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Banking Application Fraud: Enemy at the Gates

“It is a fraud to borrow what we are unable to pay.”– Publilius Syrus, first century B.C.

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Fraud is an increasing problem for financial institutions. Criminals use a variety of methods to attack organizations across channels and products throughout the customer life cycle.

Inconsistencies in applications − be they credit cards, loans, mortgages or current accounts − can range from innocent oversights, such as an incorrect address, to more deliberate misinformation such as inflated income details. Organized fraud rings exploit banks that overlook “minor” inconsistencies because they are becoming increasingly harder to spot among the bank’s normal customers.

Banking application fraud is a critical problem to address, as it directly affects a financial institution’s profitability, its customer experience and its bad debts. Conservative estimates suggest that 8% to 10% of a bank’s bad debt book has been misclassified as credit loss when it’s actually fraud. These levels demonstrate that application fraud is truly the enemy at the gate and detecting fraud at the point of application can be the best strategy for reducing these types of fraud losses.

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