Financial fraud is on the rise. By some estimates, American businesses lose more than $650 billion annually to fraudulent activities.
Financial fraud can take many different forms, from mortgage and loan fraud to credit card and identity theft. This fraud isn’t limited to any financial institution – it can affect banks, credit unions, and lenders alike.
Thankfully, automated financial fraud detection software can help identify red flags before they lead to costly losses.
What is financial fraud?
Financial fraud is any action intended to mislead or deceive a person or business for financial gain. Fraudsters use this deception to commit theft and manipulate accounts for their benefit.
The most common types of financial fraud include identity theft, phishing scams, and unauthorized transactions.
- Identity theft
Identity theft occurs when someone gains access to personal information, such as account numbers or Social Security Numbers, and uses it to commit financial identity fraud or make unauthorized purchases.
The lender may be liable for the losses incurred if a scammer successfully obtains a loan or other financial service using a false identity.
- Phishing scams
Phishing is a form of cybercrime in which fraudsters send emails, text messages, or other communications to steal sensitive information. These messages’ content can appear legitimate, with links to fake websites.
Employees at financial institutions are often targeted for phishing attacks because they likely have access to customer information.
- Third-party fraud
Identity fraud can impact more than just loan applications. In this case, a third party has managed to access your information and is using it to get the loan.
- Unauthorized transactions
Unauthorized transactions refer to someone using another person’s account or card to make purchases without their knowledge. This form of fraud is challenging for financial institutions because it can be hard to identify the perpetrator, and the victim may not be aware of the crime until it is too late.
How does financial fraud happen?
Today’s fraud attempts are sophisticated and varied. For instance, Ocrolus routinely verifies bank statements and detects any falsified information.
A fraudster might manipulate a ‘template’ bank statement to reflect fake assets and income. Stealing actual bank statements from unsuspecting victims is also common. A few minutes with a digital photo editor are all it takes to change the account holder’s name.
Prevent fraud earlier with automation
Fraud detection is a financial institution’s most critical and complex task. In order to protect customers and assets, lenders must be able to detect fraud accurately in real time.
Intelligent fraud detection automation, such as Detect from Ocrolus, can help with this challenge. Detect utilizes powerful algorithms to identify fraud in seconds and was programmed on data from thousands of leading financial institutions.
Detect can help uncover fraud proactively on the front end, lowering the number of fraud losses and potential legal costs. It also helps with more accurate identity verification, reducing manual reviews while still providing high accuracy.
As an added benefit, Detect combines machine learning algorithms with human experts to provide more accurate fraud detection. This hybrid approach is the ideal way to discover complex fraud attempts that may be difficult for machines alone to detect.
Confidently approve more borrowers
Financial institutions can use Ocrolus to confidently process more loans and applicants by eliminating ambiguity from the loan review process.
Detect is so efficient, the system can uncover fraud at ten times the rate of human employees. Lenders can approve more of the right borrowers while reducing fraud losses.
Financial fraud is an ever-evolving threat that can be difficult for banks and other financial institutions to detect.
Automated solutions such as Detect from Ocrolus can help financial institutions stay ahead of the game by detecting fraud faster and more accurately while reducing manual reviews.
Try Detect now and see how your business can transform your document fraud detection process and prevent costly losses down the line.