2023

By Pim Koorn, Product Director, Business Banking at Backbase

With the fourth quarter quickly approaching, banks are increasingly tasked with the difficult project of evaluating how to best support their small and medium-sized enterprise (SME) customers, all of whom are working diligently to re-emerge from 2020’s challenges and adapt to the new normal that is taking shape.

Responding to today’s current demands means that flexibility, innovation and personalisation are key requirements of any technology partner. Banks are considering how to best provide the customisable solutions their clients need in today’s current environment. SMEs are increasingly seeking partners that can provide the specific working tools that meet their fluctuating requirements. No one SME is alike. Whether they are reaching for new digital invoicing tools or seeking real-time onboarding solutions, banking partners that can best support their customers at every turn in their digital journey will remain a trusted partner during the collective recovery period.

The coronavirus pandemic has also put a newfound strain on how SMEs are managing their day-to-day operations and has significantly shaped the way SMEs are looking at their technology. In a PwC study from April of 469 SMEs on how banks can help businesses manage the rocky waves of the pandemic, the majority of respondents noted that the ability of a banking partner to tailor its support was critical to retaining the SME as a client. More than half of respondents (61 per cent) said personalised customer experience was core to the banking relationship.

These survey results underscore how a customer-centric focus, instead of a product-centric one, is the key to banks being able to optimise client relationships. Banks are already working to better understand their SME customers’ specific ways of working, but being able to efficiently cater to these needs lies in embracing technology and innovation.

By digitising paper-based banking processes, SME’s will be able to reallocate their limited time toward more important business-critical tasks. SMEs spend 74 per cent of revenue on non-core activities like bookkeeping and legal and 26 per cent on core activities that make them money, according to McKinsey. Implementing slick and user-friendly platforms can help banks remove friction and provide a more seamless experience for their clients, creating the efficiencies these businesses require.

Another way banks can help support SME clients is by prioritising optimisation. Digital-first banking platforms help solve some of the day-to-day hurdles that SMEs currently face, with solutions such as digital onboarding, digitised loan applications and digital customer signing processes. By empowering SMEs with the digital tools they need to reduce processing times from days into minutes, banks can make themselves indispensable as value-add technology partners.

Every business is currently looking for ways to streamline their operations. But banks that operate within legacy systems run the risk of not meeting the expectations of modern SME owners. By offering digital-first platforms, banks can provide SMEs with the underlying technology infrastructure that helps take the stress out of their finances. Providing access to secure and seamless mobile money management tools, banks can make SME’s lives easier – from bill payments to invoicing, and payroll to card management.

Lastly, banks that integrate new processes around transparency and real-time data will be better placed to cement themselves as long-term partners. Accessible, actionable data is how SMEs stay up to date, and leveraging real-time liquidity management tools that are backed by reporting and analytics are key to the financial health of these businesses.

With Q4 upon us, banks are understandably focused on how to best support their clients during this pivotal time. And as SMEs turn to technology to help them navigate these challenging times, banks can put their best foot forward by continuing to prioritise digital-first, customer-first services.

Pim Koorn
Product Director, Business Banking
Backbase

By Ted Sausen, Subject Matter Expert, NICE Actimize

On September 20, 2020, just four days after the Financial Crimes Enforcement Network (FinCEN) issued a much-anticipated Advance Notice of Proposed Rulemaking, the financial industry was shaken and their stock prices saw significant declines when the markets opened on Monday. So what caused this? Buzzfeed News in cooperation with the International Consortium of Investigative Journalists (ICIJ) released what is now being tagged the FinCEN files. These files and summarized reports describe over 200,000 transactions with a total over $2 trillion USD that has been reported to FinCEN as being suspicious in nature from the time periods 1999 to 2017. Buzzfeed obtained over 2,100 Suspicious Activity Reports (SARs) and over 2,600 confidential documents financial institutions had filed with FinCEN over that span of time.

