# The Great Bank Reset
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-06-21
Category: BANKING
Category URL: https://financedigest.com/category/banking
Meta Title: The Great Bank Reset: Rethinking Fraud Protection in
Meta Description: Learn how financial organisations are re-thinking fraud protection strategies amidst rising cyber threats during the pandemic and the shift towards first-party
URL: https://financedigest.com/the-great-bank-resethtml

_By_ **_David Mirfield,_** _Director of Product Management, Symphony AyasdiAI_

Limited personal interaction, working remotely, travel restrictions – the list goes on. During the pandemic, [communication in all sectors](https://www.financedigest.com/how-communication-technology-can-help-relieve-pressure-on-staff-in-the-financial-services-sector.html "How communication technology can help relieve pressure on staff in the financial services sector ") went online, and cybercriminals went to work.

Their attacks became more targeted, and one of their biggest targets has been the [financial sector](https://www.financedigest.com/how-can-the-financial-sector-safely-use-the-iot.html "How can the financial sector safely use the IoT?"). In fact, a study from [LexisNexis Risk Solutions](https://risk.lexisnexis.com/about-us/press-room/press-release/20220106-annual-true-cost-of-fraud-study) found that banks saw more monthly fraud attacks in 2021 than in the prior year – and the attacks became more expensive: “Every $1 of fraud loss now costs U.S. [financial services](https://www.financedigest.com/devops-the-secret-tool-thats-transforming-financial-services.html "DevOps: The Secret Tool that’s Transforming Financial Services") firms $4.00, compared to $3.25 in 2019 and $3.64 in 2020.”

When it comes to fraud, most efforts have been focused on protecting the customers, sometimes neglecting the risks that [fraud poses to the banks](https://www.financedigest.com/attacking-banking-and-fintech-fraud-head-on-through-ai-infused-strategies.html "Attacking Banking and Fintech Fraud Head-On Through AI-Infused Strategies ") themselves. But this perspective is changing. Banks are starting to look more internally at how to also [protect themselves from fraud](https://www.financedigest.com/protect-your-organisation-from-fraud.html "Protect your organisation from fraud") – but without just passing the proverbial buck to the customer, either.

All of this means financial [organizations](https://www.financedigest.com/six-reasons-why-digital-world-classtm-finance-organizations-outperform-peers.html "Six Reasons Why Digital World ClassTM Finance Organizations Outperform Peers") need to re-think their approach to rooting out fraud. Let’s call it the Great Bank Reset. Here are three areas where we see this playing out.

**First-party fraud will become a greater** [focus area](https://www.financedigest.com/three-areas-of-focus-for-financial-service-cisos-in-2022.html "Three areas of focus for Financial Service CISOs in 2022")

What’s known as first-party fraud will – and needs to – [become a bigger focus for banks](https://www.financedigest.com/banks-need-to-become-a-lifestyle-brand.html "Banks need to become a lifestyle brand"), but it can be too easy to miss. Whereas traditional third-party fraud involves an impersonation or account takeover, be it via someone assuming your identity or someone using stolen card credentials, first-party fraud is more likely to entail a [customer claiming to be a good-faith customer and then deliberately trying to commit fraud inside the bank](https://www.financedigest.com/communicating-with-the-customer-is-the-future-of-mobile-banking.html "Communicating with the customer is the future of mobile banking"). There also may be a combination of different processes or activities at play that fraudsters can bypass to commit particularly large fraud without the customers knowing anything, but the [bank is still liable for the loss of funds](https://www.financedigest.com/bank-funding-for-renewables-stagnates-vs-oil-and-gas-report.html "Bank funding for renewables stagnates vs oil and gas – report").

That makes it challenging to mitigate, and [financial services](https://www.financedigest.com/wrapping-financial-services-in-a-security-blanket.html "Wrapping Financial Services in a Security Blanket") providers often lack the historical data needed to help define what first-party fraud looks like. And first-party fraud often does not have one owner; responsibility lies somewhere in the intersection of the fraud team, [operations and the risk](https://www.financedigest.com/banks-and-insurers-right-to-prioritise-technical-skills-in-operational-risk-but-must-not-overlook-training-in-nurturing-talent.html "Banks and insurers right to prioritise technical skills in operational risk but must not overlook training in nurturing talent  ") department.

