We keep reading news and updates every few days highlighting how banking is transforming with the help of cutting-edge technology. Moreover, the new tools, software etc. utilising the large banking data can prove to be beneficial for financial institutions. How? Let us study further…

Data can be used for better decision making and for preventing banking frauds that have elevated over the years. Going back two decades or so, the extent of fraud was signature forgery to gain access of the account holder. However, today as technology progresses, the extent of possible fraud has increased several fold. Criminals can hack accounts, steal funds and transfer it to domestic and international accounts in mere seconds from any part of the world. Identifying, extraditing and convicting frauds are hard over international waters.

RBI data suggests that in between the years 2013 to 2017, a total of 17,504 frauds were reported in Indian banks alone.

It is of no surprise why fraud detection is becoming an alarming concern in banks across the world today. Have a look at the chart of bank frauds and their numbers from 2013-17.

Frauds in Indian Banks (2013-17)

Business intelligence (BI) and analytics solutions can help observe, detect and fight banking frauds using data. It, therefore, becomes reasonable for the financial executives to integrate technologies like BI, analytics, Artificial Intelligence (AI) and Machine Learning (ML) to strengthen their fraud detection and management.

Many of the banks use manual or rule-based methods to fight frauds, and they aren’t reliable. Various frauds cannot be dealt with using these traditional or rather limited scope solutions.

Types of frauds may be:

1.      Technology-based frauds

The kind of frauds with the utmost levels of cyber risks are listed under this category. Hacking, phishing, card skimming, SIM swapping etc. are a few most common technology-based frauds.

2.      KYC related frauds

After the mandatory KYC approach by RBI and banks, this type of frauds has risen significantly. It involves fraudulent documentation to provide misrepresented information for account opening, loan applications and more.

3.      Loans and advances related frauds

The type of fraud that accounts for maximum losses banks incur fall under this category and often include fund syphoning, fund diversion and over-evaluation etc.

BI and analytics in fraud-detection

Analytics and BI help in faster and more accurate detection of frauds, way before they occur. It is important that banks and other FIs undergo a continuous reassessment of exposures that result in frauds in dynamic and changing environments. For banks to take complete advantage of BI/analytics, they must dedicate themselves to acquire necessary skills and build the right culture.

To understand how Business Intelligence solutions benefit banks in the long run, talk to us today.

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