How Faster Payments Demands Faster Reactions Against B2B Payments Fraud

NACHA may have assured some banks that Same Day ACH hasn’t led to an increase in payments fraud, but concerns remain widespread about how the initiative and other faster payments efforts will reduce the window of opportunity for FIs to detect and prevent an incident.

According to NICE Actimize, a provider of anti-fraud software for financial institutions, there are technologies that should be in place not only to combat fraud, but also for banks to stay on top of the constantly changing patterns of fraud activity.

Faster payments initiatives will likely lead to an uptick in at least attempted fraud at FIs— and that’s hardly surprising, warns Rivka Gewirtz Little, global director of Product Marketing and Fraud at NICE Actimize.

“Putting faster payments aside, anytime you introduce a new product or service, you’ll see an uptick in fraud attempts,” she recently told PYMNTS, “because a new service inevitably brings vulnerabilities. Faster payments is especially prone.”

She cited the common concern among payments and fraud analytics: the timespan these FIs have to identify and halt a fraudulent transaction is drastically shortened with faster and real-time payments.

“Fraudsters are very excited about the emergence of faster payments — even more so than consumers,” she noted. “We do believe that there will be a greater uptick in fraud attempts.”

It’s on that belief that NICE Actimize recently released ActimizeWatch, a solution for FIs that aggregates troves of data and uses machine learning technology to assess it. Their data analytics strategy is not only used to identify potential threats, Little explained, but can identify broader patterns across the institution, geographic regions, industries and more.

“We can see fraud patterns and changes earlier, because we are continuously monitoring [the data],” Little explained of the new solution. “We can see an uptick in fraud maybe linked to a payment type, maybe linked to faster payments and beyond that, because we’re in the cloud and taking in data from multiple institutions and using machine learning.”

Even looking at faster payments alone could reveal deeper patterns in potential fraud, she said. For instance, NICE Actimize is watching B2B payments closely as fraudsters similarly shift their attention toward corporate transactions.

“Up until this year, when we talked about faster payments, we talked retail,” Little stated. “In reality, what emerged is a rich set of faster payment capabilities for corporates.”

She cited The Clearing House and Same Day ACH as key initiatives in the realm of faster payments that have significant implications for B2B payment practices. But as the market’s attention shifts toward corporate payments, fraudsters’ does, too.

“Part of the challenge is simply that the vision wasn’t on corporate faster payments — it was on retail. And, as it turns out, the fraudsters are turning to it too,” she said. “By all means, they’re hitting it.”

She pointed to what she described as a “ridiculous surge” in Business Email Compromise (BEC) scams as one example of how cybercriminals are landing in the B2B payments realm with their crimes.

Data released from the Association for Financial Professionals this year found a 10 percent increase in BEC scams compared to 2016, with a report that also found record levels of corporate payments fraud overall.

Faster payments initiatives, Little warned, mean businesses and their banks won’t have that day or two which is critical to stopping a fraudulent wire transaction that may have been initiated by a Business Email Compromise event.

“Business Email Compromise is just one pain point,” she noted. “You link that to the faster movement of money, and there is certainly a rise in concern about commercial banking payments fraud.”

The technology that enables NICE Actimize to collect, manage and analyze data from financial institutions is critical, Little said, to being able to stop fraud at a single institution and identify patterns that could prevent a certain type of fraud from other banks too. The problem, she warned, is that as payment trends evolve, so do fraudsters’ tactics.

“An overall problem in the industry is that fraudsters are innovative,” she said. “They change their fraud tactics very, very quickly. Historically, analytics has not been able to keep up and be agile enough to stay ahead of fast-changing fraud patterns.”

Big Data, machine learning and the cloud, she added, are paramount to identifying patterns and staying one step ahead of the criminals.