Growing focus on compliance could leave businesses vulnerable to fraud
An increased focus on compliance risks detracting businesses from making investments to protect their organisation against fraud, according to new research by TransUnion (formerly Callcredit).
The research, part of which forms the Fraud Fortress report, revealed that compliance is the area most commonly expected to drive increased expenditure (64%), potentially at the expense of prevention or detection.
Whilst fraud leaders are also reporting increases in anti-fraud expenditure, as a result of investments in biometric technologies (59%), training employees to combat fraud (57%) and anti-fraud employee costs (56%), the biggest increase of investment has been in compliance.
Yet, findings from the CIFAS report ‘The Fraudscape’ suggest that the use of technology such as device recognition software, voice recognition and predictive analytics can help reduce opportunities for fraudsters. The decrease in fraud affecting bank accounts in 2017 has been attributed, in part, to banks successfully implementing these measures.
John Cannon, managing director, fraud and ID, TransUnion said: “With a rapidly evolving and increasingly stringent regulatory landscape, compliance needs to be a key focus for businesses. But as the fraud threat grows ever more sophisticated, they cannot afford for investments in technology and education to take a back seat. The risk of fines for non-compliance is often a major factor in determining investment priorities, yet the damage to reputation and loss of business that a serious fraud incident or data breach can bring about, may ultimately be much more costly.”
Encouragingly, businesses are increasingly recognising the importance of smart technology in the fight against cybercrime and looking to build greater intelligence into their technology solutions. According to TransUnion’s research, artificial intelligence (45%), machine learning (37%) and biometric screening techniques (37%) are being targeted as the top fraud prevention solutions over the next three years.
John continued: “Where to allocate investment is always a difficult decision. Spending on compliance and fraud prevention often go hand in hand, as both aim to protect the consumer, but finding the right balance is important and often difficult to achieve. To ensure they are sufficiently protecting themselves and their customers from fraud, businesses should adopt a layered strategy, combining new technology with more traditional approaches.”
The 2018 Fraud Report is available to download here.