Mark Blakemore, CFO at Compleat Software
The use of social engineering and phishing attacks on accounts payable (AP) departments are rising according to a report by the European Payments Council, and they remain one of the most instrumental ways to infiltrate a company’s finances.
Fraud techniques have greatly evolved over the past couple of years. Scam phone calls, text messages, emails, and even fake websites and social media posts are tricking employees to hand over personal information that can be used to authorise payments.
Hidden behind anonymity, the pandemic offered the perfect way to trick employees. Impersonation scams have skyrocketed, with criminals posing as banks, government bodies, and even health officials to trick people out of their money.
Fraudsters have now shifted their focus from complicated, large-scale computer systems to company executives and employees. As a result, authorised push payments (APP) fraud – tricking people into sending money by posing as a genuine payee – increased 71 percent during H1 2021, with more than £750 million stolen through fraud.
Businesses need to get a better handle on their accounts payable processes, or risk losing millions to fraudsters.
Where does the fraud challenge stem from?
All accounts payable departments will receive a suspicious invoice every now and then, but as fraudsters become more sophisticated in style and technique, the need for tighter cybersecurity procedures in accounting departments remains.
And although fraudsters have long made the finance and accounts payable department their prime target, a couple of recent updates (or lack of) have combined to increase the risk of fraud to new levels.
The first is a reluctance to digitise old-fashioned processes, and the reliance on manual processes significantly increases the risk of human error creeping in. Staff working in different locations from each other hasn’t helped either, as team leaders are unable to physically keep an eye on staff in case they get tricked by someone posing as a fake vendor or overpayments.
Linked to this, and very much a long-standing issue for finance teams, is a distinct lack of visibility into the accounts payable process. Many finance leaders don’t have access to real-time data and insight into what their team is working on, leaving them stranded whenever fraud does take place.
There are also plenty of businesses nationwide that are sending and receiving paper invoices, again opening themselves up to risk. According to one study, 31% of UK businesses are still faxing paperwork, while 39% are posting invoices and 9% continue to accept paper cheques.
These problems are rooted in manual, paper-based processes. The more we rely on them, the greater the risk of inaccuracies, human error, and fraud.
How can businesses fight back?
If humans are one of the root causes of the issue, it makes sense to try and take the load off. We’re not machines able to log, scan, and analyse masses of data, but perhaps machines could help tighten up processes and defences.
The majority (61%) of CFOs agree that digitalising AP processes would help increase visibility in the finance department. The same report goes on to add that companies that utilise automation in their accounts payable department feel confident in their ability to prevent fraud.
If humans were one of the root causes of fraud, automation is the safety net businesses need to keep them secure. Technologies powered by artificial intelligence (AI) and machine learning (ML) are providing organisations with tools that can automatically detect fraudulent activity as well as decreasing the likelihood of it ever happening in the first place.
For example, when receiving an invoice from what looks like a genuine supplier, systems can instantly analyse information such as bank details, address, and amount requested against previous financial documents. If one tiny detail doesn’t match up, payment is refused until it’s resolved.
Then there’s the issue of access. As fraud can also take place from internal staff, businesses are using platforms to move away from simply stashing finance documents in a filing cabinet or digital folder to only granting access to records to those who need it.
But employees can also be a company’s greatest line of defence, especially as the vast majority (61%) of fraudsters are caught by employee tips. Arming accounts payable staff with technology that can provide detailed insight into the AP process and sniff out suspicious activity before it becomes a problem is a must.
Fighting fire with fire
Humans can’t be perfect all of the time, but highlighting and preventing fraud isn’t a 9 to 5 kind of job. Automation in the accounts payable department can be a powerful weapon in giving businesses the confidence that they will be protected even if they become a target.
Having employees working in several different locations and with manual processes means businesses cannot hope to defend themselves against a new, constant wave of fraudulent activity – both inside and outside of the organisation.
It only takes one convincing email or misplaced document for fraud to take place, and businesses need to make sure they free themselves from risk with technology that can act as their best defender.
How FS organisations can utilise data to boost customer experience
Charles Southwood, Regional VP and GM – Northern Europe and Africa at Denodo
We’ve all heard the age-old adage “the customer is always right”. It insinuates that, in any sector, the needs and desires of those buying a brand’s product or services should be paramount. However, today’s customer has new standards and it is becoming harder than ever for businesses to meet and exceed them.
