The April FraudTech Digest by Cybertonica

27 April 2021
DIGEST
April fraudtech digest

Welcome to our April Cybertonica FraudTech Digest! 

We’ve found the latest, fresh off the press news about payments and fraud prevention and have broken down the insights into bite-sized brain snacks.

Last month, we discussed Silicon Valley’s greatest asset and the new contactless limit, catch up here.

In our April FraudTech Digest, we’re discussing:

  • 💰 Financial Crime: How are Banks Managing?
  • 👨‍💻 A Robust Recovery for UK FinTech
  • 💶 The Digital Euro
  • 📱Facebook Exposes Over 500M Accounts
  • 🛒 Retailers Need Fraud Teams Too
  • 💸 Buy Now, Pay Later?
Financial Crime: How are banks managing?
April FraudTech Digest #1
  • UK #banks are feeling the brunt working from home, with the effectiveness of their financial crime prevention diminishing, as revealed by the Omdia Fraud and AML Compliance Banking Survey 4Q20.
  • The research identified the main operational challenges for anti-crime functions. These are perceived to be the lack of experienced staff, advanced technology platform capabilities and high operating costs.
  • Banks remain torn between achieving a seamless balance of a strong customer experience and limiting the impact of customer controls, such as ID verifications.
  • With more false positives, increased volumes of #fraud attacks and more government-led regulatory pressure, institutions are going to have to up their game with tackling #FinancialCrime.
  • Institutions are raising AML #compliance to the top of their agenda this quarter. Around 69% of institutions are developing strategic and long term plans to fight against fraud. They are also seeking a robust and cost effective fraud management solution.
  • Last month, our CEO & Co-Founder Joshua Bower-Saul shared his thoughts on how to tackle Financial Crime with the EPA team.
Monthly Cybertonica FraudTech Digest: A robust recovery for UK fintech
April FraudTech Digest #2
  • The UK’s #FinTech sector has got off to a strong start, raising a total of $2.9Bn in Q1 2021.
  • Innovate Finance’s report highlighted 117 deals were made within the last 4 months showing renewed confidence in the UK. Investment levels rose a vast 153% from the previous quarter. 
  • After a turbulent year amidst the pandemic, investors are back with large appetites for mega deals that exceed $100M+.
  • For example, high value investments from Q1 included digital lender, Starling Bank, who secured $376M in Series D funding. They have already secured an additional £50M boost from Goldman Sachs this April. Similarly, payments company Checkout.com have also secured a mega deal in their Series C funding round of $450M.
The digital euro
April FraudTech Digest #3
  • The European Central Bank (ECB) has set plans to issue a digital euro. It would contribute to financial #inclusion, complement the use of cash. it would also guarantee citizens can maintain costless access to a simple universally accepted means of #payment within the euro area.
  • Following a public consultation by the ECB on the public perception of the creation of a digital euro, ensuring privacy was ranked by 43% of 8000 respondents as the most important feature for the currency.
  • Other highly requested features included strong security, the ability to pay across the euro area and offline usability. The digital euro is also believed to beneficially make cross border payments cheaper and faster.
Facebook exposes over 500M accounts
April FraudTech Digest #4
  • Tech giant, Facebook is in hot water as an investigation launched by the Irish Data Protection Commission (DPC) will decide whether EU data laws have been breached. 
  • Over 533M customer accounts across 106 countries were exposed dating back to 2019. The breach left personally identifiable information (PII) including phone numbers, email addresses and locations accessible by cyber criminals.
  • The fraudsters used sophisticated software code to exploit a vulnerability in Facebook’s systems. They scraped user’s data, engaged in identity theft and performed further social engineering attacks leaving consumers vulnerable. 
  • Regulatory #sanctions may be on the horizon. If the DPC finds Facebook guilty of infringing user’s personal data, breaching GDPR or the Data Protection Act 2018, then they may be fined up to 4% of their annual global turnover. Also, they can be fined a further 2% for failing to notify consumers whose accounts were breaches.
Retailers Need Fraud Teams Too
April FraudTech Digest #5
  • eCommerce sales have soared during the pandemic with revenues of the European #eCommerce market expecting to hit $465Bn in 2021. This is a rise of 30% since before the pandemic struck (Source: Finaria.it). 
  • Unfortunately, this has risen hand in hand with online fraud. Finally retailers are fighting back by creating, growing and equipping their fraud teams with the fraud prevention tools they need.
  • Research suggests that 72% of #retailers expect their fraud teams to grow over the next 12 months. Meanwhile, 76% expect to allocate more of their budget towards mitigating #cybercrime and online fraud. 
  • It is evident that more intelligent fraud detection tools are needed to prevent account takeovers (#ATOs), refund abuse and chargebacks, such as our eComm360 Fraud Prevention solution.
  • Online #merchants must ensure they choose the right kind of fraud management solution to protect their customers and #profits. Achieving a frictionless checkout experience whilst also integrating resilient defence systems that defeat fraudsters is key. You can learn more here.
Buy Now, Pay Later?
April FraudTech Digest #6
  • Buy Now Pay Later (#BNPL) payments are expected to account for around 14% of global eCommerce spend by 2024 as reported by Worldpay from FIS. However, fraud is soaring in BNPL companies.
  • There are rising concerns that companies including Klana, and ClearPay lack the vital fraud prevention measures required to safeguard and protect their customers. 
  • The BNPL market lacks the stringent regulation which other financial institutions abide by. Customer onboarding checks must be tightened. Platforms need to integrate securer onboarding checks. They also need to do their due diligence and KYC checks, to ensure that their customers will be able to up pay later. 
  • This may lead to new regulatory requirements for BNPL companies using risk analytics similar to those used in the credit industry and fundamentally changing the model.
  • Credit providers must invest in additional layers of #security to prevent fraud. For example to verify their customer in real-time using #BehaviouralBiometric data.

Finally, if you have news to discuss or share for our FraudTech Digest, our Cybertonica team of experts are ready to help.

Get in touch with us via hello@cybertonica.com

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