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Digital Banking

Haunted by Fraudsters: Post-Halloween Edition

Ben Weyers
Nov 20, 2023

Captain Obvious here: we’re well into fall now with Thanksgiving right around the corner! The season that starts with pumpkin spice lattes and apple picking moves (too) quickly through Halloween and finishes with a huge helping of stuffing and apple pie. Some of us never grow out of the fun of celebrating the “spooky season”.

But what scares bankers the most during this season? Is it ghouls, goblins, or ghosts? Indigestion or indecision? Nope! It’s fraud, and unfortunately it scares us all year round. In fact, fraud in the financial services world has increased significantly year after year recently, particularly spiking since COVID hit.

American consumers reported losing nearly $8.8 billion to fraud in 2022, an increase of more than 30% over the previous year. As so many more consumers now bank digitally with enhanced services, new financial crime vectors open up as fraudsters thrive behind their keyboards in a basement somewhere.

Fraud Landscape

You may have heard the “new” adage: faster payments = faster fraud. The way I think of this is that banks and credit unions have to constantly balance convenience with security in a never-ending dance. As soon as you offer more convenient and engaging digital solutions, fraudsters will find a way to take advantage of these new solutions.

It’s important to note that fraud is here to stay and impossible to completely eradicate. If you truly have absolutely zero fraud at your institution, first a big “kudos” to you and a pat on the back! What’s more likely however, is that you’re about to be hit, or perhaps already have been and you didn’t realize it. You should also know that no or very little fraud likely means you are being too restrictive with your chosen limits/controls and missing out on important engagement and growth opportunities with your accountholders.

Fraudsters always seem to be one step ahead and it can be both overwhelming and disheartening. How do we combat this? The first important thing to know is that it’s critical to layer multiple fraud prevention technology solutions (think of those cozy sweaters on a chilly fall evening), as no one tool will stop everything – multiple points of contact and review are crucial.

There’s No Need to Fight Alone

The amount of fraudulent traffic we see attempting to enter our Banno Digital Platform™ is incredible, to the tune of 2,000 fraudulent login attempts every second of every day! For those who are not a mathematician, that equates to 120,000 attempts every minute, 7.2 million every hour, and more than 172 million every day! Simply staggering numbers.

Our system successfully handles all of these credential stuffing attempts seamlessly and elegantly, allowing the 15-20 legitimate login attempts every second into the platform while keeping out the bad actors.

System performance remains stable and no impact to your accountholders is felt. This extends to Distributed Denial of Service-style attacks (DDoS) that we have encountered in the past and successfully defended against.

To help you fight fraud on the front lines and in your accountholders’ lives, we know it’s critical to ensure today’s banks and credit unions can use modern fraud prevention technology and tactics including:

  • A modern multi-factor authentication process requiring one-time temporary passcodes delivered via text or phone call when your accountholders log in on a new or unrecognized device. You can also choose to offer authenticator apps and FIDO keys for next-generation authentication by your accountholders following all NIST guidelines
  • Step-up authentication requiring re-entry of user password when high-risk actions are attempted, such as adding a new payee or making an external transfer.

  • Back-office permissions:
    • External transfer limits (A2A) allow your institution to control the level of access your accountholders have to move funds between accounts.
    • Your digital banking administration portal puts toggles and settings limits for remote deposit capture, Zelle™, and all other external payment mechanisms in one place.
    • You can change default permissions for a specific segment of accountholders with one simple file upload! This works great both for lists of new accountholders and trusted “gold” (or premium) accountholders to easily allow greater permission and level of trust for folks you know and trust.

  • Mastercard NuDetect: Many of the banks and credit unions that use the Banno Digital Platform also elect to offer this advanced biometric and behavioral fraud prevention engine. NuDetect scores every login attempt and every high-risk action for suspicious behavior in an attempt to identify fraud using trillions of data points.

It’s a scary world of fraud out there, but you aren’t alone. Learn more about the resources Jack Henry has to help you reduce banking fraud using modern technology.

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