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The financial services industry faces a unique set of cybersecurity challenges, including traditional threats like phishing, insider threats, ransomware, and the added complexity of financial fraud. Financial institutions are constantly under scrutiny from regulators, customers, and shareholders, demanding a delicate balance between technological innovation, investment, and the relentless evolution of fraudulent attacks.
To prevent attacks, financial institutions have embraced new technologies like artificial intelligence, machine learning, behavioral analysis, and biometrics. While these tools enhance security and consumer trust, the introduction of new technologies demands continuous expansion of fraud monitoring checklists.
The overwhelming scale and intricate nature of these challenges have left both security and fraud teams struggling to keep up, with their resources stretched beyond their limits. Compounding this issue, these teams often operate in isolation, lacking the essential collaboration to combat these threats effectively. Financial services organizations must adopt a holistic approach that harnesses the latest technologies and techniques for real-time fraud detection and fosters seamless information sharing across business units and stakeholders.
The Rising Tide of Fraud
The sudden surge in online shopping and virtual banking triggered by the COVID-19 pandemic has created a breeding ground for fraudulent activities. This cultural shift, coupled with the rise of technologies like Apple Pay and Venmo, has significantly escalated the frequency and complexity of fraud. Consequently, financial institutions are under mounting pressure to ramp up their resource allocation to combat and respond to these ever-evolving threats effectively.
So, what does this growing challenge mean for financial institutions’ bottom line? Retail banks are responding by significantly increasing their investments in anti-fraud systems in the face of escalating threats. This includes enhanced monitoring capabilities, fraud analytics, case management, and fraud-related data services.
While retail banks are projected to invest a staggering $4.5 billion in anti-fraud systems globally by the end of 2024, the lack of collaboration between security and fraud teams is emerging as a critical concern. As digital channels become the primary target for financial fraud, the need for seamless information sharing and unified threat response has never been greater.
The Fraud & SecOps Disconnect
Historically, financial institutions operated in isolated silos, with customer interactions and data confined within the walls of each department. However, as the financial services industry has embraced digitalization, the need for cross-silo collaboration has become increasingly critical. This is not only essential for enhancing customer experience and cross-selling opportunities but also for effectively combating cybersecurity threats and preventing fraud.
Given the amount of fraud initiated or executed through digital channels, it seems natural thatcybersecurity and fraud teams at financial services companies would look to collaborate on investigations. However, a recent survey from Swimlane that investigated top cybersecurity challenges for the finance industry revealed that only 13% of respondents have integrated their fraud and security teams into a single unit, while 40% indicated that data sharing between the teams occurs only on an as-needed basis. This is a fundamental challenge that financial organizations face in their efforts to prevent breaches and fraud.
Breaking Down Silos
The absence of collaboration between teams and systems is hindering the development of a unified approach to security and fraud prevention. Security automation emerges as a solution to establish an integrated fraud and security infrastructure. While technology alone cannot bridge the gap between these teams, security automation can serve as a powerful catalyst for fostering cooperation, enhancing analyst accuracy, generating deeper insights, and boosting productivity.
Security automation plays a pivotal role in maintaining operational flexibility and preventing siloed operations. For example, automating data sharing enhances transparency and visibility between security and fraud teams, leading to improved efficiency and effectiveness of existing systems. Security automation also has expanding use cases beyond the SOC, bringing its benefits to a wider range of teams, including fraud investigators, compliance officers, legal case managers, and merchant onboarding specialists.
Current inflexible processes are hindering these teams' ability to resolve these business challenges. Security automation is indispensable for security and fraud teams as they strive to dismantle siloed tools, integrate with diverse data sources, and achieve comprehensive visibility across their organization.
This content is provided by an external author without editing by Finextra. It expresses the views and opinions of the author.
Arthur Azizov CEO at B2BINPAY
20 December
Sonali Patil Cloud Solution Architect at TCS
Retired Member
Andrew Ducker Payments Consulting at Icon Solutions
19 December
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