Fintech, fraud & friction
The Fintech space means a variety of things to different people, different companies and different industries. I think we all can agree that the path to some of the challenges are relatively ubiquitous. Even though some approaches are going to vary, the root of the problems are really close for all. Fraud is rampant amongst all fintechs and cost them on average 51 million a year.
Fraud can look differently and have different entry points into any organization. Therefore, the way to protect your company and yourself is to have multiple layers of protection. I call this the MLOP method. It’s a great start to have protection from the core and every place in between until you reach the endpoints. Even though multiple layers of protection isn’t a surefire way to eradicate fraud, it sure is a great way to start the battle.Fraud and bad actors are always changing their stripes. They work around the clock to steal your money. Banks, credit card companies, credit unions and fintech companies can only offer so much protection. They also possess some of the best technologies out there which are embedded into what they offer their customers. One thing I think that these companies fail to do is to stay current. I also feel that individuals lose sight of their personal due diligence and forget to take proper action as well. A lot of this may change as the fintech industry matures. Right now the fintech industry isn’t heavily regulated like the banking industry. Once that happens, fraud will be addressed by default.
The fraud market is hurting companies financially and it’s going to continue to cost companies more and more. According to Fortune Business Insights, the fraud detection and prevention market is expected to reach 129.17 billion by 2029. A lot of the targeted areas are electronic payments and insurance claims which make up more than half of that 129.17 billion dollars. The aforementioned targets lose a lot of money, time and take a massive hit to their reputation. Sometimes those hits are hard to recover from, which in turn costs the company a lot more than hard dollars.
An important step to take for all is to be very proactive when it comes to defense of fraudulent tactics. If you are a new fintech company or even a mature company, it may be difficult to stay ahead of the curve when fighting crime. My suggestion is to find some viable partners to work with. There are a lot of very good and proven technologies to embed into your platform. I know some larger organizations have the ability to “build” a solution and I’m sure they can do a fantastic job of it. My point is, why reinvent something that’s already proven when you can get the protection you need much quicker. Time to market is something everyone should consider. As Ricky Bobby said in Talladega Nights, “if you’re not first, you’re last”. That could be why a lot of fintech companies fail when trying to get off the ground.
If you’d like to learn more about how we help our partners address the current challenges, feel free to contact me via LinkedIn.