New data from Salesforce’s MuleSoft reveals that 93% of IT leaders in the financial services and insurance sector say the ‘Great Resignation has created skills gaps in their department
More than a third (35%) of organizations plan to increase their use of low- and no-code tools in the next 12 months
Based on a survey of 149 senior IT leaders in the financial service and insurance sector, the 2022 IT Leaders Pulse Report provides insight into the people, process, and technology challenges facing organizations in the modern digital era
IT talent acquisition challenges are now heavily influencing technology investment decisions, according to new research released today from Salesforce’s MuleSoft. The 2022 IT Leaders Pulse Report reveals that almost three quarters (74%) of senior IT leaders in the financial service and insurance sector agree that acquiring IT talent has never been harder, and nearly all (97%) respondents say attracting IT talent influences their organization’s technology investment choices.
The report also shows that today’s IT leaders are using technology to create more people-centric experiences for their employees and customers. The majority (87%) of senior IT leaders now say the experience an organization provides its employees and customers is as important as its products and services, and four out of five respondents agree that improved customer-facing (86%) and employee (85%) technologies are critical for their organization to compete.
“Shifting economic headwinds are making technology even more fundamental to success across every part of the business, including sales, service, marketing, commerce, and IT,” said Matt McLarty, Global Field CTO, MuleSoft. “As IT leaders struggle to fill roles to support this additional demand, the traditional playbook is in question. Today’s IT leaders must look instead to broader, company-wide process improvements, through automation, that foster innovation, enhance user experiences, and drive efficient growth.”
IT talent acquisition pressures are shaping technology investment decisions
Four out of five (80%) senior IT leaders agree investing in people is hugely important. As a result, the majority of respondents plan to invest in improving IT employees’ wellbeing (84%) and upskilling (72%) their existing workforce. The report shows:
- The ‘Great Resignation’ has created skills gaps across IT: Most (93%) senior IT leaders say that the ‘Great Resignation’ has created skills gaps in their organization’s IT function, primarily within IT and solutions architecture (62%), and cloud and infrastructure management (48%).
- Organizations are embracing automation and self-serve initiatives: Many senior IT leaders are turning to automation and self-serve initiatives to address the growing skills gap. Across the financial services and insurance sector, 58% of organizations are automating tasks and processes, and 54% are empowering non-technical employees to meet their own needs.
- IT leaders are being measured on user experience: Three out of five are now evaluated on employee productivity (62%), while many are also measured on cost reduction and optimization (46%), customer experience (56%), and employee experience (51%).
Process improvements foster innovation and efficiency
While creating experiences is crucial, a people-centric IT and business strategy needs efficient processes to succeed. More than half of IT leaders (53%) think that working processes between IT and business teams could be significantly improved. The report also showed:
- Existing IT processes are a bottleneck: Almost nine out of ten (88%) senior IT leaders say that existing IT processes are hindering productivity. Process challenges are also reported to negatively impact innovation (91%), technology adoption (89%), customer experience (92%), and employee experience (93%).
- Process improvements are high on the agenda: Almost half (46%) of senior IT leaders say that making process improvements is a major priority for their organization over the next 12 months.
- Fusion teams for process efficiency: A majority of respondents are looking to create fusion teams to improve processes and address process-oriented challenges. More than two-thirds (68%) of organizations have created or are in the process of rolling out fusion teams, and 25% plan to do so within the next 12 months.
Notably, of organizations with fusion teams already in place, 57% of senior IT leaders say these teams have been very effective in helping the business meet its goals.
Automation and low- and no-code tools drive efficiency and enhances user experiences
Empowerment and enablement through technology drives business growth, and organizations are using best-of-breed technologies to create new customer and employee experiences. While this strategy can increase agility, almost three-quarters (72%) of senior IT leaders agree that this approach means that their organization struggles with IT complexity. What’s more:
- Integration headaches remain: The majority of senior IT leaders believe data or system integration projects take too long (64%) and are too expensive (62%). At the same time, two-thirds (66%) recognize that a lack of data or system integration creates a disconnected customer experience. Consequently, all senior IT leaders say that new investments are influenced by a tool’s ability to integrate with existing technology.
- Companies are embracing low– and no-code tools: Many senior IT leaders are turning to low- and no-code tools to enable business users to build and test new experiences. Almost all organizations (97%) currently use low- and no-code tools and 35% plan to increase their use over the next 12 months.
- Automation maturity is growing, but there is room for improvement: Many organizations have implemented automation to enhance customer experiences and product quality. Two-thirds of organizations (68%) have either mostly or fully automated their IT operations, and many have introduced similar levels of automation across other business functions — including customer support (53%), finance (50%), marketing (53%), sales (51%), and HR (46%).
“The current economic climate leaves IT leaders no choice – they have to do more with less. The tools are there to empower more users to become digital builders, and help their organizations grow while improving efficiency. By automating processes where feasible, leaders can realize value faster and accelerate innovation,” added McLarty.
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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