Similar such leaks have occurred previously, such as the Panama Papers in 2016 where over 11 million documents containing personal financial information on over 200,000 entities that belonged to a Panamanian law firm. This was followed up a year and a half later by the Paradise Papers in 2017. This leak contained even more documents and contained the names of more than 120,000 persons and entities. There are three factors that make the FinCEN Files leak significantly different than those mentioned. First, they are highly confidential documents leaked from a government agency. Secondly, they weren’t leaked from a single source. The leaked documents came from nearly 90 financial institutions facilitating financial transactions in more than 150 countries. Lastly, some high-profile names were released in this leak; however, the focus of this leak centred more around the transactions themselves and the financial institutions involved, not necessarily the names of individuals involved.

FinCEN files and the impact

What does this mean for financial institutions? As mentioned above, many experienced a negative impact to their stocks. The next biggest impact is their reputation. Leaders of the highlighted institutions do not enjoy having potential shortcomings in their operations be exposed, nor do customers of those institutions appreciate seeing the institution managing their funds being published adversely in the media.

Where did the financial institutions go wrong? Based on the information, it is actually hard to say where they went wrong, or even ‘if’ they went wrong. Financial institutions are obligated to monitor transactional activity, both inbound and outbound, for suspicious or unusual behaviour, especially those that could appear to be illicit activities related to money laundering. If such behaviour is identified, the financial institution is required to complete a Suspicious Activity Report, or a SAR, and file it with FinCEN. The SAR contains all relevant information such as the parties involved, transaction(s), account(s), and details describing why the activity is deemed to be suspicious. In some cases, financial institutions will file a SAR if there is no direct suspicion; however, there also was not a logical explanation found either.

So what deems certain activities to be suspicious and how do financial institutions detect them? Most financial institutions have sophisticated solutions in place that monitor transactions over a period of time and determine typical behavioural patterns for that client, and that client compared to their peers. If any activity falls disproportionately beyond those norms, the financial institution is notified, and an investigation is conducted. Because of the nature of this detection, incorporating multiple transactions, and comparing it to historical “norms”, it is very difficult to stop a transaction related to money laundering real-time. It is not uncommon for a transaction or series of transactions to occur and later be identified as suspicious, and a SAR is filed after the transaction has been completed.

FinCEN files: who’s at fault?
Going back to my original question, was there any wrongdoing? In this case, they were doing exactly what they were required to do. When suspicion was identified, SARs were filed. There are two things that are important to note. Suspicion does not equate to guilt, and individual financial institutions have a very limited view as to the overall flow of funds. They have visibility of where funds are coming from, or where they are going to; however, they don’t have an overall picture of the original source, or the final destination. The area where financial institutions may have fault is if multiple suspicions or probable guilt is found, but they fail to take appropriate action. According to Buzzfeed News, instances of transactions to or from sanctioned parties occurred, and known suspicious activity was allowed to continue after it was discovered.

Moving forward
How do we do better? First and foremost, FinCEN needs to identify the source of the leak and fix it immediately. This is very sensitive data. Even within a financial institution, this information is only exposed to individuals with a high-level clearance on a need-to-know basis. This leak may result in relationship strains with some of the banks’ customers. Some people already have a fear of being watched or tracked, and releasing publicly that all these reports are being filed from financial institutions to the federal government won’t make that any better – especially if their financial institution was highlighted as one of those filing the most reports. Next, there has been more discussion around real-time AML. Many experts are still working on defining what that truly means, especially when some activities deal with multiple transactions over a period of time; however, there is definitely a place for certain money laundering transactions to be held in real-time.

