Covid-19 has caused upheaval to all our lives. With the economic impact still uncertain but likely very significant, it’s clear we’ll be living with the consequences of the outbreak for a substantial period of time.
But even during these unprecedented times, criminals and fraudsters remain active. Banks and other financial providers’ fraud teams – even when facing the upheaval and disruption that has affected all of us – have dealt with a busy workload while the rest
of country lives under lockdown.
New analysis from Experian and the National Hunter Fraud Prevention Service shows a rise in fraud rates, with a 33% increase across all financial products in April – the first full month of lockdown - when compared with previous monthly averages.
The largest increase was in car and other asset finance applications, which saw a rise of 181%, followed by saving accounts (up 28%). Fraudulent credit card applications (17%) and unsecured loans (10%) also went up.
The figures are a warning that banks, building societies and other financial providers need to be as alert as ever in identifying fraudulent applications, even in the unique circumstances the country finds itself in.
A positive picture
However, the assumed conclusion from the data doesn’t paint the whole picture. The uptick in fraud rates, a figure which is detected fraudulent attempts as a proportion of total applications, can partly be attributed to a fall in overall application numbers
While fraudsters were looking to take advantage by submitting higher volumes of applications under the belief that the disruption would give them a better chance of success, the data suggests they have been largely left disappointed.
Fraud teams have had greater capacity to flag and investigate openings that otherwise may have gone unchecked, resulting in incidents of fraud being successfully identified – preventing fraudulent account openings.
Artificial Intelligence and Machine learning
As the figures show, banks and other financial providers have met the challenge posed by fraudsters during the pandemic – but need to remain vigilant to ensure they have robust fraud prevention systems in place to meet the mutating risk fraud poses to both
their businesses and customers.
Solutions incorporating Machine Learning and Artificial Intelligence can support this objective. By looking at the results of an application, whether it was fraudulent or not, ML and AI then uses this information to inform its decision making on future applications.
The more information it has at its disposal, the higher quality decisions can be made.
This gives businesses the ability to quickly flag potentially questionable applications and carry out further checks, while at the same time reducing the level of ‘false positive’ applications and creating a frictionless customer journey for legitimate customers.