Fergal Parkinson
Published on: March 23, 2022
70% of financial fraud involves identity theft where fraudsters pose as someone else. Over the last couple of years, businesses have had to change the way they operate. Unfortunately, so have fraudsters.
As more people choose to conduct financial transactions online rather than in person, they’re doing so in increasing numbers on their mobile devices. As a result, a growing number of malicious actors are targeting this vector.
Company networks have never been more vulnerable. Getting security right, however, starts with proper customer onboarding in banking and other financial services. In other words, you need a structured, technology-driven customer onboarding process.
Keep reading to learn more about the importance of mobile number intelligence for onboarding.
Customer onboarding in financial services is a much more critical function compared to other industries.
Digital onboarding procedures involve many compliance and data gathering steps. At the same time, friction must be reduced to ensure users complete the process as seamlessly as possible.
One of the most important aspect of the customer onboarding process is getting to Know Your Customer (KYC). KYC involves the processes used to verify users’ identities.
You must confirm that people are who they say they are. In other words, you must make sure that they’re not using an alias.
It’s pivotal in combating crimes like:
In fact, most fintech apps don’t allow users to perform transactions until they pass all KYC checks.
There are many ways to perform KYC checks. These include passport and other identity checks.
Unfortunately, however, malicious actors have become increasingly clever in thwarting KYC checks Using sophisticated techniques to fool companies.
To combat this many companies are looking at additional alternative data sources to verify and authenticate users above the standard required checks.
With the increasing use of mobiles a simple mobile number using live telco data can identify if a person is who they say they are.
Simply using a customer mobile number enables organisations to obtain rich and actionable data intelligence to strengthen and validate the user verification process, reduce fake accounts, give risk insights, improve conversations, and determine the optimal channel for message delivery, such as One Time Passwords or Two Factor Authentication SMS.
Mobile device intelligence is a set of robust phone and mobile signals. You can synthesise and analyse them to provide insights for several purposes. These purposes might include:
There are a few signals you might use to gather phone intelligence. These signals might include how long a potential customer has had their mobile phone number, is it active and does it match the name and address they have provided?
Phone signals may also include change events. These events could include:
Phone signals could also include account takeovers like SIM swaps. You could also gather phone signals from the velocity and behaviour of these change events.
Phone intelligence supports a more sophisticated, private, and secure model of identity verification. It offers more than traditional identity verification and authentication models.
Phone intelligence can replace several authentication and verification techniques. These methods include:
Let’s have a look at how mobile intelligence onboarding techniques deliver an improvement over traditional verification and authentication methods.
With diverse signals, you can create the highest correlation between identity and trust. These days, nearly everyone has a mobile phone.
However, they’ve had them for varying amounts of time. Also, people use their mobile devices with varying frequencies.
All these characteristics are phone signals. They supply clear, detailed, and repeatable observations.
In this way, phone signals create a customer’s digital footprint. They’re highly correlated with the identity and trustworthiness of a particular consumer.
A customer’s digital footprint is made up of a multitude of signals over time. In many cases, however, they have a specific frequency.
As a company performing KYC checks, it’s vital those signals have maximum accuracy and effect. With this in mind, you must compare those signals with other authoritative data sources. These data sources might include information from credit risk and scoring companies.
You could combine signals with a diverse mix of additional authoritative sources. Combined with phone intelligence, this kind of data can give you powerful insights as to whether a customer’s identity is accurate.
Most smartphones have built-in passive authentication, encryption, and privacy features. Phone intelligence doesn’t require your customers to download an app or purchase hardware.
These built-in features enable smartphones to provide digital authentication. The process can take place invisibly and seamlessly.
It all happens right on your customers’ existing mobile devices. In this way, mobile device intelligence improves the customer experience.
A KYC user flow that eliminates or minimises points of friction is obviously better.
There are many ways that your company can use mobile phone intelligence. Still, there are some popular use cases for it, including:
That’s right. Of course, you can use phone intelligence signals for mobile interactions. However, you can also use them across web support and call centre channels.
With mobile number intelligence, you’ll find your organisation is more responsive and flexible. This powerful set of data will empower you to stay ahead of your competition. Access to real-time data will enable you to make sure you spend your energy up-selling, cross-selling, and capitalising opportunities with real customers.
A growing number of consumers are switching to new financial products versus traditional financial services. Fintech’s are disrupting the finance industry.
The companies that provide these services face heightened risks. There’s a new global environment emerging in the wake of the pandemic.
As governments continue to restrict travel, more people are staying at home. Resultantly, an increased amount of commerce has moved online. People and businesses are relying on online financial services more than ever before.
This new environment is dynamic and evolving. Now, even employees tasked with risk management and performance work from home. As they do, various sources compete for their attention.
These circumstances can present fintech companies with unexpected challenges. Companies’ risk mitigation measures, controls and compliance performance may not prove as effective as when the workforce more commonly performed their duties from a designated office space.
With these points in mind, fintech companies face an increased risk of digital fraud. First, there’s increased online payment processing and volume. This circumstance can cause operational concerns about monitoring and detecting fraudulent transactions.
Furthermore, a newly minted remote workforce can increase potential cybersecurity threats. For example, hackers can compromise an employee’s trusted devices and use them to breach your network.
Now, most companies must issue remote access to a broader employee base that could include contractors and vendors. Companies’ reliance on third-party services also increases the need for digital fraud monitoring and oversight.
As a fintech decision-maker, it’s important to take proactive steps toward fraud detection and prevention, even if those actions are outside of your organisation. For example, it’s a good idea to participate in fraud monitoring and steering groups.