Lastly, the ability to share information between financial institutions more easily will go a long way in fighting financial crime overall. For those of you who are AML professionals, you may be thinking we already have such a mechanism in place with 314b. However, the feedback I have received is that it does not do an adequate job. It’s voluntary and getting responses to requests can be a challenge. Financial institutions need a consortium to effectively communicate with each other while being able to exchange critical data needed for financial institutions to see the complete picture of financial transactions and all associated activities. That, combined with some type of feedback loop from law enforcement indicating which SARs are “useful” versus which are either “inadequate” or “unnecessary” will allow institutions to focus on those where criminal activity is really occurring.

We will continue to post updates as we learn more.

Ted Sausen
Subject Matter Expert
NICE Actimize

By Mark Bolton, Head of Sales, International at Gresham Technologies

Automation was once embraced wholeheartedly by reconciliation departments as companies leapt at the opportunity to integrate the latest efficiency driving technology to bring about change and improvement. However, in more recent times this has been replaced by a mood of complacency and stagnation, characterised by a preference to stick to what’s known. To get out of this rut we need to get out of our comfort zones and embrace change – because even during times of uncertainty, a better understanding of your data will always enable a better understanding of your business.

When high-value, high-volume reconciliation processes were first automated it was an exciting and brave new world. Manual tasks that previously required dozens of people were replaced with a new solution that could get through thousands of transactions in a fraction of the time taken for an army of clerks to tick back the same trades.

However, over the years, a culture of resistance to this change has taken hold in many recs departments and the appetite to ‘do more with less’ is diminished by a fear of disrupting day-to-day operations and breaking old systems that work for now. At the same time, the C-Suite has sometimes overlooked the vital role of reconciliations in keeping the firm running smoothly, only mandating change when poor performance or high costs are simply too big to ignore.

Where did it all go wrong?

Skipping forward to today, many organisations have addressed the shortcomings of their incumbent solutions with bespoke in-house procedures, or worse, manual processes, as their incumbent solutions lack the flexibility to cope with either the volume or complexity – or both – of current demands. Business as usual undoubtedly looks very different.

Whilst those within the industry are resistant to change, this does not mean that the industry stays still. Over time, complexity has increased, with transaction volumes skyrocketing, causing new technology to be introduced in response to these developments. This meant that systems had to be updated to keep up with the rapid changes in market conditions. However, this wasn’t as easy as the original ‘big bang’ approach taken to create automated processes, where everything was built from the ground up. Changes to a production environment often didn’t happen, as the time and cost of performing these updates was often prohibitive and heavily reliant on solution providers. Over time, the quality of results started to deteriorate.

Challenging complacency to adapt to the new normal

For many, an argument against change is that the labour-intensive implementation of their legacy solution took many months (or years) to get close to their expected results, and the appetite to repeat such a painful exercise is lacking.

Also, it’s comfortable to keep what you know, right? Wrong! Nothing is more uncomfortable than when your patchwork of fixes unravels, forcing errors to become more commonplace. Unless you can be absolutely data confident across the whole enterprise, then this is the reality you face.

We now have a sector that is rapidly changing, but there’s a lack of willingness to embrace this change. The consequence is piecemeal measures being put in place, rather than taking a leap and fully embracing new technology and the benefits it can bring. For example, we know of multiple companies whose foundations are built upon legacy systems, which they must rely on to process millions of transactions. Many within these companies made requests for systems to be updated but changes were never made, whether due to concerns over cost or the complexity of changes required.

It is in the interest of both the C-Level and practitioners to challenge this risk-averse attitude and fix this situation. Regulations such as MiFID, Basel III and CAT have already placed a huge burden on these old, creaking solutions, and as regulatory oversight continues to increase, so will complex reconciliation volumes. This means wasting time and money by using valuable resources to work through issues that could be handled efficiently by technology.

Firms must act now. With the right partner and attitude, firms will not only be able to develop the right solution for themselves now but one which will provide a robust long-term framework that is flexible and adaptable enough to react to whatever the market has in store.

