How to Ward off Synthetic Identity Frauds?

Banking CIO Outlook | Wednesday, March 11, 2020

The banking industry is on the lookout for concrete measures that can mitigate synthetic identity fraud.

FREMONT, CA: Detection is one of the central tenets in every risk-mitigation strategy. For the banking industry, which is now at risk from synthetic identity fraud, building up detection capabilities is becoming indispensable. Synthetic identity frauds have traditionally been under-reported since they are difficult to ascertain. However, the prices that banks have been paying due to duplicate identities have risen significantly in recent years. Thus, it is high time for banks to develop immunity against identity frauds.

Sophisticated technologies have enabled the creation of fake identities that are difficult to differentiate from authentic ones. Some of the counterfeit identities are so well-crafted that they can filter through checks and verifications during the onboarding process. Sometimes these identities pass KYC as well. These factors contribute to making identity fraud almost invincible. But banks can still develop protection through the strategic use of security solutions and advanced technological capabilities.

The formulation of a multi-layered fraud-detection strategy is the first significant step. A team of banking security experts, along with a team of digital security professionals ought to collaborate and come up with relevant strategies that can actually make a difference. Thereafter, banks have to partner with the most suitable provider of technology to build customized fraud detection solutions. From analysis to scrutiny, available technology can foster many aspects of identity fraud prevention. Besides, a comprehensive identity management solution with built-in security features can also prove to be valuable.

The proper implementation of the fraud detection system is another area where banks can focus. Achieving coverage across all the channels of banking is vital. These approaches often result in a lot of false positives that impact revenue. But the use of data to train the automated fraud detection systems can gradually improve the accuracy of risk identification. A proper balance between customer experience and fake identity detection can then be achieved. Although there exist no guarantees in risk mitigation, banks can bank on technologies to avert duplicate identities to a great extent.

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