Online banking has drastically gained pace in the last few years, especially after the COVID-19 pandemic. However, as more and more banking services move online, the risk of cyberattacks in the banking industry has increased and is considered one of the industry’s biggest threats.
According to a survey conducted by Statista, nearly 24.9 percent of phishing attacks worldwide were directed towards financial institutions making it the highest targeted industry in 2021.
Cybercriminals attempt to gain unauthorized access to banks’ computer systems causing substantial financial losses. Hence banks and other financial institutions are extremely cautious and considering the right preventive measures to safeguard the customers’ assets. They are looking for ways to safeguard and streamline the customer onboarding process to thwart these malicious cyberattacks.
Here are a few ways how smart customer onboarding can help financial institutions thwart four emerging cyberthreats.
New account fraud
New account fraud is one of the biggest threats the financial industry faces, costing them millions every year. According to the Federal Trade Commission, there were 2.2 million fraud reports from American consumers in 2020. However, opting for smart customer onboarding can reduce these attacks significantly. To open a bank account, customers need to upload a self-clicked picture along with the government-issued ID which nullify the fraudulent attempts.
Credit card fraud
The number of credit card users is increasing every year. According to Statista, nearly 29.31 billion credit, debit, and prepaid cards are estimated to be in circulation worldwide by 2023. With the rise in the number of credit card users, the chances of cyberattacks also increased. Sleeper fraud or bust-out is one of the most common types of credit card fraud that most banks face. Here a customer applies for a credit card, builds up a regular payment history, and then maxes it out without paying the bill.
Smart onboarding not only verifies customer details but also examines their credit history. It enables banks to leverage analytics based on behavioral baseline and remove suspicious customers from the collection workflow.
Account Takeover (ATO) is another type of fraud that cybercriminals attempt. ATO is a kind of identity theft where cyber criminals gain access to customers’ account details and credentials and steal funds or other information for monetary benefit, including phishing activities.
Smart onboarding allows customers to secure their high-risk transactions using various means, including face recognition, biometrics, or even one-time password (OTP), eradicating the risk of account takeover frauds.
Social engineering is another common cyberattack that most banks and customers experience. Phishing emails, calls, texts, tailgating are a few examples of social engineering. Here cybercriminals gather the required information, establish a relationship and rapport with the customer, and then misuse that data for their benefit. This cyber-attack heavily relies on human interaction.
To prevent social engineering, banks must move beyond traditional security methods like password- and knowledge-based authentication paradigms. Creating a biometric login system for the customer during onboarding helps banks defend cyber criminals trying social engineering.
Cybercriminals leave no chance to deceive both banks and customers, causing substantial financial loss. Cyber criminals steal confidential information through incorrect measures from the banks and sell the same, which is later used for malicious practices. To avoid such attacks, banks must enhance their security system and switch to smart customer onboarding.
Arttha, a unified fintech platform, can be a great companion for banks looking to secure their transactions and implement smart onboarding. Based on a completely modular and microservices architecture, Arttha helps banks not only with smart customer onboarding but also other aspects of digital banking. To know more about this fintech platform, speak to our experts today.
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