Finance News

How Banks are Working to Combat Online Bank Fraud Today

One of the most significant changes in the world of personal finance over the past couple of decades has been the increased prevalence of online banking and completing electronic transactions. While people in the past used to go into a bank on a regular basis, most people are now able to complete their transactions through electronic payments, mobile banking, and other convenient services. While this has added a considerable amount of convenience and support to customers, it has opened up the risk of fraud.

Banks all across the country have continued to report and increase in bank fraud over the past decade. This has led to losses and frustrations by individual consumers, commercial clients, and the banks themselves. The FTC has estimated that customers are losing billions of dollars due to fraud each year. Beyond the financial losses incurred, fraud can also impact a bank’s reputation and lead to regulatory violations. Because of this, finding a way to combat fraud is very important. Today, banks are taking a variety of steps that can help to combat online banking fraud.

Employee Training

One of the most valuable ways a company can help to combat fraud is through employee training. No matter what role an employee has when working for a bank, it is very important that they are aware of different fraud schemes and red flags that they should look out for. Further, they should know how to escalate fraud and properly warn and support a client if they are concerned about fraud taking place. In most situations, a company should look to conduct fraud training for all new hires and to have it updated at least once per year. This can ensure all employees continue to be made aware of the latest trends in online banking fraud.

Educate Customers

While it is important to ensure all employees are aware of potential fraud risks today, customers should also be properly educated. When a customer is educated on the subject and is aware of the latest trends in bank fraud, they will also be able to notice risks before it is too late. Banks are able to do this by having fraud awareness educational videos available online and by sending out notices and warnings to customers to ensure they are aware of the most current risks they face when it comes to managing and monitoring their accounts. This can include ensuring customers are aware of the security services they have access to through online banking and that they are taking advantage of them.

Monitor Transactions

Another way that a bank can combat online banking fraud is by properly monitoring transactions. All employees will have trends when it comes to spending and using their money. If they suddenly have a wire or other unusual activity that takes place out of their account, or have a sudden change in spending trends, it could be evidence of fraud. Banks should have appropriate monitoring systems in place to catch these trends and will then want to ensure they notify customers when it takes place. Any unusual activity should be held suspended until a client confirms the activity.

Invest in Technology

Banks today are also able to combat online banking fraud by investing in appropriate technology. One form of this is to use banking authentication technology. This technology can include multiple ways to authenticate an account and transaction. This can make it far more difficult for someone to access an account and complete a transaction illegally, which will help to protect the customers of the bank. The use of artificial intelligence and machine learning is also becoming more common for banks when it comes to fighting fraud. All banks should look for ways to incorporate this into their business.

Online bank fraud continues to be a serious concern for consumers all over the country. Those that are victims of fraud can lose a lot of money that they may never be able to recover. For banks, ongoing fraud is a serious security risk that they must continue to take steps to combat. Today, a standard bank uses a variety of processes, steps, and forms of technology that can help to combat online banking fraud.

Infographic created by
DFIN, an SEC reporting software

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