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BOT ATTACKS IN THE FINANCE SECTOR: FRAUDSTERS ARE USING AI TOO

By: John Briar, COO and co-founder, BotRx

 

The use of Artificial Intelligence (AI) and automated processes in the finance industry is growing. From using AI-enabled chatbots to communicate with customers, to using Robotic Process Automation to eliminate tedious tasks in payroll and accounts receivable, financial organisations are making the most of this up-to-the-minute technology. Indeed, a report by McKinsey found that current technologies can fully automate 42% of finance activities and mostly automate a further 19%. As progress continues to be made in automated technology, this number is only likely to increase.

The problem is that cybercriminals are also using AI. With AI tools at their fingertips, fraudsters are developing and deploying sophisticated automated attacks, namely in the form of malicious bots. These bad bots masquerade as legitimate users to conduct malicious activities against financial organisations, such as stealing Personally Identifiable Information for illicit activities like fraudulent credit card applications and account takeover. This trend has only increased during the coronavirus pandemic, as cyber adversaries look to take advantage of the disruption caused by the outbreak. Indeed, financial fraud increased 33% during lockdown, according to Experian.

 

John Briar

AI-enabled fraudsters are on the loose

Fraudsters are becoming increasingly reliant on automated bots, and using credential stuffing as one of their favourite tricks. Credential stuffing attacks work by taking advantage of the fact that people tend to have poor cyber hygiene and reuse the same usernames and passwords across all of their different online accounts. Cybercriminals then launch automated bots to complete repeated password-guessing attempts to log into secure user accounts on hundreds of different websites.

After the fraudsters have sifted through millions, sometimes billions, of login credentials, and have found a login match for a specific website, they normally sell these verified credential pairs to other cybercriminals that launch follow-on attacks. Once they have access to the account, cybercriminals begin committing a variety of fraudulent activities.

Account takeover fraud is a common endgame for bad actors, and almost always begins with credential stuffing. This attack allows fraudsters to access an individual’s account. Once inside, they can conduct unauthorised activity, and depending on the attack, even change login and personal information. KPMG found a  57% increase in UK financial account takeover cases last year, with account takeovers even making the news, like Marriott’s March 2020 data breach where login credentials of two Marriott employees were used to access guest information, affecting over five million guest accounts.


It’s time to fight back

Financial institutions must look to better protect themselves and their customers from these automated bot attacks. There are numerous solutions out there, though organisations must take note of the strengths and weaknesses of each one. The biggest challenge for financial organisations is being able to combat the dynamic nature of automated bot attacks, which fraudsters change on such a regular basis that it’s difficult to predict attack behaviours and recognise signatures.

Indeed, the hardest part of stopping bot attacks is that bots can very easily outmanoeuvre static network infrastructures. Currently, most solutions don’t have a dynamic nature. Firewalls and Intrusion Prevention Systems for example, are ineffectual because they cannot detect changing attack patterns. Web Application Firewalls on the other hand struggle to pick up attacks that mimic normal behaviours, which is exactly what these automated bots do. Threat intelligence, which gathers intelligence on new threats only after an attack has happened, also aren’t bulletproof as they allow early attacks to go undetected.

AI and Machine Learning (ML) based solutions are a better match for automated bot attacks, as they are playing fraudsters at their own game. However, even the most sophisticated AI and ML solutions can be outsmarted by fraudsters who take the time to gather intelligence so that they can plan a future attack. Because AI systems rely on the information they’re fed, they require manual intervention to classify if the anomalies identified in the traffic patterns are real or false events.

Then there are new solutions like Moving Target Defense (MTD), which has recently surfaced as malicious bots’ new foe. Coined by the US Department of Homeland Security, MTD is unique because it is a proactive approach to stopping malicious bot attacks, unlike traditional detect-block solutions. It works by making the attributes of a financial institution’s network dynamic rather than static, obfuscating the attack surface. This reduces the window of opportunity for fraudsters, making it extremely difficult for them to infiltrate a network, and allows financial organisations to take back control of their IT infrastructure by always being on the front foot.

 

A proactive approach  

Continuing to rely on the detect-block methods simply isn’t sufficient to stop malicious bot attacks. While each of the above defence methods have their merits, financial organisations shouldn’t rely on any one of them alone, as the growing number of automated attacks will always be looking to take advantage of static infrastructure and other weaknesses.

It shouldn’t be surprising that, as financial institutions increase their use of automated processes, so too are cybercriminals. Financial organisations must therefore look to new solutions that will redefine the power balance between defenders and attackers. MTD is a promising approach to the equation, enabling them to protect their networks and their customers in the long-term.