[**Moving away from endpoint solutions**](https://www.financedigest.com/vias-cloud-based-solutions-ensure-painless-office-move-for-insurance-body.html "VIA’S CLOUD-BASED SOLUTIONS ENSURE PAINLESS OFFICE MOVE FOR INSURANCE BODY")

The rapid [move to cloud-based models](https://www.financedigest.com/investment-advice-moving-towards-a-new-model.html "Investment advice – moving towards a new model") has opened security gaps. Many organizations have tried to [solve a lot of the more immediate fraud problems](https://www.financedigest.com/british-start-up-reveals-the-secret-to-solving-the-problem-of-identity-fraud.html "British start up reveals the secret to solving the problem of identity fraud") with piecemeal endpoint solutions, but this doesn’t work once fraudsters evolve their attacks. They need to optimize the use of data, optimize the use of analytics and get a 360-degree view of fraud risk – as opposed to having different [teams or different solutions](https://www.financedigest.com/carta-teams-up-with-vauban-to-launch-the-first-digital-solution-aimed-at-venture-capital-investors-creating-luxembourg-based-funds.html "Carta teams up with Vauban to launch the first digital solution aimed at venture capital investors creating Luxembourg-based funds") working in silos.

**Combining AML, [financial crime](https://www.financedigest.com/financial-crime-is-the-chink-in-the-banks-armour.html "Financial crime is the chink in the banks’ armour") and fraud in one holistic view**

This level of change isn’t going to happen overnight, but change is coming. We’ve seen the need to use more advanced and effective techniques in [anti-money laundering](https://www.financedigest.com/anti-money-laundering-time-to-take-a-new-approach.html "ANTI-MONEY LAUNDERING: TIME TO TAKE A NEW APPROACH?") (AML.) And with the familiarity of using those techniques already in the fraud space, we’re going to see more organizations start to consider how to tie these together more strategically and more aggressively than they ever have before.

In order to detect and block threats in real time, [financial institutions](https://www.financedigest.com/what-the-future-holds-for-financial-institutions-in-2023.html "What the Future Holds For Financial Institutions in 2023") need to use advanced technology to get a much deeper understanding of past, present and future human behavior. To put it another way, these organizations must devote the same level of resources, [attention and creativity](https://www.financedigest.com/playground-xyz-shines-a-light-on-the-nuanced-interplay-between-context-creativity-and-attention-for-advertisers-in-new-study.html "Playground xyz shines a light on the nuanced interplay between context, creativity and attention for advertisers in new study") to the rest of their operations that they do to customer security.

Though it’s true that individuals can sometimes be the weakest link in [fraud detection](https://www.financedigest.com/the-clues-to-detecting-fraud-are-hidden-in-relationships.html "THE CLUES TO DETECTING FRAUD ARE HIDDEN IN RELATIONSHIPS"), so are manual processes and outmoded procedures that many businesses currently use. Adopting new technology is one option, but [firms must also embrace a far more comprehensive approach to risk](https://www.financedigest.com/aon-announces-agreement-to-acquire-risk-management-firm-creating-a-comprehensive-cyber-risk-management-advisory-group.html "Aon announces agreement to acquire risk management firm, creating a comprehensive cyber risk management advisory group"). They should take a 360-degree [view of their customers](https://www.financedigest.com/insurance-marketing-is-more-targeted-with-the-single-customer-view.html "Insurance marketing is more targeted with the single customer view"). It’s about more than how customers interact in general; it’s also about the behaviors that drive them. Organizations can use AI and ML, as well as third-party data, to better discover patterns and [construct more effective defenses to halt criminal activities](https://www.financedigest.com/increase-in-investments-in-building-refurbishment-and-new-construction-activities-to-propel-demand-of-construction-safety-net-market-fact-mr-report.html "Increase in Investments in Building Refurbishment and New Construction Activities to Propel Demand of Construction Safety Net Market: Fact.MR Report").

**[Fraud protection](https://www.financedigest.com/fraud-protection-why-customer-onboarding-requires-digital-identity-processing.html "Fraud Protection: Why Customer Onboarding Requires Digital Identity Processing") for all**

Financial institutions have seen unprecedented demands on their cybersecurity teams in the past two years: first from the significant network rejiggering required by the shift to [remote work](https://www.financedigest.com/shoring-up-cyber-defences-in-the-remote-working-era.html "Shoring up cyber defences in the remote working era"), and then from the cyber-attackers eager to take advantage of the resulting security gaps. No wonder that [banks saw a spike in fraud](https://www.financedigest.com/finance-brokers-bank-on-red-flag-alert-to-help-beat-fraud.html "FINANCE BROKERS BANK ON RED FLAG ALERT TO HELP BEAT FRAUD").

That’s why it’s time for a great reset when it comes to how banks approach their fraud mitigation [strategy – and we see this playing out with a three-pronged focus: re-examining, first-party fraud, abandoning the point-product strategy and combining modern technologies into one holistic point](https://www.financedigest.com/france-seeks-strategy-as-nuclear-waste-site-risks-saturation-point.html "France seeks strategy as nuclear waste site risks saturation point") of reference. This new focus will reinvigorate efforts to combat fraud and protect the [banks as well as their customers](https://www.financedigest.com/how-will-open-banking-impact-the-customer-experience.html "How will Open Banking impact the customer experience?").


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