Community banks are battling increasingly sophisticated forms of fraud. Artificial intelligence (AI) impersonation has grown more prevalent, and we must be much more vigilant, increasing our reviews of transactions that on the surface appear normal. That added scrutiny requires a two-fold approach in the form of ongoing education and technological support.
With such complex scams and fraud scenarios in play, community banks must prioritize staff training. If someone’s trying to impersonate a customer using AI or victimizing them via a scam, our teams need to be able to identify red flags and unusual behavior. To protect both our banks and our customers, we need to go that extra mile to verify every transaction is legitimate.
Fortunately, this type of scrutiny speaks to an existing community bank strength—knowing our customers—but it’s also about ensuring we are up to speed on the latest scams. At my bank, we sign up for alerts, including those from ICBA, on the latest fraud attacks. Then, we share that information internally and also make it available to our customers, raising awareness of the types of fraud we’re seeing and sharing examples of the latest scams to help protect them, because knowledge is power.
But in a complex fraud environment, you need more than knowledge alone. That’s where technological tools enter the picture. For instance, we’ve recently tightened up our Bank Secrecy Act (BSA) software, and we also implemented a detailed wire transfer questionnaire. As part of our wire process, we have begun asking a series of questions about the transaction, including where it’s going and what it’s being used for. We’ve stopped many fraudulent transactions by digging deeper into purpose. In the past year, between our software and this questionnaire, we estimate we’ve stopped upwards of $750,000 in fraudulent transactions.
The fraud environment requires community banks to become detectives, charged with determining the legitimacy of a transaction. Today’s technology can help us do that. ICBA Innovation (icba.org/innovation), through the ThinkTECH Accelerator and Preferred Service Providers, gives a short list of strong fraud mitigation partners that can serve as important assets in our fight against fraud. They’re worth considering for your bank’s needs.
Stopping fraud requires the right mix of technology tools and current knowledge. It’s up to each community bank to ensure we have appropriate solutions in place to address both. Fortunately, we have ICBA in our corner to support our work and keep us armed with the latest fraud prevention information and tools.
My top 3
Ways to stop fraud:
Invest in strong BSA software.
Provide constant fraud trend education for staff and customers.
Use positive pay with business customers.
