Feedzai, BioCatch reports show fraud increase, biometrics adoption plans
A pair of behavioral biometrics providers are separately warning of an increasingly hazardous online fraud environment in financial services and challenges around resource constraints to deal with it.
Online fraud attempts in card payments have increased by 23 percent between April and June of 2021, according to the latest ‘Quarterly Financial Crime Report’ from Feedzai.
The shift towards digital banking and cashless transactions has continued to build in the pandemic’s second year, according to Feedzai. P2P payments increased by 146 percent, cash transactions decreased by 44 percent, and online transactions grew by 109 percent, the report says.
Purchase scams, in which consumers pay for products or services they will never receive, were the top fraud scam in the quarter by volume. The report details other common scams, such as smishing (SMS phishing), and analyzes fraud rates across the United States geographically.
Tips offered by Feedzai for preventing online fraud include making use of the educational resources provided by banks, which are constantly monitoring fraud trends and have a vested interest in protecting customer accounts. Adopting biometrics and two-factor authentication and treating suspicious communications with due care and reporting them to your financial institution are also recommended.
Feedzai acquired Revelock just months ago to add behavioral biometrics capabilities to its fraud prevention platform.
Many financial institutions plan behavioral biometrics adoption, BioCatch finds
In recognition of this changing fraud landscape, two out of three financial institutions expect to increase their investment in fraud management resources, BioCatch says.
Despite this, the top fraud prevention challenge facing financial institutions is a lack of resources or budget to adopt new tools and technologies. A lack of visibility into risks introduced by new technology and the increased friction that can be caused by multifactor authentication were identified as a top challenge by roughly the same number of respondents as the lack of resources (47 and 46 percent respectively).
Almost a third (32 percent) of financial institutions are planning to adopt behavioral biometrics within the next 18 months, while 24 percent are planning to adopt physical biometrics like voice, facial, or fingerprint authentication. Thirty-four percent intend to adopt transaction analysis and monitoring.
The findings are drawn from a survey of 175 global financial institutions from around the world, half of which are from North America, conducted in partnership with Information Security Media Group.
“Advanced machine learning and looking at behavior online will make a difference,” comments BioCatch Director of Fraud Strategy for North America Raj Dasgupta. “Looking at behavior during a transaction allows you to leverage all that rich data to gain insights so that you can do a risk assessment. What was not apparent in the past with just PII-based controls or device-based controls is now pretty apparent with behavioral biometrics.”