Independent Banker - November 2020 - 77

Innovative
Insights
How to prevent new account fraud online
For community banks, digital channels are the most
cost-eff ective way to deliver financial products and
services. Many banks fear that online services will lead
to unmanageable and costly rates of fraud, but when
done right, digital channels also provide a rich reservoir
of behavioral data that helps banks better manage risk.
Most cases of fraud are preventable with the right tools
and a thoughtful risk-management strategy.
Fraud in physical vs. digital channels
Digital fraud often follows similar patterns to in-person
fraud, and many cybercriminals use the same strategies
as in-person scammers. For
instance, check kiting is a
common way of accessing
unauthorized credit by writing
physical checks from an
account with insuff icient funds
to a second checking account
and then withdrawing the
transferred funds before the
check bounces.
Kiting can also occur in digital
channels such as ACH services. As with in-person
check kiting, ACH kiting can be prevented by putting a
hold on the money. However, this results in poor user
experience-and there are more sophisticated ways
to diff erentiate authentic transactions from fraudulent
ones. For instance, banks have the option of setting up
real-time transaction monitoring. They can then apply
enhanced fraud analytics to assess if the transaction
follows a legitimate pattern or whether the account
holder has committed fraud in the past. By using a more
sophisticated suite of tools, banks can reduce the risk
of fraud without an extensive manual review process or
putting legitimate transactions on hold.
Fraud prevention and customer experience:
a tradeoff ?
Risk management will always involve certain tradeoff s,
especially with regards to the customer experience.
Digital banking customers are willing to disclose
personal information-but only to a degree. The key is to
ensure that banks are consciously balancing customer
experience with risk mitigation. MANTL not only off ers
banks the data they need, but it also provides the
analytical context to understand the impact of their
controls on the customer experience. This way, bank
leaders can know they are optimizing both.
Visit mantl.com for more information on how to reduce
new account fraud online.
The key to eff ective fraud prevention
As community banks implement fraud prevention
solutions, a common misconception is that they can
minimize risk by choosing an all-in-one fraud-prevention
system. Fraud prevention and identity management
solutions such as Equifax, LexisNexis and QualiFile
each off er data analytics and predictive insights for
fraud prevention-but none are suff icient as a one-stop
shop. To unlock the full potential of fraud-prevention
solutions, a bank needs to rely on multiple services, with
each providing protection in the areas where they are
strongest.
For its clients, MANTL simplifies fraud prevention by
enabling banks to verify applications against various
data providers. For instance, to protect against
address fraud, MANTL runs a user's address through
four separate data sources, which are all additive
to achieving a high-eff icacy match rate. By running
provided information through the databases that
are best suited to validating that piece of the puzzle,
banks can significantly reduce fraud across their digital
channels.
Raj Patel // COO and cofounder, MANTL
raj@mantl.com // mantl.com
http://www.mantl.com http://www.mantl.com
Independent Banker - November 2020

Table of Contents for the Digital Edition of Independent Banker - November 2020
