Top 7 Ways to Upgrade Your Organization’s Financial Fraud Detection

Jul 11, 2022

The idea of a scam compromising your finances or organization is unnerving for all, but it happens all too often, costing companies and consumers more than ever before. When we hear of the latest fraudulent event on the news, we may think “that won’t happen to my business.” There are many rationalizations that are easy to employ.  “My company is not big enough” or “We are not as popular as our competitors.” 

The truth is that any organization can fall victim to financial fraud these days. Although big scams might appear in the media, the smaller incidents account for the biggest losses in total. Research shows that organizations today are losing approximately 7% of their annual revenue as a result of financial fraud. That’s a cost your organization can’t afford. 

What can you do to minimize financial risks from fraudulent activity?

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Traditional methods of fraud detection are too time-consuming and not as fruitful in today's world. In the age of big data, it is slow and impractical to rely solely on auditing or manual processes to identify fraudulent transactions.

Thankfully, just as the Internet gave fraudsters new ways to do scams, it has also given companies new ways to protect themselves. In this article, you’ll learn how to increase your CI/CD security and decrease the chances of financial fraud for your business. 

Below you’ll find useful tips for upgrading fraud detection in your organization: 

1. Stay up to date on the different types of financial and bank account fraud

Preventing fraud starts with knowing what you’re up against. The first step is to determine the types of fraud that are hurting customers and undermining your business today. 

One of the most used fraud prevention tools today, SEON, describes common types of bank account fraud and teaches you how to differentiate among them. According to SEON, the rapid digitization and the COVID-19 pandemic led to $986 million being stolen from banking customers in the first half of 2021 - and that’s just in the UK!

Financial service companies have to stay on top of bank account fraud of every kind, from bank account takeovers to new account fraud, bank impersonation scams, wire transfer scams, and even money mules. 

The list doesn’t even end here. Some other categories of financial fraud include:

  • Payroll fraud

  • Thefts of cash and assets

  • False accounting

  • Financial statement fraud

  • Using stolen or lost credit cards

  • Fraudulent insurance claims

Bad actors use a variety of methods to scam consumers and organizations out of their money. They use phishing, spamming, and hacking, to mention a few. 

Luckily, tools like SEON can make it easier to detect fraud. You can use SEON to track financial transactions and detect even the least recognizable instances of fraud, automatically while minimizing manual effort.

But fraud detection tools alone may not be enough. Organizations need to close the gaps before hackers have a chance to attack. Value Stream Management provides one way to accomplish this task, by integrating governance and compliance into CI/CD pipelines. We’ll discuss this in a bit. 


2. Encourage customers and internal staff to change passwords regularly

Changing passwords seems too simple a strategy, but to this day it remains one of the best ways to prevent data theft or other forms of scamming. Aim to switch out passwords on sensitive accounts regularly, especially for places where you store personal data, process transactions, etc. 

Many of us still use the same password throughout various accounts. It’s challenging to remember different passwords for different purposes. However, it’s crucial to put effort into managing them and asking employees and customers to do the same - using the same password everywhere multiplies the risk of financial fraud. 

3. Use a variety of techniques to identify irregularities

Automated tools that track transactions and customer actions can prove to be extremely useful in detecting fraud. Listen to your customers and customer service on a larger level, you can also use a value stream management platform to build visibility into releases and support governance and compliance, which can reduce the risk of gaps that invite fraud in your product development process. 

If you have a broad understanding of the business processes that happen in your company and know the systems and procedures put in place, CI/CD pipeline visibility can be the key to preventing and detecting fraud. 

As a consumer, the strongest tool you have to determine if an action is a fraud is you. With experience and the right mindset, you will become more vigilant and develop the pattern-recognition skills to identify details that indicate fraud. The same mindset can be used within organizations by making fraud detection a shared responsibility and making the necessary investments in tools and processes that prevent this from cutting into the bottom line.

Let’s take a look at some techniques to minimize the impact of scams:

  • Read up on the current state of fraud in the industry and check how your processes are guarding against these trends. The press can be a useful source for such information, and you should also subscribe to a publication that specializes in different types of fraud. 

  • Undertake a fraud risk assessment. There are many methods for assessing fraud risks. Your task is to design or find specific tests that will help you identify the greatest areas of risk for your business. Then tackle those with gusto.

  • Do some benchmarking to compare different financial periods, business units, cost centers, etc. By comparing things that happen in your business over time, you can highlight the anomalies and fix them before they cause you to become a victim of financial fraud. 

  • Review the set of tools you are using to perform the company’s fraud prevention tasks. If you want to upgrade your fraud detection, frequently examine all the software, tools, and systems in place. 

  • Look for red flags. Tools like SEON can notify you of irregular activities. You’ll get a text alert or an email when suspicious activity is identified. Don’t ignore them! Some red flags will turn out to be nothing, but others will be clear signs of fraud.

4. Centralize critical systems and data across your organization

One of the highest risk factors for your organization and your customers is the software development process. You can more easily prevent fraud if you have visibility into your software development pipeline and stop silos from developing between development and operations. To get the most security benefits, choose a platform that places all your value streams under the same roof so governance and compliance can be part of the development process, not just tacked on at the end. 

A value stream management offering like Plutora’s financial services makes it possible for your organization to fill the gaps in communication and help you see more clearly how to solve the gaps that leave you vulnerable to fraudulent activity. Streamline releases across different systems such as your web services, accounts, etc. This will help you detect fraud easily due to the high level of visibility and easy access to data across applications. 

The top three things that Plutora will provide are better compliance, reliability of your business processes, and predictive insights. If you streamline releases across critical systems, you can detect and prevent fraud more easily.


5. Educate customers to keep an eye on their accounts and cards

Encourage customers to check card statements and bank accounts regularly. It’s easy to recognize strange transactions. When customers know what to look for, it will help them to pinpoint the financial flaws in your system before fraudsters do more damage. 

Many fraudsters attack with smaller sums first to ‘check the field’. If you can be alerted to this activity soon enough, you can prevent avoidable losses. 

The personal finance director of MorningStar, Christine Benz, said the following about identity theft:

“One of the best ways to be preemptive about identity theft is to scrutinize the transactions of your bank and credit card statements to ensure that they are in line with the transactions you’ve made.”

This applies to every form of financial fraud and can help you significantly. It doesn’t take long to check a bank statement - and when customers and service representatives are alert to fraud, it can save customers and your company a fortune!


6. Examine the details

Scammers often have typos in the company’s name or the body of the email. Let’s be real - marketing and customer service teams might make a mistake while writing, but this is very unlikely to happen with the name or multiple times in one message. 

Examine the logo as well. We often skip it because it looks familiar, but scammers frequently use brand names and logos to get through mail filters and scam us. 

Share with customers what to expect from your institution and keep them posted about fraudulent activity. 

The bottom line

There are many methods used to defraud businesses and individuals today, but there are also plenty of methods to detect and prevent fraud or minimize the consequences. Just as fraudsters are doing their best to get creative and steal money from your company and your customers, you can take the necessary steps to prevent them from doing so. 

Even small steps can make a big difference for your business. If you take simple measures to educate customers and invest in automated software to track transactions, you’re taking the first steps to avoid fraud. When the stakes are high, consider how additional investments in a value stream management platform like Plutora can make doing business safer for your company and your customers.

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