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Fraud Prevention Best Practices For Successful Customer Onboarding

Believe it or not, ID theft is one of the most common fraudulent activities in the world today. In the year 2015, 13 million Americans lost a whopping USD 15 billion to fraudsters through the means of ID theft. Even though these losses were not targeted at financial services companies, the figures will get worse in the future.

Simply put, fraudsters are targeting online debit and credit transactions on a day to day basis, making the fraud numbers go up drastically over a period of time.  As BFSI companies are increasing their footprint in the world rapidly, they are under constant supervision by fraud monitoring organizations, since financial services companies often find themselves in the midst of various fraud scandals.

Despite their growth, financial services companies are finding it difficult to stay abreast of the changes needed for supporting online services. In order to prevent fraudulent activities during the customer on-boarding process, these companies are required to perform multi-factor identity verification, by including services like auditing and reporting capabilities into their on-boarding procedures.

So the question arises, how can FinTech companies prevent the on-boarding of fraudulent customers and businesses to avoid falling prey to such scrupulous acts? Here are some steps which can help the successful on-boarding of customers without incurring the chances of fraudulent activities:


Know your Customer, which is most commonly known as KYC, has become one of the most important methods to prevent fraudulent activities during the on-boarding process. The process of KYC includes knowing details about the customers, which includes their personal details, which can further be used to gauge the identity of the customers. KYC can go a long way in helping businesses understand the background of their customers, so that on-boarding becomes easier, when it comes to fraud prevention.

Fraud Prevention Tools

As a business, you need to invest heavily in fraud prevention tools, which combine different aspects of the customers during the screening process. Such tools use analytical methodologies to bring together different details of the customers, to bring across a full-fledged report of the customers being on-boarded. Such details include KYC details, spending habits, past payments, etc. This will give a detailed idea of where the customer stands in his professional and personal status. Depending upon the status of the report, businesses can decide whether to on-board or reject customers.

Artificial Intelligence

Technology has reached an all new level these days; Artificial Intelligence has become another top notch aspect which proves this fact. Through Machine Learning and Artificial Intelligence, algorithms can be pre-designed to arrive at a suitable combination, which can be used further to approve/reject customers based on certain parameters, which can help weed out suspicious activity in the short and long run.

Such parameters are often designed keeping in mind the industry standards and the learnings adopted from past trends. These past trends often form the ground work, basis which algorithms are designed to approve/reject future customers. As the trends continue to evolve, so does the range of algorithms and the methodologies of performance. As technology continues to evolve, there are newer and better practices being introduced every day, each of which is aimed at making the on-boarding process more efficient and fraud free.  

Biometric identification

Biometric Technology has become one of the most important techniques in the modern era which is aimed at a better customer identification process. When combined with facial identification, it can become an excellent tool for enrolling customers remotely. This way, the data can be matched with national databases and a fool proof fraud prevention mechanism can be devised, which further strengthens the fraud prevention techniques.

Adopting industry wide fraud prevention practices

Sometimes, there are generic rules which can go a long way in helping companies prevent fraudulent activities within their own organization. Learning from your competitors helps implement best industry practices, which are already prevalent in other organizations, and which go a long way in preventing fraudulent on-boarding practices. The idea is to utilize existing norms to enhance customer on-boarding and convert it into a seamless process.

Fraud can occur in any shape and form. While ID theft is an integral form of fraud, it has become extremely prevalent in the society as of today. Many legitimate people end up losing their identities to impersonators through the virtual sources and physical mediums. It’s imperative to be able to diagnose these issues and prevent on-boarding the wrong customers to avoid financial losses.

About Melissa

Since 1985, Melissa has specialized in global intelligence solutions to help organizations unlock accurate data for a more compelling customer view. For more information on eKYC and AML please visit

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