Mark Bolton
Head of Sales, International
Gresham Technologies

By Niall Twomey, CTO at Fenergo

How do financial institutions stay competitive in the COVID-impacted marketplace? In today’s climate, financial institutions must switch to digital or risk becoming obsolete. As a result of the pandemic, recent research revealed that consumers use of mobile and online banking has dramatically increased with 30 per cent more people using their mobile apps and 35 per cent using online banking. It’s imperative during these trying times that financial institutions digitise in order to accommodate the needs of the marketplace, otherwise they risk losing customers – or worse, going out of business.

Before COVID-19, many financial institutions were putting aside digital transformation projects for a variety of reasons. For example, financial services have been slow to adopt cloud technology owing to a perceived lack of data security and control. Historically, building and maintaining in-house systems was considered the safest way of protecting business-critical sensitive data and applications. However, many of the key concerns associated with cloud adoption such as security and privacy have been addressed, and banks are now beginning to enjoy the advantages of cloud-based services. In the regulatory space, more and more banks are now forced to rapidly embrace the deployment of their regulatory applications on the cloud – in order to drive scalability, lower capital costs, ease of operations and resilience. It’s all about driving efficiencies by adopting technologies, to help give financial institutions a competitive advantage.

In order to be able to better serve their clients in the current climate, financial firms need to improve efficiency, drive better digital client experiences and focus on better value-added tasks by embracing innovative and highly automated technologies that can help ensure the optimal client experiences. In our connected age, clients expect and demand a faster, more efficient account opening process that lets them re-use the information they’ve already submitted and avoid repeated requests to the customer. Often, poor data management is where financial institutions become stuck. The inability to automate the consumption of customer information really hampers financial institutions’ abilities to expedite compliance and onboarding. Financial institutions of any size, and within any sector, need to recognise that introducing technology-enabled client onboarding solutions will give them the best possible chance of meeting the continuing regulatory challenges head-on.

Firms must prepare for the future and consider what the next 6-12 months will look like. They must contemplate how to best respond when relationship managers can’t physically reach out to potential customers. When face-to-face meetings are no longer possible, a digital-first strategy and the ability for clients to provide documents remotely via online portals is crucial. With increased automation, the middle and back-office no longer need to deal with repetitive, manual processes such as scanning documentation. Advanced technologies and capabilities such as natural language processing (NLP), machine learning (ML) and optical character recognition (OCR) allow firms to extract the required information and text from scanned documents which can then be cross-referenced against other data sources internally and externally.

The pandemic has accelerated consumers’ move toward online financial services. Today, customers are looking for remote services including online banking and mobile apps, however, it’s just a matter of time before the demand for more advanced services becomes the standard. For this reason, banks need to fast-track their digital transformation or risk being outpaced by digital-first competitors.

Niall Twomey
CTO
Fenergo

Mohit Joshi, President, Infosys, in conversation with Siew Choo Soh, Managing Director, Group Head of Consumer Banking and Big Data/AI Technology, DBS

DBS is a leading financial services group in Asia with a presence in 18 markets. Headquartered and listed in Singapore, DBS is in the three key Asian axes of growth: Greater China, Southeast Asia and South Asia. The bank’s “AA-” and “Aa1” credit ratings are among the highest in the world.

Recognised for its global leadership, DBS has been named “World’s Best Bank” by Euromoney, “Global Bank of the Year” by The Banker and “Best Bank in the World” by Global Finance. The bank is at the forefront of leveraging digital technology to shape the future of banking, having been named “World’s Best Digital Bank” by Euromoney. In addition, DBS has been accorded the “Safest Bank in Asia” award by Global Finance for 11 consecutive years from 2009 to 2019.

In her conversation with Mohit Joshi from Infosys, Siew Choo Soh from DBS talks about how the bank has achieved a feat unmatched by other banks globally, to become the first bank to concurrently hold three global best bank awards. Siew Choo Soh is the Managing Director, Group Head of Consumer Banking and Big Data/AI Technology at DBS. In her role, she drives digital transformation leveraging Agile, Cloud Computing, Big Data, AI, Machine Learning and is also increasing the representation of Women in Tech. Mohit Joshi is a President of Infosys. He is Head of Banking, Financial Services & Insurance ( BFSI), Healthcare and Life Sciences at Infosys and is also responsible for firm-wide sales operations and reporting processes, including large deal pursuits and top account growth.

