Audience Q&A: Automation to Detect and Stop Fraud

Audience Q&A Automation to Detect and Stop Fraud Informed

Welcome to the final installment of the Bank Automation Summit Fraud Panel recap – the Audience Q&A. The conversation went on so long, there wasn’t much time left for questions. Some were answered in the room, the rest via email follow-up. We’re sharing them all in this post.

As a refresher, the panel members were:

Jessica Gonzalez, Director of Auto Lending Strategy at Informed

– Kevin Faragher, Senior Director of Product and Strategy at Ally Financial 

– Michael Reynolds, Business Technology Senior Manager for Service Digitization at KeyBank

– Moderated by Whitney McDonald, Deputy Editor Of  Bank Automation News. 

Let’s dive back into the conversation with the Q&A.

How do you ensure you onboard only verified legitimate businesses?

There are many resources, including the DMV. There are also data sources that are easily consumed. Because there is so much data, it’s a good idea to have your subject matter expert decide which data you should use. If you’re not familiar with each data source, ask questions to determine their reliability.

When you start aggregating, get as much data as you can. When onboarding a dealer or a commercial lender there is loads of data. It’s packages of 50, 60, 100s of documents. Partner with an AI organization to handle the heavy lifting. You don’t want 30 or 40 people spending time looking at documents, extracting information and keying it into a data entry system. It’s inefficient and sacrifices accuracy. Focus on getting at the data so you can see the insights yourself. Then, if needed, enrich the data with reliable data sources.

What are your views on using biometrics to fight fraud? 

Biometrics are key to fighting fraud, if available and make sense for your organization. When people hear about biometrics, it sounds cool – like digital transformation. And while it’s great to have biometrics, many organizations aren’t ready. If most of your portfolio is on paper, you won’t have the ability to do biometrics.

Be honest about where your organization is. If your organization is paper-heavy, biometrics may not be the right solution. But there is probably a better solution. If you are paper-heavy, digitize first. Invest in image capture and a verification process. critical Leverage a verifications subject matter expert to advise you on the best platform. 

Are you seeing fraud mainly in the consumer lending space? 

When you see market growth like we’re seeing in small business lending, you’re going to see fraud increase. But it takes a while to see it because you’re looking at portfolio performance over time. It takes six to eight months to know, ”Okay, there is a fraud issue.” Then we may overcorrect. Be aware that there are waves when that market growth catches up. And focus on the right thing. It’s hard to do that equitably for everyone because if you are investing in fraud, you have to staff a team.

Many small business lenders and credit unions don’t have enough staff. With the right technology, you don’t have to expand your team. Were seeing an increase in fraud where lenders have a digital presence, because fraudsters are testing those digital portals. If the larger organizations have a barrier to entry, they’re going to target smaller lenders. They’re going to go to the small banks, which hurts the community. It is imperative that we level the playing field. That’s why hosting a contributory database and sharing insights across all lenders is important. All of the banking community benefits.

What types of fraud are most prevalent? 

Benchmarks and best practices are great for understanding fraud trends. But, understanding your data and portfolio is critical. You can be proactive against fraud. But fraudulent tactics change quickly because there are so many different causes. Properly interpreting your data ensures you can reduce your fraud losses.

This is why we provide benchmark results on fraud and trends – in addition to breaking out results by specific portfolios and segmentations. We enable lenders to create customizable fraud triggers and checklists based on indicators from our data analysis. We analyze your data sets and tweak rules to align with your specific fraud concerns. 

How has automation changed the employee experience in dealing with fraud?

Automation improves the employee experience because it allows employees to focus on the customer relationship rather than mundane tasks. It raises employee morale and satisfaction, so you’re not losing motivated staffers. And it allows staff to be proactive, build relationships, and undertake strategic improvements within operations.

What trends are you seeing in KYB/KYC for top of funnel applicants/businesses?

KYB has been historically harder to address because the data resources are not as reliable as KYC. And, KYB relies heavily on specific niche databases and resources – some more reliable than others. KYB also requires an additional number of onboarding documents that is significantly higher than consumer documentation.

Focusing on document retention and data analysis is critical to understanding KYB trends. KYC focuses on identification. Fraudulent pay stubs have a direct correlation with identity fraud. There is a certain aspect of a waterfall within fraud. Creating barriers to entry for the most accessible types of fraud eliminates other root causes such as tight credit policies.

Handling Income for Gig Workers

If you see a large fraud increase among the self employed it is likely due to credit policies creating a barrier to entry. It is difficult to prove your income when you’re self-employed, so rather than jumping through the hurdles to prove your income, an applicant may purchase a fake paystub.

We see issues with digital employers such as DoorDash and Uber. It’s becoming harder for people to prove their income based only on bank statements and deposits. Lenders should reevaluate their policies on bank statements and the self-employed, so we can continue to lend to these consumers. Having capital available in a community is a top indicator of future success, so it’s critical to support the self-employed and small businesses.

KYB is skewed towards larger organizations that have support, education and expertise in creating financial documentation. Small businesses without such resources are less able to prove their identity and revenue, limiting their ability to meet these stipulations. 

We had so much fun answering these audience questions! Tell us what questions you have so that we can answer them. We want to hear from you!

What topics would you like us to blog about and why? Let us know at by dropping us a line at

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