Elliott Tiernan, Global Head of Pre-Sales at ActiveOps.
If you use technology to spy on your staff, your bottom line and staff turnover rate will feel it. So instead, use tech to empower them with good data and supportive management practices.
As we have all read and heard a thousand times, the pandemic has changed the workplace and the tools that managers and their teams need to work effectively, for good. There seems to be a consensus from both businesses and staff that working from home, at least sometimes, is a positive thing.
You may think, and you certainly would hope, that this ‘new normal’ hints at some degree of trust between employers and employees. That managers may start to trust their employees, and that employees, in turn, would reward this greater autonomy, and the morale boost, with increased productivity. Unfortunately, this doesn’t seem to be the case.
According to recent research, employers ‘spy on’ a third of UK workers, and webcam monitoring has more than doubled. Bosses and business owners are using dystopian surveillance tools more and more to make sure their workers are being diligent. As they can’t see people working at their desks, they come to the slightly mad conclusion that people just won’t be working at all.
This paranoia, perhaps understandable as we get used to new ways of performance measuring and the required maturity to trust fellow stakeholders, is just that; paranoia. The c-suite and the managers that run the day-to-day operations must relinquish this over-the-top oversight if they want their company to perform well. This means swapping surveillance for something much harder to perfect but much more rewarding for everyone’s mental health and, therefore, their productivity; good management – trust, communication, and a focus on outcomes not just how long employees spend at their desks
Not surprisingly, a 2017 study by Baylor University found that monitoring software correlated with greater employee tension and less job satisfaction, which naturally caused a higher staff turnover. This pressure, and the subsequent desire to jump ship, is stressful enough, let alone during the economic freeze of the pandemic, when another job may not be so easy to find. More recently, MPs stated that worker surveillance and setting performance targets through algorithms damage employees’ mental health and need to be controlled by new legislation.
Workforce surveillance is not just unjust and unethical; it is entirely self-defeating. A happy team is a productive team, and an effective team is what your bottom-line needs. You’d be better off, and so would the quarter’s profits, if you motivate your staff by instilling a sense of autonomy and measuring success by results. After all, results matter, not mouse clicks and not time spent sitting at the desk.
There is a phrase for these concepts, and it isn’t some pandemic-spawned technobabble; it is simply called good management. Communicate with your employees, measure their effort by the results they achieve, and regularly review these results against other companies, departments, and staff. This way, everyone is productive, and everyone remains happy and avoids burnout. The trust goes both ways, and if you play your cards right, your staff may stay working for you – rather than filling the ever-growing number of vacancies in better-paid and better-managed roles elsewhere.
Just because some bad apples use digital tools to spy doesn’t mean that is their only use. Intelligent workforce management software coupled with the right management practices is a tried and tested approach to keeping your workforce healthy, happy, and productive (and I don’t mean by measuring their clicks). Insight into working habits and the results they achieve can help managers and the C-suite make better decisions – and I don’t just mean for their profits.
Good decisions at the top can, and should, mean better conditions for all stakeholders involved, especially employees. Better conditions mean higher productivity, improved staff well-being, and mental health. With proper workforce management, ultimately, you will have a better-performing company.
Defining Fraud in 2023
Scott Buchanan, Chief Marketing Officer at Forter
Fraudsters are fluid — they constantly experiment with new tactics to find cracks in a merchant’s defenses. In 2023, there are five trends that merchants need to be aware of — we saw each in 2022 and expect to see them with even more frequency in the year ahead.
Human ‘Bot’ Farms
First, let us acknowledge that while “human bots” is an oxymoron, it is also highly insensitive. At present, our industry lacks a better way of describing the practice. It used to be that human ‘bot’ farms referred to sweatshop-style arrangements in which poorly paid workers, often in developing countries, spent their days on brute force attacks, solving things like CAPTCHAs.
Now, though, a new twist on this old theme has arisen. In short, human bot farms use trafficked humans to scale their fraud operations. Often, they behave as bots, conducting brute force (and similar) attacks.
Human bots were widely recognised in fraud manager communities as a driving force behind recent repeated attacks, especially during the holiday rush. For example, human bot farms bombarded merchants that offer limited edition merchandise, decreasing the chances that prized products find their way to (and ultimately frustrating) good customers. These same operations also applied several tactics that follow at a scale that overwhelmed some fraud solution providers and their merchant customers.
Low-tech Address Manipulation
In the past year, fraudsters reverted to old tricks to circumnavigate rule-based fraud prevention as we saw an uptick in low-tech address manipulation. Consider a merchant with a rules set that checks a shipping or billing address against a negative list. And let’s say a noted fraudster has an address of 123 Main Street that is on that list. Therefore, any transaction with a shipping or billing address of 123 Main Street will be blocked by rules.
Fraudsters found an easy workaround. They simply write a variation of the address during checkout that evades the rules but can be easily understood by FedEx, UPS, or any other delivery company. For example, 123 Main Street becomes One-two-three Main Street or 123 Maain Street.
This should be simple to identify and block in theory. Still, fraud managers were frustrated that rules-based solutions — even those that applied artificial intelligence to speed rules application — struggled to spot this manipulation. During the Black Friday rush, more than one vendor threw up their hands and admitted they had no way to stop this tactic effectively. And as a result, fraud teams with these solutions had to manually review a growing queue of transactions.
With the growing presence of marketplaces to exchange goods, fraudsters are using triangulation more. Think about this as ‘stolen to order’ (instead of made to order). A fraudster posts a sought-after item for sale on a marketplace; in 2022, some of the most popular items for triangulation were high-end ‘cozy’ blankets, sneakers, gaming systems, and other electronics.
