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  Nowadays, cyber criminals are into FinTech operations. Experts have warned that cybercriminals, especially internet fraudsters, are more likely to be tech-savvy than some professionals. Little wonder this menace has reached an unprecedented level, drawing global attention. 
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Experts have also observed that fraudsters are now in the FinTech industry, even running their FinTech businesses. Hence, users must be careful. In 2021, 85% of financial institutions worldwide experienced fraud in the process of account opening. Stories exist where scammers steal people’s personal information and credit details by breaking the anti-fraud system, using the victim’s bank account and online wallet to buy an existing account on the black market.  Another form of cyber fraud is called “social engineering” where attackers manipulate their victims into releasing sensitive details. For instance, attackers might send interview invitations designed to look like well-known companies to their victims. Victims follow phishing links that grant the attacker access to their devices or submit their data through a questionnaire that looks like an HR website but is a payment system.  These days, cyber fraudsters are employing the use of more sophisticated technologies like deep fakes. In this article, I discuss five effective ways to prevent fraud in FinTech. 

  • Employ Liveness Detection Technologies

Liveness detection is more like a real-time video user can use to authenticate themselves as the real owners of their accounts. Although there are existing models such as selfies, it does not guarantee 100% security.
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There have been cases where criminals use stolen selfies, wax figures, and other mediums to gain access to user accounts. On the other hand, with a liveness detection request, you can ask users to make real-time actions such as asking them to make a circle with their heads to authenticate real, present people.

  • Monitor Customer Behavior

Another way to prevent fraud in FinTech is to monitor the behavior of clients and know their habits and patterns. These patterns could include password resets, spending behavior and spending volume and speed, change of address, typical shopping time and typical goods and services payment, time and locations of spending patterns, etc. For example, there are things you know your clients can’t afford based on the available data of the said clients. Hence, monitoring the spending characteristics of clients will keep you alert when you notice a strange spending pattern.  With the use of Machine Learning (ML) algorithms, you can gather this data to determine if these patterns are likely fraudulent. This helps to monitor and raise alarm when there is a possibility of fraud. ML reports suspicious alerts and in some cases blocks the account from further transactions. 

  • Employ Biometric Security

Biometrics over time has proven to be more difficult for criminals to crack. This is because biometrics works with a person’s unique physical characteristics such as fingerprints, iris, voice, etc. Experts have opined that biometrics is more secure compared to passwords, which can be lost or stolen. Although in recent times, people’s biometrics have been faked, forging biometrics is extremely expensive, thus petty cyber criminals rarely take the risk, unlike hacking static login credentials. 
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Furthermore, with biometrics, for example, fingerprints, you can easily monitor your client’s login patterns and spot unusual behavioral patterns. For instance, a user in Nigeria might order a large piece of furniture from a large online marketplace and on the same day make a large purchase from China. This is very suspicious. Moreover, there is a list of countries with a high risk of fraud, so it’s useful to keep an eye on the IP location with the help of AI.

  • Basic Web Safety

Another way to prevent cyber-fraud is to educate clients about security basics. You can do this by creating alerts on your website to remind users to avoid the following:
  • Opening digital wallets by connecting to public WiFi
  • Clicking on unfamiliar links
  • Leaving cards exposed
  • Trusting well-known companies that send job offers in return for a registration and personal data submittal 
Finally, warn your clients not to post their sensitive information on Twitter, Instagram, or any other public domain. Warn them about the dangers of displaying full bio-data such as full name, e-mail, and Facebook profile, which leaves them at the risk of fraudsters draining their bank account.

  • Choosing The Right Partner

FinTechs must align their services with the right Know-your-customer (KYC) requirements, which are traditional tools in the market. Nevertheless, several fraudsters produce high-quality fake documents. To prevent this, always cross-check if there are duplicates elsewhere. For instance, you can cross-check if a registered user shares the same photo with a different user. In cases where documents are the same, then there is a case of forgery. Hence, it is important to partner with KYC companies that have a wide spectrum of identity authentication.

Final Words

Clients are more comfortable when they enjoy seamless and secure services through your FinTech apps. Therefore, FinTechs that invest greatly in cybersecurity will win the confidence of users and cause more financial inclusion across the board.  Featured Image Source: Built In
Got a suggestion? Contact us: editor@connectnigeria.com  
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This article was first published on 29th June 2022

nnaemeka-emmanuel

Nnaemeka is an academic scholar with a degree in History and International Studies from the University of Nigeria, Nsukka. He is also a creative writer, content creator, storyteller, and social analyst.

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