In 2023, losses from payments fraud scams totaled $485.6B worldwide. With a perfect scenario of high-value transactions combined with a narrow window of opportunity for institutions to intervene, payments fraud scams will only continue to challenge financial institutions unless our industry collaborates for action.
By embracing the power of collective insights from across the industry, financial institutions can proactively detect and prevent payments fraud.
Cross-Channel Challenges
Payments fraud losses are considerable – in 2023, $102.6B was lost specifically to payments fraud scams in the Americas. Criminals take advantage of the unique opportunities within each payment rail, from check to wire, ACH and instant payments. This complexity has changed the way institutions need to approach payments fraud prevention — making a holistic view of risk essential.
The Power of Collaboration: Embracing Consortium Analytics
Consortium approaches are the key to helping institutions stay ahead of financial crime as criminals grow bolder and more connected than ever. Cloud-based consortium data enables institutions to identify patterns of criminal activity, evolving trends, and financial crime risks more effectively across multiple institutions.
Consortium analytics work by profiling the accounts of every payor and payee across a network of thousands of financial institutions using massive amounts of rich demographic and transactional information, to determine if activity is known and legitimate.
Visibility into both sides of a payment is essential to reducing false positives and detecting true fraud more effectively.
A consortium approach provides holistic insights into the payor and payee, giving a financial institution a greater understanding of the nature of a transaction and the entities involved by assessing the history of legitimate activity across a network of thousands of other institutions. This approach allows money mules and fraudulent accounts to be more effectively identified and considered in future analysis for all members of the consortium.
Collective Action to Combat an Industry Challenge
As criminals continue to exploit payments and target victims through complex schemes leveraging social engineering and other methods, it is critical that financial institutions work together to stay ahead of evolving payments fraud trends. Consortium evidence provides greater context to transactions, allowing investigators to prevent more fraud, and interdict earlier to minimize losses.
Read our new White Paper, Payments Fraud: Collaborating to Combat an Industry Challenge to learn more about how collective insights can help institutions prevent payments fraud.
About the Author:
COLIN PARSONS
Associate Vice President — Head of Fraud Product Strategy at Nasdaq Verafin
Colin Parsons spearheads the strategic development of technology solutions to combat fraud at Nasdaq Verafin. Throughout his time with the company, Colin has worked as a development team lead, software developer and in product marketing. Applying the knowledge gained through his roles and experiences, Colin is focused on using technology to solve the hard problems that are persistent within the fraud space.
