Cyber and malware attacks are very common today in the finance industry. Detecting them is complicated and hard. Regular implementation of protective measures against new attacks is necessary.
Traditional protective measures such as CVV2 and one-time passwords are not effective at combating the new cyber crime techniques.Criminals today use attacks including trojans that bypass traditional security measures. Remember that criminals are always developing new tricks to stay ahead of their game.
Financial Fraud Prevention
Security is a very important consideration for companies and individuals when choosing a banking institution. Financial institutions must make security a priority and adequate fraud prevention to retain current customers and to acquire new ones.
It’s imperative today for companies to improve their fraud prevention measures especially for online transactions. Business owners and corporate companies need a more comprehensive approach to getting the best possible service regarding securing their data and transactions.
Who’s At Risk Of Financial Fraud
Online banking customers are the softest target for cyber criminals who find it so easy to hack and steal from private accounts. Banks are forced to return the money to clients’ accounts although they’re not willing to do most of the time.
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A report by the Association of Certified Fraud Examiners discovered that organizations also love about five percent of revenue through fraud annually. This has encouraged increasing mistrust in online transactions. The reasons for the increase in online fraud include:
- Access to personal computers by malicious codes
- Using websites without appropriate security protocols
- Employees leaking customer information
- Modifications on devices for electronic transactions
Impacts Of Financial Fraud
Fraud undermines all facets of society and causes significant financial damage to companies. Lete’s highlight some of the impact of financial fraud below.
Revenue loss
Financial institutions lose about five percent of their revenue through fraud. Additionally, putting in place measures to curb fraud increases budgets of various organizations. Financial losses through fraud include:
- Fee and interest accrued during processing
- Chargeback fees
- Expenses incurred to investigate and recover the losses
- Accruide fines and other legal fees
- Loss in transaction values
Reputational Damage
People can’t trust a company with various fraud complaints. Financial institutions are entrusted with protection of customers’ assets and finances. Reputation damage significantly encourages customers to run to other companies that they believe are more secure.
Financial fraud prevention should be part of the company’s reputation risk management strategy. Uncovering security lapses or mismanagement in financial institutions leads to significant loss in customer confidence.
Losing Customers
Customer retention is very important for the success of any business. The relationship between customers and financial institutions relies heavily on trust. No customer would like to gamble losing their money with an organization likely to suffer from fraud.
Customers don’t hesitate to switch to an organization where they feel confident enough to trust them with their money. Fraud in a financial institution causes double loss. The organization spends money to reimburse the lost funds and it also loses its customers.
Fines And Penalties
Financial crime in organizations encourages fines and penalties. The government put hefty fines on companies that fail to limit fraudsters from compromising customers finances and details. An example is Western Union that lost $153 to reimburse money to scam victims. Companies have to invest in fraud prevention solutions because it costs them a lot more than the crime happens.
Investment In Financial Fraud Detection Today
Fraudulent actions come in different forms and repercussions. Therefore, it is imperative to invest in financial fraud protection to protect your reputation, retain and attract customers. Investing in appropriate fraud prevention protects you from fines and penalties.