Mohit Joshi: You have had a very interesting, fascinating and a well-documented career. Could you just give us a sense of your journey and the key lessons through-out your years in technology at DBS?

Siew Choo: It was a point in my career when I was ready to move towards new challenges and that was when DBS came calling. They asked me to look at a transformation they were about to start and pick up an opportunity there. When I first started in DBS, I was working on all the back-end technology, core banking is one of them from Finacle. As well as all the supporting units for the business such as legal, compliance, finance and so on. Those were the areas that I had never done in my entire career, I deliberately asked to be assigned to such a kind of technology to make sure I can get a 360-degree view of technology in a bank. I did that for about 2 years and after that I was given another new opportunity to head the consumer bank technology and the big data platform for the bank. That is what I am currently doing and still in the journey to further transform these 2 areas in the bank.

I was very fortunate to work with companies that truly supported mobility of people. We actually select people for roles and not because you have done it before but because of your calibre and as well as your passion to make an impact.

Mohit Joshi: You are also one of the few female leaders in technology across the world. For us at Infosys, 40% of our employees are women. What advice would you have for them as they move up in their career and take senior positions.

Siew Choo: Wow, 40% is a great achievement. Well done. I would say that women are typically the shy lot and we always have very high standards. To me, I think every woman should be bold and be fearless. One of my favorite icon is the fearless girl that has been moved in front of the New York Stock Exchange. I think that should be the model for every single girl. Be fearless and go after your dreams and do what you are passionate about.

Mohit Joshi: Now, moving to DBS. DBS has been a remarkable bank for many decades, but specially over the past 10 years. In 2019, the bank won every single ‘Best Bank in the World’ award, every single magazine and every single survey. What would you say is the vision of DBS, what is DBS truly looking to accomplish?

Siew Choo: In the last 10 years, we have been guided by our current CEO, Piyush Gupta. He has a very clear vision about where the bank should be, how we the bank should add value and how we should be transforming ourselves. I think the key part of it actually that we want to make sure that we are truly customer obsessed. We are striving every single day to make our customer experience seamless and we are always pioneering new areas to exceed the expectation of the customer. We have been doing this for many years and we continue to think of new ways to exceed the expectations of the customer, to make banking seamless and invisible to them. That has been the key part of our agenda.

Mohit Joshi: DBS is in a unique position where people contrast DBS with a Netflix or an Amazon just because your technology DNA is so strong. How do technology and business co-exist and succeed at DBS?

Siew Choo: We have a new saying at DBS that ‘business is tech and tech is business’. We are using technology as an enabler for business. Quite a few business models came about because of technology. That’s how we see technology as a revenue contributor rather than a support unit. That is a big contrast to many years ago to where we are now. In this whole agenda, we are quite relentless in pursuing cloud native, in making sure that our people are working in a truly agile manner as well as in the leverage of data and AI. We want to make sure that we do each of this in the true and correct way. There is a lot of effort put into educating our people, giving opportunity to attend various conferences and to be trained by the experts in the industry to understand the true essence. This is so that when we are implementing all of this, the architecture pattern for example, we are doing it the right way that we are able to reap the true benefits from those implementations.

We also benchmark ourselves with the big tech firms. For example, in the last one-two years we are trying to create a new enterprise data platform – ADA, to drive our AI agenda. Before we started, we went to all the various companies, especially the tech companies to look at what they use, what are the tools that they use and what is their operating model and so on. We created our platform based on those learnings.

