plans by RBI

The RBI has been figuring out the use cases and building an implementation strategy for introducing the CBDC with almost zero disruption to the cash-only economy. According to the Central Bank, several crucial elements need to be designed and tested before the digital rupee in the form of CBDC can be introduced. The RBI is working out implementation models and strategies, and use cases of the digital currency.

When’s the Expected Launch of Digital Rupee?

Even if the RBI is ready to launch the Digital Rupee for everyone, it’s impossible before the crypto law is passed and approved in Parliament. Some changes will be required in the RBI Act as well before the digital rupee is launched in India. Some of the most crucial changes in the RBI Act are:

  • Coinage Act
  • FEMA
  • Information Technology Act

Without the crypto bill, and small changes in the RBI Act, there’s no way that the Indian digital rupee is launched in the country. 

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Finance

Online Payments: Reinventing Customer Experiences

Online Payments reinventing customer experiences

The idea of the digital economy has been around for a long time, but the Covid-19 pandemic finally pushed the idea into a reality. Several businesses have made the idea possible by launching digital financial products and services. Before the pandemic, online payments were becoming highly famous among customers. Cash payments have been steadily declining since the year 2000, falling by around 10% every year, and the pandemic completely changed the process. According to industry experts, cash transactions will be eliminated in the next decade. 

However, traditional banking alternatives to cash still contain huge fees and inefficient practices. However, businesses are finding that traditional banking alternatives to cash aren’t equipped to deal with the modern instant economy and digitally demanding customers. 

Customers want a financial system that will allow them to send and receive money instantly and without much hassle. Leading more businesses to place more value on the online payment model. 

Open banking APIs allow businesses of all kinds to set up their own payment methods outside of traditional banking services. Open banking APIs leverage customer data, so they allow businesses to tailor build digital financial products and services for customers.

What are APIs and Their Value?

An API is software that allows two different applications to communicate with each other. One of the biggest and most common examples of APIs are food delivery apps or ride apps like Lyft, which offer customers an option for making payments inside the app. In the long run, it helps in improving customer experience.

For the customers, the online payment process becomes fairly simple and it’s all possible due to APIs.

As the banks themselves aren’t equipped enough to handle online payments, this leads to slow payments, expensive transfer fees, and a completely inefficient process. After all, banks don’t have the technical prowess to handle growing customer demands. 

This is where open banking APIs come in. An API (Application Programming Interface) acts as a third party between accounts. APIs are specifically designed to offer a better online payment experience for customers.

Benefits of APIs

As customers are becoming more digital-friendly, they want more options for online payments. For banks and other financial institutions to keep up with customers’ demands, they need a seamless and secure payment method.

As traditional banking methods are expensive and inefficient, non-banks and FinTechs can struggle to find a payment infrastructure that can meet their customers’ expectations. Fortunately, open banking API can in fixing this problem by offering benefits such as:

1. Faster Payments

API software can support regulatory and operational tasks of plugging into payment schemes meaning that they can make online payments faster compared to banking methods. 

Businesses will be able to receive and make payments instantly, instead of waiting for days for a payment to be confirmed.

2. Faster Settlement & Reconciliation

APIs can make for better payment settlement, so accounts and debts are settled quickly. This means users are aware of their account activities at all times. This is coupled with faster reconciliation, so accounts show all the activities in real-time, ensuring better financial management.

3. Enhanced End-to-End Payment Experiences

The embedded payment feature reduces the need for customers to enter their financial details over and over again. APIs allow businesses to provide seamless online payment which can support customer needs. And, as the user’s accounts are never in direct contact with the bank’s servers, APIs offer an extra level of financial security compared to traditional payment methods.

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Finance

Technologies For Fighting Financial Crime

technologies for fighting financial crime

The digitization of the world has become the stepping stone of all kinds of online fraud, no matter how big or how small. Institutions of all kinds are trying their best to develop or make use of existing technologies that can help them fight all kinds of financial crime. Financial crime identification is as crucial as employing technologies for fighting financial crime.

Technologies for fighting financial crime are being combined with human intelligence to create a powerful technology that helps in huge team compliance. To prevent financial crime, businesses and other institutions that use KYC/AML processing need to use technologies for fighting financial crime.

Rise of Financial Crime

According to a global survey, it was revealed that more than 3,000 managers who deal with compliance-related operations had come across multiple financial crimes during their operations.

Even with the rise of technology, financial crime remains prevalent. The loss from some specific financial crime can cause a lot of money. This is why technologies for financial crime prevention are crucial.

During the survey including banks, financial technology businesses, and other institutions, the thing that came to light was that financial crime had multiple disadvantages. Several organizations lost their corporate value, lost investor confidence, and some businesses lost their brand reputations and supplier relationships as well. 

All the businesses could have saved themselves from losses if they had the right financial crime identification methods in place. To prevent financial crime, institutions need to make use of the right technologies for fighting financial crime. As of right now, there is a clear and urgent requirement for organizations to employ innovative technologies to tackle the problem of financial crime with a new approach.

Technologies For Fighting Financial Crime

1. Due Diligence Checks

Huge organizations with a large number of due diligence processes spend around 4 percent of annual turnover on third-party due diligence checks. Regardless of using third-party organizations for due diligence checks, almost half of the new relationships with businesses don’t have the needed due diligence checks.

This huge gap in the compliance process like KYC/AML can allow financial crimes to go undetected until a huge loss has been incurred by businesses. The ideal way to prevent financial crime is by adding more heads to the due diligence process. Adding more budget to the due diligence process can save organizations to suffer heavy losses. 

2. Constantly Adopting New Technologies

A lot of organizations are already making their way towards newer technologies, the main purpose of the technologies is to enhance the compliance process and prevent financial crimes. 

A survey conducted by businesses showed that most businesses are embracing cloud base data and technologies for financial crime prevention. Also, around 50% of people are using API-based document verification technologies, others are using artificial intelligence and machine learning-based technologies.

In institutions where the technology isn’t applied, there can be huge losses. There are even organizations that showed no interest in employing newer technologies.

3. Faster Onboarding Process

Technologies for fighting financial crime can enhance multiple parts of the business. Making use of newer technologies can offer so many benefits. The intelligent use of technology can:

  • Speed up onboarding process
  • Reduce strain on existing resources
  • Reduce the risk of human error
  • Allow organizations to onboard more customers
  • Can decrease the onboarding times and shorter time for revenue generation. 

Almost all the top technologies for document verification or financial crime prevention are cost-effective. Apart from being cost-effective, they can enhance the overall client experience.

4. Trusted Human Experience

Businesses that use technology to prevent financial crime are more likely to find success while completing onboarding checks. After realizing this, organizations are trying to pour more funds into investing in newer technologies.

In upcoming years, the expenses on third-party due diligence checks are expected to grow by up to 50%.

5. DIRO’s Online Document Verification Technology

Using DIRO, institutions can easily verify any person or information from any bank, utility company, or government. DIRO guarantees that you can trust each PDF and use them as an original document in KYC compliance and all kinds of other processes.

DIRO is one of the best technologies for fighting financial crime. Using them, you can reduce the risks of financial crime in your business operations. Businesses who are not afraid of adopting newer technologies for financial crime prevention, can try DIRO for free or even get a demo on how it works.