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Innovative Fraud Management Tools

Fraud management has become a serious problem as fraudsters get more advanced in approach, leveraging sophisticated tactics to simultaneously imply different fraud scenarios. 

That is the reason why most financial institutions set forces and focus their efforts on providing the most innovative and disrupting solutions for detecting and combating fraud. 


Tokenization

Tokenization is the process of replacing sensitive data with other data known as a “token”. The process is highly essential since it safeguards the customer's information and prevents theft from the card. 

Tokenization allows you to perform safe payments. The method does not transfer the buyer's bank card number to the seller. Instead, a token is assigned to the card - a randomly generated value that will be used to complete transactions. 

Therefore, the customer confirms his identity by adding a card to the mobile application and security tokens are stored in the client’s mobile device, the process, in turn, improves transaction security for both the seller and the client. Tokens safely pass through the network without the need to expose the card details such as card numbers. 

The benefits of tokenization:

  • Compliance - Data tokenization is the perfect tool to keep you in compliance with PCI DSS and keep data safe.
  • Reduced risk - If you store card data information there is always a minimal risk to be exposed to a breach. Tokenization will minimize the risk by securing your data.
  • Added security from mobile wallets - With the acceleration of mobile wallets the extra layer of security is provided utilizing tokenization because third-party apps implement an extra layer of biometric data or a password to get access to their mobile wallets before going forward to the site. 


Biometrics

This security method is rightly called the “Future of payment authentication”. 

This security method involves using biometric security software for the authentication of people based on their behavioral or biological characteristics. 

Since biometric data is unique to each individual, it is often used to identify individuals promoting biometrics authentication as a form of identification and access control.

It can replace or even enhance traditional identification methods such as PIN numbers, passwords, or paper ID. The most used biometric is fingerprints,  other methods such as iris, face, or voice scanners to identify the individual are also on the list of the most often used recognition tools. 

As for payments,  biometrics can replace PIN recognition, providing faster and more accurate checkout. 


Two-factor Authentication

Two-factor authentication (2FA), often called “dual-factor authentication” or “two-step verification”, provides a high level of protection by adding an extra layer of security to your online platforms.

Instead of simply inputting your username and password, a two-factor authentication process requires additional information, such as a fingerprint,  security questions, SMS messages, OTPs, push notifications, and answer to a code that’s been sent to your device.



Artificial Intelligence and Machine Learning

Artificial Intelligence (AI) and Machine Learning (ML) are one of the most instrumental tools for creating an intelligent system to detect and eliminate fraud transactions. 

Machine learning is a subset of AI, whereas AI implies a wider concept of creating intelligent machines to simulate human thinking and behavior. 

Machine learning is based on the creation of algorithms that are designed and applied based on processing large datasets, namely the previous fraud cases with variables. 

The algorithms enable machines to detect fraud cases such as spam, scams finding out these hidden correlations between user behavior and the likelihood of fraudulent actions. 

The access to big data, the ability to analyze, reduction of human interference make ML one of the most transparent and efficient tools in fraud detection. 

ML- based systems reduce fraud investigations drastically as it automatically processes a large amount of data and eliminates the need of manual work, which enables a more effective and scalable mode to combat fraud. 

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