 

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Finance

2021 FINANCE SPEND PREDICTIONS

by Andrew Foster, VP Consulting EMEA, AppZen

 

As we enter a new year filled with ongoing change and uncertainty, a few things are still clear. Though digital transformation has long been a familiar story told across the finance sector, businesses are recognising the need to adopt new technologies as a matter of urgency. As a result, 2021 will see a huge shift towards embracing technologies that transform finance procedures.

Anant Kale, Co-Founder and CEO, AppZen, shares his finance predictions for 2021:

 

The year of accelerated digital transformation

The current pandemic forced companies of all sizes, across nearly every industry, to virtualise their workforce, almost overnight. But in the coming year, finance leaders will be turning their attention to wider digitalisation efforts.

Kale explains, “Last year, the focus was on how to quickly keep up with changing business needs, with CIOs focusing on business continuity in a remote work environment—conferencing and collaboration tools, network upgrades, and so on. As we finally caught our breath, this next year will bring even deeper transformation. Rethinking and reimagining business processes in an AI-first world will keep enterprises agile, efficient, compliant and allow them to scale without relying on adding huge headcounts, which will be critical to the bottom line.”

Andrew Foster

Consequently, more CFOs will be driving the push for AI-powered programmes to be implemented into finance operations to accelerate digital transformation, streamlining operations across the entire enterprise and ensuring business resilience.

 

Expanding digital transformation – beyond the basics

Over the past year, the drive to enable remote working across the whole organisation has meant the deployment of a wide variety of technologies. Yet, most of these solutions are not in areas that directly increase the finance department’s efficiency. This year, finance leaders will be prioritising two specific functions that are prime for disruption and enhancement – AI-based invoice processing and expense auditing.

“Increasingly, AP invoice processing decisions will be made in the autonomous zone, where intelligent systems can independently make decisions that don’t require human second guessing or manual review,” said Kale. “With autonomous AP, systems that are capable of evaluating all aspects of invoice entry, matching, accounting approvals and even risk and compliance, AP teams will be able to move from operations to more strategic AP concerns.”

AppZen’s recent survey of top CFOs and finance executives confirms the need for deeper transformation in 2021. Currently, 59 per cent respondents report they still haven’t automated ingestion and extraction of data from invoices. Unsurprisingly then, a notable 43.5 per cent of organisations still take seven or more days on average to process an invoice. Organisations with more proficient automated processes only take 2.9 days to process an invoice on average — a considerable difference that supports the need for increased automation and AI uptake among modern finance teams.

 

Adapting for expenses in the 2021 work-world

CFOs will need to budget for different types of business expenses in light of the new environment. With an evolving workforce that includes remote, on-site and hybrid workers, they need to rethink their strategies and plan scenarios in ways they’ve never had to do before.

To this point, Kale comments, “Business travel will come back in some form later this year, but more importantly, the nature of expenses that have traditionally been associated with travel and entertainment (T&E) will change. Instituting routine audits and implementing clear expense policies will be critical to avoid fraud and abuse or unreliable financial data, which cost businesses nearly $3B dollars a year—and that was before the pandemic.”

As the spend environment becomes more complex, spend visibility is more vital now than ever. Finance leaders need to have the right tools in place to identify these new types of expenses – such as the number of video conferencing licences acquired, home office equipment, and productivity software – and properly assess spend priorities.

Flexibility is also crucial. In a rapidly-evolving environment, a one-size-fits-all policy isn’t up to standard. “How enterprises create and allocate budgets has been completely disrupted and what worked in the past won’t work in 2021,” declares Kale. “We’ve gone from a relatively certain, predictable way of carrying out business operations to a time where only the unpredictable seems certain, which requires agility, speed, and scale to ensure longevity and continuity.”

 

Conclusion

Despite challenging times, finance leaders are showing optimism for 2021. This year will require adaptability in the face of evolving global economic conditions in order to meet not only wider company needs, but those of employees as well. Embracing new technologies will continue to transform operations across every level of an organisation and enable business leaders to drive both productivity and profitability despite the uncertainty ahead.

 

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Finance

THE LOYALTY-TRUST PARADOX AT THE HEART OF FINANCIAL SERVICES AND HOW TO OVERCOME IT

By Andrew Warren, Head of Banking & Financial Services, UK&I at Cognizant

 

There has long been a paradox at the heart of the financial sector – customer loyalty remains high despite overall trust in the banking system being very low. In any other sector, low trust would lead customers looking for services elsewhere. Generally, however, the major banks have been able to retain their clients despite, rather than because of, trust.

