90% of FIs Say a Fraud-Prevention Vendor’s Reputation Is Key to Collaboration 

fraud prevention

More than 40% of financial institutions (FIs) report seeing increasing volumes of fraud and financial crimes, according to PYMNTS Intelligence data. 

Faced with this onslaught of illicit activities, it’s little wonder that FIs are now deploying newer technologies like artificial intelligence (AI) and machine learning (ML) to help safeguard their institutions and customers. 

But in addition to employing cutting-edge technologies, “Financial Institutions Revamping Technologies to Fight Financial Crimes,” a report from to PYMNTS Intelligence and Hawk AI, found more and more FIs are leaning on trusted, third-party vendor relationships to help fend off fraudsters.  

What do FIs look for when selecting fraud-prevention vendors? 

Just as FIs recognize the need to maintain a solid reputation to attract prospective customers, they also place a high premium on potential vendors’ reputationS. Ninety percent of the FIs we surveyed cited “reputation” as a top consideration when considering a fraud-fighting solution provider. A different but equally large share — 90% — said the ease and expertise with which they can integrate a vendor’s fraud-prevention technologies into their own systems is another major consideration.

Financial institutions, third-party solutions, fraud prevention

Next in line are two factors that carry equal weight: 70% of FIs say they will consider a provider only after successfully testing their technologies. Similarly, 70% say the cost of a vendor’s services is a deciding factor.  

And while equal emphasis (50%) is placed on both proof that other FIs are using the provider and the extent to which the FI can continue developing its own technology in conjunction with the vendor’s, surprisingly little weight is placed on internal viewpoints when picking a vendor. Just 30% of FIs surveyed mention their own employees’ feedback as influencing the final decision. 

And, perhaps even more surprisingly, only 30% reported their customers’ needs were top of mind.

The report also determined that — because fraud is constantly evolving — FIs will likely need to revamp their prevention efforts over the next three years. 

When asked, 80% of FIs say they will rely on a mix of third-party providers and their own technology. We also found that 70% of FIs will rely on third-party solutions to leverage ML, AI and fraud scores. Sixty percent tell us they want to work with vendors that can incorporate cloud-based fraud solutions as well as APIs. 

In other words, as fraudsters continue to develop more sophisticated schemes, FIs intend to use equally sophisticated methods to repel the efforts — so long as the methods come from a trusted provider.