The allure of digital transformation has become too lucrative to resist. There was a time when the internet was considered as the new shiny object in the room, but now, it has become the undisputed foundation of the digital age. It acts as a sea of new opportunities for every industry. Perhaps, the financial sector more than any other industry has the most opportunities to get interactions right or, for that matter, wrong.
Forget online banking, mobile apps- its Fintech (Financial services technology) finding new ways to streamline the process of managing hand-earned money simpler and better like never before. Today more and more consumers are seen moving towards digital currency- Venmo to Apple Pay. As a result, the entire industry is compelled to rethink the concept of both brick-and-mortar stores and everything that goes along with them. The change seems to be pretty fast, isn’t it? I can still recall those days when we used to wait for two hours and more in long shopping lines to get the desired product. Now, we have Amazon Go- no checkout lines, customers require to choose the product and wait for AI to do the dirty work.
Two key factors have influenced this shift, namely the development of the Internet and a dramatic reduction in the cost of technology. Digitalization has embedded in the financial and banking sector to a great extent. Right from customer experience to revenue, and cost things have become increasingly compelling in the particular realm. Improving efficiency and the quality of risk decisions, better monitoring and control, and more effective regulatory compliance are some benefits worth considering.
Down below I would like to mention a few key trends that all financial services must leverage while walking on the road to digitalization.
- Customer engagement- It is essential to engage customers across a wide range of channels, ensuring workforces are well mingled and have all the information they need at any time. This is the time when you can break down siloes and enable smarter collaboration between teams, colleagues and business networks.
- Smarter data usage- As soon as your organization becomes increasingly digital, it becomes vital for the company to understand that the data is used in such a way that makes it easier to gain real-time access to information. As a result, nothing can stop you from conducting activities in a faster, simpler, and in a more agile manner.
- Adding value- Initially, banks used to sit back and wait for their potential customers to come to them, but not anymore. With the change in time, focus now seems to shift from transaction execution and product selling to adding value. This requires an entirely different mindset and business model.
As a result, transformation seems to be pretty huge. Banks are now able to offer 24*7 services providing customers greater visibility into their transactions. The step hasn’t just given a significant advantage to the banks by putting its customers first but also has reduced the time it takes to bring new products to market by 75%.
Of course, these services have indeed come as a boon, but they even have a fair share of controversies as well. Cybersecurity has become a major concern for everyone. Attackers seem to be working hard on tactics and techniques faster than security teams can keep up and their methods grow more sophisticated each year. The scenario has ramped up the speed, and the consequences can’t be even imagined. With the growing number of cybercrimes, we are moving from bad to worse. Playing defense will become harder than ever.
Now before we start preparing for these threats, one requires identifying them in prior.
#1 Authorized push payments
One of the most common types of online criminal activity is authorized push payment (APP). Being well documented across the media, apps scams involves seeing a bank or credit account holder tricked into authorizing a payment to be made from their account to somebody else’s account.
An effective range of social engineering tactics are used by the fraudsters to commit such a crime. All one requires to do is pose as a genuine individual or organization via telephone, email SMS or even on social media. As soon as the payment seems to be authorized by the victim, criminal will then swiftly transfer money out of their receiving account to numerous other accounts where it can be cashed out.
#2 Unauthorized payment and banking fraud
Unfortunately, the popularity among cybercriminals seems to be increasing at a fanatic pace. APP scams, card payment fraud still act as unauthorized payment losses that are hard to tackle. Remote purchase fraud, card identification theft are the chief culprit concerning unauthorized card payment scams. In addition to this, the method of third-party application fraud has risen to another tipping point.
#3 Call center scams
Much similar to APP scams, call center fraud is another pain in the neck for several banks and financial service companies. Let us understand what the threat is all about; call center agents are the one who incorporates limited identity verification tools at their disposal, criminals are often able to use simple social engineering tactics to impersonate account holders to initiate transfers with the assistance of bank staff.
Another act of SIM swapping, where an individual’s mobile identity can be stolen by simply accessing personal information through phishing or open source research to obtain a victim’s phone number before contacting that individual’s mobile phone provider and asking them to transfer the phone number to a new SIM card. This allows criminals to gain full access to that person’s mobile identity while they are blocked.
How to overcome these cybercrime risks?
#1 Banks must invest heavily in systems as well as people. Due to a severe increase in such activities, financial companies must keep an eye on cyber-crime protection strategies so that the measures taken are always meant to keep up with increasingly sophisticated cyber-attacks. Moreover, focusing on fraud will also help in the fight against cyber-crime.
#2 A broad view across all channels and customer behavior must be taken. With the technologies changing at a whiplash-inducing pace, machine learning (ML), artificial intelligence (AI) and big data are the main reason for suspicious transactions. Banks can sift through massive amounts of data in real time and identify suspicious transactions. Leveraging big data and ML, cyber defenses can ‘learn’ how to detect anomalies going forward. The complex nature of cyber-attacks requires banks to track and identify transactions more proactively.
#3 Learn about phishing attacks and social engineering. Another interesting solution, financial companies should take into account is being regularly informed about these attacks. Make your client understand that why it is crucial to implement strong authentication and to have encryption to create more robust communications channels. However, chances are there that these stronger cyber-security systems turn out to be complex and cumbersome to implement. But by offering the accurate information, you can make the client accept the reality of cyber threats. In addition to this, a bank can send information to a client before a remittance is signed if an anomaly is detected.
In a nutshell
Are you mapping out your potential digital journey? If so, it’s imperative to take the first step, and that’s by not varying the digital transformation. Instead, consider it as something to aspiring or a golden opportunity, and I am sure it will help you to improve your business in innumerable ways.