This customer loyalty does not always pay, with research suggesting consumers could be overpaying by £2.9bn in areas such as mobile, broadband, home insurance, as well as, notably, mortgages and savings. Whether the result of customer lethargy, lack of awareness of the possible cost savings or low expectations of the service banks provide, this has encouraged complacency in the banking sector.

This could, however, change as our post-pandemic reality begins to bite. People may have used the extra time from the lack of a commute to do some research and shop around for better alternatives, as well as harbouring frustrations over a perceived lack of support in recent months. Coupled with the possibility of a period of negative interest rates, we could soon be heading towards a perfect storm, where both retail giants and small local businesses start to question the value their banks actually provide.

 

Digital native challengers are shifting the landscape

One viable reason for the supposed loyalty consumers have towards the major banks has been the lack of real alternatives. With all of the traditional high street institutions offering services that were largely interchangeable, switching services seemed more effort than was really worth it when perceived benefits were so minimal. However, this changed with the arrival in recent years of challenger banks such as Monzo, Starling and Revolut, which continue to grow in popularity due to ease of use and better customer experience from sign-up through to their intuitive apps.

The primary advantage of the big banks is their liquidity, historical reputations and longstanding customer base. However, the agility and user-friendliness of the challengers is shifting the landscape, and the continued reliance on legacy systems leaves the traditional players struggling to surpass, or in most cases match, the innovative services and products fintechs are able to bring to the market.

 

Customer expectations setting a new standard

As personalisation and smooth technological integration in other sectors, such as retail, raises expectations of similar offerings across all service industries, this could soon become a key battleground for banks.

With the challengers currently looking better equipped to respond to these consumer needs, here are some of the steps banks can take to modernise their offerings and retain customers’ loyalty:

  • Embracing human science – the financial sector has long favoured data science in its behavioural analysis. Almost anyone can understand basic data; it is how semiotic algorithms can be used alongside this that will reveal real insights that can be used simply to help understand people better, their fears, their hopes and their aspirations.
  • Adapting to modern trends – the lockdown has, by necessity, modified and in some cases accelerated, many of the established habits of both individuals and businesses. These range from an increased adoption of cashless payments, to remote working, the propensity for saving vs investing, attitudes towards fraud and risk appetite, and loyalty. As a result, some customer journeys, which had become the cornerstone of banks’ or lenders’ strategies, will now need to be adapted. For example, products, pricing and customer treatment strategies will need to be updated, and the entire value-chain of customer touchpoints should be digitally enabled. Financial institutions will now need to ensure speed and quality of their response to this change.
  • Using innovation to level the playing field – the systemic advantage the big banks have over more agile challengers is in liquidity access. It is an advantage that potentially will be scrutinised in the COVID-19 enquiries we can expect to see in the near future, particularly around the provision of the various governmental support schemes and loans for which these big banks initially had responsibility. As that advantage then reduces, the need for real innovation grows. This means building business models and deploying technology that can deliver value and differentiation. For example, the major banks have more channels than their digital-only counterparts and, therefore, more data to draw on. The result is a better focus on customer journeys, with modern cloud-based data management platforms central to this. The quantity and detail of data can play in banks’ favour, allowing constant ongoing improvements to customer communications and simplifying self-service options in an increasingly remote world. It is important that banks continue to ensure they are thinking outside the box and keeping pace with other industries that are innovating in their response to the pandemic.
  • Personalising the process – technology is already helping to speed up processes and improve self-service banking operations, particularly with predictive and smart decision-making through AI and ML. The advanced use of chatbots is an example, along with increasing tailored content and interfaces in apps and on digital platforms. However, the end goal is personalisation across the whole customer journey, not only through technology but also call centre operatives who still form a critical role in trouble shooting and need an up to date view of the customer in order to be able to do their job. Technology can also help analyse how these human interactions can then become more personalised.

The major banks retain a crucial position in UK society for the support and confidence they offer their customers. However, as in so many other sectors, the coronavirus pandemic could come to be seen as a watershed moment in their evolution. With the challengers continuing to gain momentum, banks certainly cannot afford to stand still. It is the ability to have a data- and technology-driven approach, as outlined here, that can help them retain their dominance and justify customer loyalty now lockdown is beginning to lift. Should they fail to do so, we may find ourselves in a very different landscape than we do today. By focusing on the steps above, banks will start to level out the playing field.

 

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