Jayaraj Puthanveedu: Protecting Customer Trust in a World Full of Fraud

Episode NotesJayaraj Puthanveedu - MD, Global Head of Resilience, Cyber, and Digital Fraud of BNP Paribas - dives into fraud, what the landscape looks like for financial firms, its impact on customer trust, tips on customer awareness, and much more.Notes from Our Discussion with JayarajFraud Landscape for the CustomerFraud is of utmost importance for the financial sector. It is increasing in both complexity and magnitude. Only about 20% of fraud is reported, making it more difficult to measure it.Rising Agility of Fraudsters Fraudsters respond very quickly to changing situations. Now they can leverage AI, which makes it even more difficult for customers to recognize suspicious sites or activities. Neither individuals nor the largest organizations are immune to fraud.Which Customers are Most Susceptible to FraudFraudsters are enterprise businesses now, which operate across countries. It’s easier to target the older, less tech-savvy generation. Fraudsters have data analytics to profile customers and evolve their targeting strategies. They also adapt to different themes, like the cost-of-living crisis.Impact of Fraud on Trust in the Financial SectorFinancial institutions focus on securing their own infrastructure, their websites, applications, assets and information. There’s a need to be external looking and protect customers. It’s challenging to keep customer’s data and money safe, while ensuring they have access to banking services when they need it. Building trust is about creating communication protocols to raise awareness and train customers.Considerations When a Customer Becomes a Victim of FraudEven if a bank does everything right, a customer who is defrauded may lose trust. Banks need to think beyond the regulatory aspects and encourage customers to report fraud and train them to know when, what and how to report it. This helps financial institutions to understand the latest modus operandi of perpetrators in cross-jurisdiction fraud. Also, the fund recall process has become far more complex because the money moves quickly between countries.Fraud Proof by DesignFinancial firms need to follow a holistic approach to building machines, processes and products to detect non-standard behaviors and patterns. Fraud prevention must be a consideration in application development, product design and delivery. Intelligence gathering is also important, like identifying websites that look like your own to reduce phishing. Getting Customer Attention to Increase Fraud AwarenessDespite the rapid evolution of fraudulent activities, banks cannot communicate too frequently, as customers will just tune out. Awareness needs to be part of the customer journey, from onboarding to the transaction process and account maintenance. Sometimes personal data is stolen on other websites, but customers don’t get to know till their bank account is impacted. Customer awareness of different ways in which data may be compromised is key. Customer education is better driven by contextualizing the message. Collaboration to Get Ahead of FraudstersThere’s a need to share actionable intelligence and information on trends and patterns. There is currently no central or global data source to understand the real loss from digital fraud because it is hugely underreported. There needs to be regional and international coordination to tackle fraud.Privacy Issue with Sharing Fraud DataFraud reporting may not require sharing customer specifics but will definitely include customer profiling. There are privacy issues with this as well. Conversely, there are things that can be shared that are not yet being shared.