Fraudsters Winning ROI Battle, But Data May Turn the Tables

The “ROI” of increasingly efficient fraudsters is often better than the large companies they attack.

According to Trish Cox, head of operations at Galileo Financial Technologies, this sad but true reality is set to see businesses experience more than $38 billion in fraud losses by 2027 — representing a 20% growth over 2022 levels.

She sat down with PYMNTS to discuss why listening to the voice of the customer and the use of data-driven insights is at the forefront of the fight against fraud.

“Fraudsters are everywhere. They’re getting smarter. I think every firm expects some level of loss, (and this) explosion (in fraud) just causes everybody to rethink their strategies,” Cox said, noting that the bad guys’ bots “fly faster than our fingertips.”

Unfortunately, she said, looking for fraud at the back end or trying to shut it down after the fact is usually too late, and the main reason why so many IT security firms are taking a different approach.

“You really have to have a multilayered fraud strategy that is looking at all points of engagement,” she said.

Response Revision

As fraud losses multiply for businesses, criminals are using their increased proceeds to ramp up their own tech and hone their tactics, further fueling the rise in fraud globally.

According to Cox, fraud is top of mind for her clients. She advises them to level up using data and modern tools. In addition, businesses need a robust fraud mitigation strategy, one that replaces manual fraud mitigation with AI and machine learning, a shift that means getting smarter and drilling down to observe transactional data and then leveraging those insights to mitigate risk.

The Voice of the Customer Is Key

One of the great challenges companies face, Cox said, is making it difficult for fraudsters to access their platforms while simultaneously making it easy for legitimate vendors, clients and customers to do so.

According to Cox, an increasingly important part of finding the right mix of anti-fraud vigilance and frictionless client experiences involves listening to the voice of the customer. Understanding what causes clients to engage — or disengage — from a product or service at a particular point, she said, is key to preventing fraud and, in turn, switching losses into revenue gains.

“When all you’re doing is looking at top line and customer acquisition, you’re not necessarily looking at your return on investment and what it costs to acquire a customer and to keep them engaged,” she said. “I think that the voice of the customer is a key part of your operational data to help manage your business.”

Friction Holds Clues

Isolating pain points, according to Cox, is key to delivering the right experiences and fine-tuning revenue strategy.

“We’ve seen a couple of points where consumers dropped off after opening an account or (between) activation and funding. Those are some really important points in the journey to think about,” she said, noting that businesses need to regularly review how they are attracting clients if they are the right clients, and driving engagement to ensure they’re monetizing and growing a well-disciplined, profitable business.

As such, digging into data around transaction or process frictions for clients is also critical, Cox said.

“Often, those friction points for your clients or customers can be enlightening. (They can deliver) insights around where you need to innovate and (help) ensure that you are building for scale and cost,” she noted.

The remedy, per Cox, focuses on the connection between client or customer user experience and a business that operates efficiently.

“You’ve got to keep your customer-centric approach,” she said. “Sometimes you get the most interesting innovations when you question the value of everything you’re doing along the way and rethink the processes, and I’m a huge believer that great experiences drive great efficiencies internally.”