This is certainly the case in the financial services (FS) sector where getting customer experience right used to be relatively simple. The human touch was traditionally delivered as a bi-product of in-store, transactional interactions. Perhaps, as a result of this, few people ever considered changing their provider and the traditional, established banks ruled the space.
However, with the dawn of online banking and the introduction of new, exciting challenger banks as well as the UK’s unique Current Account Switching Service, the balance of power between the consumer and the bank is changing. Consumers no longer feel locked in. If their needs aren’t being met, they aren’t afraid to look elsewhere and switch their allegiance to other companies. In other words, loyalty is far from guaranteed and customer acquisition is only half the battle.
Retention relies upon delivering strong, unique customer experiences that beat down the competition. In order to achieve this, FS organisations will need to be able to leverage data. Its insights could be the differentiator that enables them to stand out. The positive news is that, in our online world, there is a constant stream of data being produced. However, having access to all this data doesn’t necessarily mean that a brand knows how to effectively analyse and utilise it.
Ensuring data provides insight
The rapid growth in digital technologies and services across the sector has left many FS organisations juggling an unimaginable amount of data. This data is both complex and much of it is lacking in quality. Structured, semi-structured and unstructured, it is stored in many different places – whether that’s in data lakes, on premise or in multi-cloud environments. Before FS organisations can even think about using it to inform customer experience strategies, they need to be able to find it and understand it.
This is where modern technologies – such as data virtualization – can help. Through a single, logical view data virtualization boosts visibility and real-time availability of all data across an organisation. Unlike traditional extract, transform and load (ETL) solutions, it does not move and copy data. Instead it leaves it in the source systems. In other words, instead of just replicating data, data virtualization reveals an integrated view to those trying to find it.
For FS organisations this provides several important benefits. For example, it helps when data sovereignty issues arise and the movement and replication of data outside certain countries is illegal. Data virtualization solutions can also assist in terms of financial reporting by fetching data in real time from underlying source systems – applying the necessary security and obfuscation whilst delivering the performance, the agility and the accuracy needed through the seamless connection of data.
FS organisations that adopt data virtualization, are likely to see an improvement in the overall performance and efficiencies of their business operations. Overheads will be reduced, as will the length of project times. Above all, data virtualization will rapidly strengthen the customer experience by supporting business leaders to think strategically and make decisions based on real-time insights. But don’t just take my word for it.
The proof is in the pudding: How Landsbankinn is delivering on the CX promise
Landsbankinn is just one of the many financial services institutions that has already successfully embraced data virtualization and its benefits. Despite being the largest financial institution in Iceland – with around 40% of the retail and 33% of the corporate banking market share – Landsbankinn used to face several issues when it came to data sharing and analytics.
Over 45 siloed data sources – including Oracle databases, data warehouses and APIs from internal and external sources – made finding and accessing the right data at the right time extremely difficult. Without real-time data to fuel informed decision making, customer experience and operational efficiency were suffering. As a result, Landsbankinn was in need of a data overhaul to streamline and integrate its infrastructure.
To bring together its complex data landscape and collect data in real-time, Landsbankinn implemented the Denodo Platform – a data integration and data management solution built on data virtualization – to build a logical data warehouse. As a result, the team can now aggregate data from multiple data sources, transform that data based on the applied business rules, and then make it available to consuming applications. Ultimately, this means that, throughout the organisation, the data can be utilised by a wealth of employees, even those who are not particularly IT savvy. It also means that the business leaders can use data insights to make well-versed decisions and provide a plethora of services to Landsbankinn customers both quickly and efficiently.
In recent years, customer retention has become the key to successfully growing a business. This cannot happen without an effective customer experience strategy. The ability to convert data into insight is priceless in an economic landscape where the line between a business thriving, surviving and failing is so thin. Those operating in financial services must harness modern technologies – like data virtualization – to stay at the top of their game and ahead of the competition.
The Importance of Digital Trust in Banking and Finance
By Maeson Maherry, COO at Ascertia
With the rising adoption of eSignatures and the acceleration of digital transformation, trust in digital systems is more important than ever before. As a recession looms, the ability to trust digital systems is critical to the stability and security of the banking and finance industry.
