It’s a time of reflection and anticipation at The Fintech Times throughout December, as we look back at developments and trends over the last 12 months and forward to the year ahead.
We’re excited to share the thoughts of fintech CEOs and industry leaders from across the globe to 2023’s key takeaways and what we should expect to be top of the agenda in 2024.
Today our leaders address escalating challenges related to fraud and the need for businesses to take proactive measures to address these issues and maintain customer trust and regulatory compliance.
Businesses under greater pressure to protect customers
In the face of rising online fraud and limited government action, businesses are increasingly burdened with the responsibility of protecting customers, warns Tamas Kadar, CEO and co-founder of anti-fraud platform SEON.
“In the past year, clients of SEON have regularly expressed concerns about insufficient government support, highlighting a gap in effective fraud prevention strategies. As we look ahead into 2024, it’s going to be interesting to see if this issue improves or worsens.
“Thankfully, the UK government’s new anti-fraud strategy which was published in May could offer hope here. The new strategy sets out a plan to reduce fraud by 10 per cent on 2019 levels by December 2024. It’s been designed to help to stop scams and protect the public. Of course, we won’t know how effective this strategy is until it’s been fully implemented, but it would at least seem to be a step in the right direction on paper.
“Still, over the next 12 months, businesses should still expect to face escalating pressure to enhance their fraud protection measures. This situation will necessitate greater investment in advanced fraud prevention technologies and strategies, with a strong focus on maintaining customer trust and regulatory compliance. In this pursuit, businesses like SEON can help companies to bolster their defences against sophisticated fraud schemes.
“Ultimately, in the absence of substantial global policy coordination, the private sector’s role in innovating and implementing effective fraud solutions will become increasingly crucial. Until we see more action from governments at both a national and supranational level, the onus will remain on companies to take care of these problems for themselves. It’s a difficult task, but new online fraud prevention tools are making it easier.”
Rory Doyle, head of financial crime policy at financial compliance software provider Fenergo, says fraud prevention must be prioritised by British financial institutions in 2024.
“Fraud prevention is always high on the agenda for financial institutions, but for those operating in the UK, it must be a top priority in 2024. With the Economic Crime and Corporate Transparency Act having received royal assent on 26 October, financial institutions must ensure they up their game and deliver sophisticated risk assessments over the coming months. Without them, those found to have failed to prevent certain instances of fraud could pay a very heavy price.
“Rather than leave themselves open to enforcement actions at a civil level, the new legislation means they could face a class-action lawsuit – a nightmare scenario for any firm. British banks will certainly not be eager to become embroiled in a nationwide class-action lawsuit like the mis-selling of Payment Protection Insurance (PPI) we remember all too well.”
AI will play a big role
“As we enter 2024, fraud will most likely remain a significant issue for fintech leaders to tackle, sharing responsibility with the wider financial services industry,” says Christen Kirchner, senior solutions expert, fraud and AML at analytics software company SAS.
“SAS’ recent consumer fraud study revealed that nearly 90 per cent of consumers believe financial services organisations should be doing more to protect them from fraud – with nearly two-thirds of UK consumers prepared to switch if they feel another company might offer better protection. Fintechs will need to support financial services businesses to improve protection for consumers.
“AI-powered analytics will help enhance fraud detection, while not compromising customer experience with unnecessary checks or false positives. The same analytics capabilities can also help optimise business’ performance by anticipating customers’ unspoken needs based on their behaviour – proving AI will have a large role to play in 2024.”
Stop fraud at the source
Experts at ComplyAdvantage think that there will be increased pressure in the coming year – from consumers and regulators – for technology companies to take a greater role in policing the activities on their platforms.
A study by UK Finance found that 61 per cent of all authorised pushed payment (APP) fraud was connected to Meta (owner of Facebook, WhatsApp, and Instagram). As APP continues to grow, consumers will expect tech companies to provide safeguards at the source of most scams.
Iain Armstrong, regulatory affairs practice lead for ComplyAdvantage, said: “Platforms provided by big tech and telecoms companies often serve as the initial point of contact between fraudsters and victims, so those companies also have a responsibility to do everything they can to stop scams at the source.
“We think there should be an increased focus on tech companies working with financial institutions to identify scams, develop more effective fraud detection tools, and implement stricter policies to prevent the spread of fraudulent content on their platforms. Any legislation around fraud and the application of AI should take this into account.”
Rise in whistleblowing cases
“During the past few years, there’s been a steady increase in whistleblowing cases, fuelled by heightened awareness and growing employee empowerment,” says Pav Gill, CEO and founder of whistleblowing platform Confide.
“Here at Confide, we’d expect 2024 to be no different. Thankfully, through greater access to information and a societal shift towards valuing transparency and ethical conduct, employees are becoming more confident in voicing concerns about corporate misconduct.
“This trend will be supported by new legal protections for whistleblowers and the growing influence of social media as a platform for raising awareness about corporate malpractices. In response, companies will need to adapt by implementing robust internal reporting mechanisms and cultivating a culture of openness and accountability. Thankfully, innovative tools, such as Confide are now coming to the fore to make this process more manageable.”