At these engagements, you can serve as an independent, objective voice. You could also critique the design of new or amended fraud monitoring controls.
Most importantly, however, you must employ real-time auditing across your fintech organisation. You must leverage tools and technology to continuously monitor key fraud risk indicators. This kind of monitoring can also help you support quality assurance.
The cost of fraud is astounding. Today, there are many exciting opportunities for digital businesses. From social media to e-commerce sites, there are many opportunities for customer engagement.
To make the most of them, however, you must also consider the undesirable elements of the internet.
Today’s hackers are quite busy. In 2020, for instance, the FTC fielded more than 2 million reports of online fraud.
With this in mind, you must take every precaution to prevent identity theft. You must stop individuals in their tracks who fraudulently use others’ names and details for personal gain.
In this regard, it helps to understand how hackers exploit consumer information. The following entries highlight some of the top identity theft risks faced by fintech companies.
Account takeover fraud (ATO) involves a bad actor who poses as an authentic customer. The fraudster will use this tactic to take over an online account.
After succeeding, the malicious actor can make unauthorised changes and transactions. They could also sell the now compromised credentials.
It’s difficult for fintech companies to catch ATO fraud. Many of the actions that malicious actors take when exploiting this vulnerability are very similar to those of legitimate users.
Chargeback fraud is a type of e-commerce fraud. Sometimes, companies refer to chargeback fraud as “friendly fraud.” In either case, it’s an attempt to fraudulently receive a refund using the chargeback process.
With this crime, a customer doesn’t contact the merchant directly for a refund. Instead, they’ll dispute the transaction with their card provider or bank.
Chargeback fraud is a vicious cycle between cardholders, merchants, and financial service companies. A fintech company doesn’t have the time to investigate every chargeback dispute for validity. However, the right technology can make it much easier to fight false chargebacks.
A subscriber identity module (SIM) is a device identity. SIM card swapping is such a severe threat to consumers the FBI recently posted a public notice about the crime.
With this crime, malicious actors engage in SIM card swapping, for example to gain access to a customer’s cryptocurrency. Often, hackers will target heavy cryptocurrency investors who are early adopters with this tactic.
Increasingly, they’ll use the information found on victims’ social media to compromise targets’ smartphones. This information could include personally identifiable details about individuals’ cryptocurrency accounts.
The key to SIM swap fraud is convincing a customer service representative to port the victims’ phone number to a SIM card that’s in the hacker’s control. Now, the hacker can take over the victim’s phone.
In short, wangiri is a kind of cell phone fraud. A hacker may begin this ruse by calling from an unknown international number.
They’ll usually make many short-duration calls. Their goal is to trick the user into calling back a premium-rated number (PRN).
When the victim calls the number, the hackers will try to keep the victim on the line for as long as possible. A real person or an interactive voice response system may answer the call. In either case, the next step is to keep the person on the line as long as possible and extract as much money as possible from their account.
The longer the victim stays on the phone, the more money the hacker makes. Then, the victim will receive a very unpleasant surprise on their next phone bill.
One of the fastest-growing kinds of financial crime is synthetic identity fraud. For example, a hacker might steal someone’s personal information.
Alternatively, they might buy someone’s information on the dark web. Now, they can combine that information with fake information to create a new identity.
Malicious actors use synthetic IDs to build credit. It can take months to years to create good credit files for the new fake identities.
When they do, however, hackers will “bust out.” In other words, they’ll borrow a large amount of money and disappear. This kind of crime makes loan application fraud detection vitally important.
Fraud can come from every angle. Mobile devices have made it easier and faster for criminals to conduct malicious activities.
Now, they can use mobile devices to carry out a range of crimes. These crimes might include:
Resultantly, fintech companies must develop a mobile-first strategy for fraud protection.
For many financial services companies, smartphones are becoming the most convenient and important way to engage with their audience. The amount of time that an individual has a phone number is a powerful element of their digital identity. Still, this characteristic may not always serve as what it seems.
With a powerful tool like our Verify platform, however, you’ll have access to a suite of services that help fight fraud. They’ll help you strengthen digital onboarding for financial services.
Moreover, they’ll reduce fake accounts and enable you to mitigate fraud. At the same time, our suite of software will add little to no friction to your users’ onboarding experience.
Verify combines several authoritative data sources. It also uses our deep knowledge of the global mobile telephony landscape. In this way, it offers a solution for a variety of use cases.
In addition, our platform has a wide geographical coverage network. We’ve also engineered it to respond to millions of queries per second.
In addition, many of our available data points are sourced globally. What that means is there’s no need to adjust your onboarding or fraud prevention workflow as you expand into new markets.
When using Verify to secure your digital onboarding platform, you can access data that will keep your customers engaged. That same information will help you to remove the friction from your onboarding process.
For example, you can learn several key facts about who’s on the chat or line when using TMT Verify. You can learn about whether data is:
Meanwhile, our Verify Protect service will defend your company against the ever-increasing threat of account takeover.
Furthermore, Verify Protect can alert you in real-time about possible compromises. What that means is you only need to increase friction for the end-user if you have a good reason to suspect fraud, such as a fraud verification.
Now, it’s more important than ever for financial services companies to understand how to interact well with mobile customers during the corporate customer onboarding process. We hope that our market guide for online fraud detection has helped you better prepare to protect your company.
An effective online customer onboarding process is essential. You must know the person is using an active number. You must also know whether their identity is authentic as well as the network they’re using. With TMT Analysis products, you can.
Please feel free to contact us today to learn more about the fastest and most accurate data and technology available for mobile number intelligence in fintech onboarding.
Last updated on September 18, 2024
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