Mohit Joshi: That’s very inspiring. From a Finacle perspective, we have had a relationship with DBS for many years now and you personally have been a very strong sponsor but also a very constructive critic of everything that Finacle needs to do. What is your advice to us as we invest and grow our platform?

Siew Choo: DBS has been in partnership with Infosys and Finacle for more than ten years. Finacle is definitely a core part of our architecture. As the bank grows up to become more and more digital to tackle new business models, it is important for us that Finacle evolves at the same pace as well as in the same direction as where we are going. So, in a sense the architecture pattern, the product capabilities, the agility of the teams as well as the user friendliness of the UI, those are all key part of what Finacle does to DBS. It is in our interest that we kept the agenda and the priorities of the bank in sync with Finacle.

DBS was recognised as the winner of the Celent Model Bank award in 2018. To download a copy of the Case Study click here.

James Butland, VP Global Banking at Airwallex

Businesses will always need banks, but this necessity does not equate to trusting or even liking their chosen provider. The last decade has seen the digitisation of financial services change entirely how people manage their finances and what they want from banking suppliers – from instant contact, API integrations and more importantly, choice in the market.

COVID-19 has presented an optimum time for banking providers old and new to engage with their customers on a human level, rather than simply transactional. Since their rise from the early 2010s challenger banks have gained huge support due to customers no longer needing to physically visit a branch and the high tech digitisation of managing finances. However, traditional providers continue to overwhelmingly dominate market share and retain long-standing customers, whether they trust them or not.

A shift in attitudes since 2008

The years following the financial crash have witnessed an explosion of choice in banking, in turn altering what businesses are looking for when choosing a provider. The effects of 2008 have had a major impact on the structure of the industry. Advancements in technology and increasing competition from newer financial institutions entering the market means that what was once a monopoly for traditional high street banks is no longer the case. With an abundance of new options, it is only to be expected that customer needs have changed.

The arrival of digital-only banks was a blessing for customers hoping to have their own needs put first. Trust is core to UK banking and when customers hear a provider has a UK banking license, or is regulated by the FCA, it’s an immediate proofpoint ticked off the list. New FinTech companies that have come in and disrupted the market over the past decade were born in part from a loss of confidence in the traditional banking sector as customers sought options elsewhere. The crash opened up opportunities to disrupt the status quo of banking, and businesses re-evaluated what was important to them. Something FinTechs have over traditional banks is agility to expand their services to suit customer demand. For example, aside from often being cheaper, faster, more convenient, new financial providers can listen to customer wants and adapt their platform accordingly, more quickly and easily to meet demand, as the technology is not shackled to older legacy hardware and business processes.

The consequences of the pandemic for the industry

COVID-19 has offered banks an apt opportunity to show their customers how best they can serve them during hard times. In theory, this should provide financial providers with an optimum time to gain customer trust, but research suggests there is a notable gap between what SMEs feel about banks carrying out transactional tasks against the level of trust that banks will look after their long-term financial well-being.

Before the pandemic hit the number of physical banks branches were already in decline, especially in Spain, Luxembourg and Iceland. The lessering need for bricks and mortar means a wider array of choice and as we come out the other side of COVID-19, digital only banking will likely continue as the norm, particularly with advice from The World Health Organisation to use contactless payments and avoid handling cash to reduce the spread of germs. Where there are health connotations attached, the lessening of visits to high street bank branches may mean a continual decline in branch use. Lloyds Bank saw a 50 per cent increase in those registering for online banking compared to last year, while TSB has seen a rise of 137 per cent since the start of lockdown.

Business banking needs in 2020

A huge number of businesses have struggled immensely during COVID-19, with more than half of UK SMEs seeing a significant decline in sales, or worse, out of business entirely. Now more than ever business owners need the support of their bank, so the mission-driven ethos newer providers tend to offer will hold an immense amount of significance. FinTechs cater towards changing customer demand quicker than traditional providers because their platforms are built to adapt. If a new feature is being requested they can most likely build it and be much more transparent on progress. For example a public roadmap or regular company updates clearly demonstrates to users what they can expect and when.