So, what should businesses prioritise in an increasingly online world? Information security, data integrity, and digital trust are crucial for ensuring regulatory compliance and customer satisfaction.
Digital trust is empowering banking and finance institutions to effectively tackle issues of identity theft and fraud.
What is digital trust?
On the surface, digital trust refers to a digital system or platform that is secure and can be relied upon to protect and properly handle sensitive information.
Building the confidence that people have in digital systems, platforms, and technologies to handle their sensitive information, protect them from fraud, and function as intended is paramount for decision-makers going forward.
Trust online encompasses various aspects, such as data security, privacy, authenticity and reliability. Digital trust also involves assessing the trustworthiness of digital entities such as websites, apps, and online services, as well as the trust in the integrity and reliability of digital communications and transactions.
Digital trust is a key element of digital transformation, the additional step to ensuring the digital systems in place are secure. This can include the following:
- Online banking platform for customers
- Digital document approvals and workflows
- Secure digital signature solutions
- Know your customer (KYC) checks
- Electronic anti-money laundering procedures
Why is digital trust important for banks?
One of the main reasons why digital trust is so important in banking and finance is that it helps to tackle issues of identity theft and fraud. Customers and regulators require reassurance that personal and financial data won’t fall into the wrong hands. This includes customer statements, investment authorisations, legal records and customer personal data.
Online banking is now well established but the technology continues to evolve and so do the potential threats to data security. With phishing and other identity theft a daily concern, establishing digital trust in the industry is key.
Digital trust provides a means to trust in the identity of a person or document online, to the same degree as meeting or signing in person. This requires additional checks and layers of security to verify identities and the security of documents.
The role of eSignatures in banking
Digital trust is vital in the secure implementation of eSignatures.
In the banking and finance industry, eSignatures are becoming increasingly popular as they allow for transactions to be conducted quickly and securely. However, for eSignatures to be effective and to provide digital trust, all parties involved must trust in the transaction. This is done by ensuring eSignatures are valid and that the person signing the document is who they claim to be.
There are global standards to ensure the authenticity of eSignatures for digital signing. This means there is a way to validate the digital trustworthiness of eSignatures if implemented and used in a manner that meets certain criteria for security and authenticity.
For instance, digital signatures that are compliant with internationally recognised standards, such as eIDAS (Electronic Identification and Trust Services) in Europe, can be considered digitally trustworthy. It’s important to understand not all eSignatures provide the same level of security and to ensure the correct eSignature is used for the purpose and security required.
eSignatures that use advanced digital signature technologies such as Public Key Infrastructure (PKI) or biometrics, can be considered more digitally trustworthy as they provide a higher level of security and authentication.
These technologies use cryptographic methods to ensure that the signature is unique to the signer and cannot be replicated or forged. These standards establish a legal framework for the use of electronic signatures and ensure that they are legally binding, enforceable and offer the same level of trust as traditional signatures.
How does digital trust prevent fraud?
If the public loses trust in digital systems, it could lead to a loss of confidence in the financial system. Fraud, in particular, is at the forefront of public concerns.
Digital signatures are well positioned to offset the risk of financial fraud, largely due to three critical factors when assessing the digital trust of an eSignature:
- Authentication: To verify the identity of the signer, eSignatures employ sophisticated technologies such as PKI. This confirms that the person signing the document is who they say they are and aids in preventing fraud through impersonation.
- Tamper-evident: Tamper-evident features are often included in high-trust eSignatures, which identify if a document has been changed after it has been signed. This helps to prevent fraud by identifying manipulated papers and giving an audit trail of the signature.
- Compliance: International standards such as eIDAS ensure that eSignatures are legally binding, enforceable, and provide the same level of trust as traditional signatures.
The banking industry specifically will benefit greatly from investing in digital trust ecosystems that include eSignatures, biometrics and encryption software to provide verification and assurance for customers.
In the future, financial institutions will adopt Know Your Transaction (KYT) as a means of implementing cybersecurity measures at the transaction level in their banking protocols.
By utilizing digital signatures at the transaction level and verifying them upon receipt, the financial industry can achieve KYT, ensuring that the source of information is under the control of the endpoint and that transaction information has not been tampered with.
This level of security will be a crucial aspect of achieving digital trust in the financial industry moving forward.
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