Global Fraud Trends in Wholesale and Commercial Banking

When it comes to wire and automated clearinghouse (ACH) fraud, global financial executives agree that the biggest negative impact is reputational damage. Regionally, North American financial executives are experiencing less fraud than their global counterparts, according to a recent survey from electronic payment and banking systems leader ACI Worldwide, which examines global fraud trends in wholesale/commercial banking.

North American financial executives also perceive an increase in the rate of online account takeover attacks (63%) compared to their global counterparts (50%) in the last 12 months. Yet in the same period, attempted and actual wire and ACH fraud related to account takeover is lower in North America than at the global institutions, based on survey responses.

Fraud Protection Focus
It’s no surprise that financial executives surveyed across all geographies are focused on fraud protection. Because of a heightened concern and bleaker view of online account takeover fraud, both North American and global respondents are fighting hard to protect their wire and ACH accounts—with varying focuses. North American financial executives are placing more emphasis on utilizing tools that address device protection, while their global counterparts are more focused on payment-specific transaction monitoring and online session anomaly detection.

• 84 percent of North American banks are utilizing device protection tools (such as device ID, secure browsing and malware protection)
• 89 percent of rest of world banks are utilizing payment-specific transaction monitoring

Although fraud protection is top-of-mind, when it comes to compliance with regulations around the security of commercial accounts, surprisingly 18 percent of all respondents admit to being only mostly or partially compliant with current security regulations. FFIEC (Federal Financial Institutions Examination Council) guidelines in the US have brought a spotlight to monitoring online banking activity and are a likely driver as to why most organizations must continue to shore up their defenses.

Confidence in Fraud Management Tools
All respondents report confidence in fraud-fighting tools, although they differ in terms of which tools they believe are most effective. In an effectiveness scale from 1-5 (with 5 being most effective):

• North American respondents rank layered security protocols highest (4.06 ranking), followed by payment transaction monitoring and device protection
• Rest of world, payment-specific transaction monitoring slightly edges device protection as the most effective approach (4.0 ranking)

Real-time settlement in global financial markets has impacted the focus and need for fraud prevention tools. All respondents agree that cross-channel fraud monitoring and online session anomaly detection have the most room for improvement.

“As electronic payment transaction volumes increase, so too do fraud attacks on those transactions. Financial institutions are faced with not only increasing scrutiny and regulatory pressures, but also the risk of reputational damage and loss of customers, which is why they’re working tirelessly on preventative measures,” said Mike Braatz, Senior Vice President, Payments Risk Management Solutions, ACI Worldwide. “The real-time nature of payments has a direct impact on fraud prevention tactics. Longer ACH settlement times likely contributed to the lower fraud rates in the US compared to their global counterparts. For example, Faster Payments in the UK has put increased pressure on banks to stop attempted fraud in real time.”

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