Trust is immensely important for international businesses needing to manage money in multiple currencies. The cost of sending money abroad can be extortionate and traditional providers are guilty of inflating the exchange rate, while also adding on high foreign transaction and receiving fees. It is often when businesses realise they have lost out on a significant chunk of money that they are incentivised to search for alternatives. Many FinTech companies are reliable options to ensure businesses do not get ‘stung’ each time they send, spend, or receive money in another currency. Airwallex, for example, provides clients with easy and immediate access to international markets by allowing them to set up local business accounts and displaying a transparent rate at the time of the transaction.

The shock of COVID-19 to the world economy has been huge and affected businesses and consumers alike on a global scale across all industries. Trust was a huge problem in the previous financial crash because it was born out of decades of bad practice and excessive risk-taking, whereas this isn’t the case in 2020. Nonetheless, COVID-19 provided banks with the ideal time to show businesses how their needs were being put first, something that appears better communicated from the newer FinTech providers on the market. And while the shift to fully digital banking/payments is underway, traditional providers are still a long way off being competitive with the technology (and underlying customer demand) of the FinTechs of the past decade.

Whether or not this year has resulted in a growing amount of trust towards banking providers, or positively shifted attitudes is still yet to be discovered. One thing is for sure though, the effect this will have on customers’ futures will be remembered for years to come.

James Butland
VP Global Banking
Airwallex

By Stephen Ferry, Managing Director at Pay360 by Capita

For businesses, the impact of Covid-19 has changed the way they interact with their customers. In order to survive, many who viewed an ecommerce offering as a “nice to have” have been forced to act quickly and decisively, moving into unchartered territory: by becoming a fully-fledged online retailer. Of course, amidst such dramatic change and uncertainty, this is when fraudsters can thrive.

Many businesses might dismiss payment fraud as only applying to large corporates, but that is simply not the case, as every business will encounter fraud, whether they know about it or not.

According to a recent report in Retail Times, fraudsters are using the surge in online activity to target unsuspecting consumers and merchants. The average ticket price of attempted fraud increased by £14 in May ‘20, driven by electronics and retail goods. During the period from January to May 2020, the fraud attempt rate by value increased to 4.3%. Significant, by any standards.

In light of the dramatic increase in online fraud, businesses need to be conscious of customer contested card payments (“chargebacks”). The intention should be to minimise chargebacks as much possible and the threshold for this is around 1%, though the target should be 0.5%. However, when a merchant’s chargebacks go over 1% this becomes a red flag for many card acquirers. This can result in higher security or rolling reserves, higher charges and, worse case, the card acquirer serving a merchant notice.

To put this into context, according to Chargebacks911, only 18% of chargebacks are even contested by merchants, because they don’t have the internal resource or the technology to contest them. Repeat fraud is also assured, since 2 of out every 5 consumers who commit this type of ‘’friendly fraud” will do it again within two months.

So, where do businesses start? Many businesses are not even aware that they are being targeted or think that the costs of preventing card fraud will be greater than the fraud itself, which is usually not the case at all.

There are many fraud prevention solutions on the market sold as standalone products or integrated within payment platforms. It makes good sense to have a fraud prevention solution baked into your software, to enable the seamless process that merchants and their customers crave. Make sure you shop around to find one that fits into your business, integrates with your existing system and can scale with you as your business grows. Select one that has a straightforward and easy to understand interface and an interactive dashboard that can be connected to multiple data points. Also make sure rules are available to be set up in real time and offer complete flexibility.

Integrated fraud solutions can save merchants thousands of pounds in lost revenue, chargeback costs and administration time, and enhance the right customer payment experience. The key message I leave for businesses is – the threat of online fraud is current and growing. It’s a risk you ignore or underestimate at your peril.

Stephen Ferry
Managing Director
Pay360 by Capita