When a consumer buys an item from a fraudster on the marketplace, the fraudster then steals the item from a merchant. They input a shipping address for the marketplace buyer at checkout, which typically evades address verification checks. The marketplace buyer gets their item; the fraudster gets their money; the merchant gets penalised, and the marketplace is entirely unaware.
Fraudsters prefer triangulation because they don’t make any effort until they have a buyer — they never have to worry about stealing something they can’t sell, and they never have to touch the merchandise (further reducing their operating costs).
Emboldened cheaters are attempting more brazen tactics. A prime example of that is double-dipping — while this is not new, we did see more attempts (especially from amateurs and previously good consumers) to double-dip in 2022.
Double dipping can take any form where a bad actor wins twice. For example, the bad actor makes a purchase and has the product shipped. They tell the merchant the item was not received and simultaneously file a chargeback with their issuer. Since it may take hours or days for the issuer to inform the merchant of the refund request, the communication gap can mean the bad actor receives money back from both entities and keeps the product.
We’ve also heard examples of bad actors buying and receiving an item, then filing a return, yet failing to return the item. Instead, they send the merchant back a package with rocks (or something else weighted). In one particularly devious example, a bad actor filled a bag with dry ice, which evaded a weight check by the delivery company, and then arrived at the merchant as an empty package.
The best-known form of friendly fraud is chargeback fraud when a customer makes a purchase and receives it but files a fraud chargeback claiming that the purchase was made by a fraudster. This form of friendly fraud has been growing dramatically in recent years. Less recognised is that other forms of friendly fraud — which can also be labeled policy abuse — are increasingly serious.
For example, a consumer buys a sweater as a final sale. When it arrives at their doorstep, they realise it doesn’t fit as they’d hoped. Disappointed, the (previously good) consumer contacts the merchant to claim the sweater never arrived (code = Item Not Received) and demands a refund. The consumer now has the item they can wear (hey, at least the fit is close) or resell on a marketplace for profit.
Friendly fraud can also surface as returns abuse (returning items worn or outside of store policies), promotions abuse (re-using new customer discounts or other voucher codes), and more.
Friendly fraud is difficult to stop since it is often perpetrated by good consumers — they don’t appear on negative lists or fail basic rules. But professional fraudsters get in on the same acts, industrialising the consumer problem by increasing its scale and professionalism significantly. To increase their odds of success, they have gotten pretty systematic about this form of fraud. For example, on the dark web, fraudsters have shared the exact language to use when calling specific large merchants or issuers to nearly guarantee a refund or chargeback.
Parting Thought: The Power of Identity
The above tactics that fraudsters used with some success in the past year generally exploit gaps in rules-based systems (deployed by the merchant and/or offered by a fraud solution provider). These tactics don’t work when you can pinpoint the identity behind an interaction.
When you can be statistically confident that the identity entering an address of “One-two-three main street” is associated with fraud, it doesn’t matter what they enter in the address field; their transaction attempt is blocked. When a known fraudster is attempting to put an item up for sale on a marketplace or purchase an item with a net new shipping address, you stop them. And when they try to re-use promotional codes repeatedly, you reject the attempt.
You cannot pinpoint an identity with rules — instead, you need a massive graph of online identities and as much data as possible on each. While fraudsters always manipulate aspects of their identities, they cannot mask thousands of data points. Next-generation fraud solutions that use machine learning to augment human expertise can pattern match and pinpoint identity.
And to build the largest identity graph, you need a consortium of the largest merchants — collectively, they will ‘know’ the vast majority of online identities. And in this model, an identity — a bad actor or a good customer — known to one merchant is immediately known to all merchants.
And that is why the final trend for 2023 will be merchants abandoning rules-based systems at an increasing rate. That includes the rules-based fraud solution providers masquerading as machine learning (but really just speed up the application of rules). To combat more sophisticated fraudsters, merchants will make decisions based on identity. They will seek out the largest identity graph in order to achieve superior results.
Mizuho Bank Luxemburg upgrades anti-financial crime compliance risk management with Napier
Mizuho Trust and Banking (Luxembourg) S.A , the Luxembourg subsidiary of Japan’s Mizuho Trust & Banking division (part of Mizuho Financial Group) , is upgrading its Transaction Monitoring framework strategy through a partnership with Napier, the financial crime compliance technology specialist.
An intelligent compliance platform, Napier Continuum, including Transaction Monitoring, Client Screening, Perpetual Client Risk Assessment and Client Activity Review, will provide Mizuho Bank Luxemburg with a holistic overview of compliance that will enable it to connect data, control compliance operations, and manage risk.
The bank wanted to upgrade its framework to make it more robust given the importance of financial crime for credit institutions.
Naim Tliba, Chief Compliance Offer and Vice President at Mizuho Trust and Banking (Luxembourg) S.A., said: “We chose to work with Napier as it has the flexibility to meet our needs, at the same time offering the most advanced technology supported with powerful AI. With improved transaction and client monitoring capabilities, our organisation will be able to stay ahead of the curve and provide our clients with the most secure and regulated asset servicing experience.”
As part of Mizuho Financial Group, Mizuho Trust & Banking (Luxembourg) S.A. has been formed in 2000 and provides securities and fund services to its institutional clients.
Napier’s compliance technology helps businesses and financial institutions to comply with local and international anti-money laundering (AML) regulations, monitor transactions, and screen customer and business partners and therefore participate to the efforts to better combat financial crime.
Greg Watson, CEO at Napier, said: “Our range of new-breed compliance solutions help organisations like Mizuho Luxembourg to gain control over their risk management so that it can become a competitive advantage. The technology is one side of this, but it’s the capability to adapt a system in adherence with local regulations that offers the most effective solution, and that’s what we have been able to provide Mizuho Luxembourg. Approaching a system upgrade in this proactive way means that they will be equipped with a futureproofed anti-money laundering strategy that will take care of their AML compliance needs.”
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