“Technology begets technology.”
That’s one of the key takeaways from the 2017 Tech Trend Report from Future Today Institute. As newer technologies emerge into the marketplace, it creates space for more innovation (AKA: more technological advancements).
As the report highlights, there is a seismic shift in how automated technology solutions are changing the face of virtually every industry — payments and financial services included. With concepts like artificial intelligence (AI), machine learning, bots, Internet of Things (IoT) and big data carving a path for the next wave of innovation, the year 2017 and beyond is ripe for the adoption of new fraud fighting technologies.
When it comes to detecting, combating and reducing the influx of fraud across the financial services ecosystem, what’s needed it a greater ability to automate fraud compromise detection. This reduces manual processes and the amount of fraud losses by getting ahead of the problem before it spreads. What will make a real impact is the ability of banks to get ahead of this rapidly-growing problem by applying the above highlighted trends.
“Now more than ever, organizations must examine the potential impact of tech trends,” writes Amy Webb, the founder of Future Today Institute. “Whether you are a Fortune 500 company, a government agency, a startup, a university, a foundation or a small business, you must factor the trends in this report into your strategic thinking for the coming year, and adjust your planning, operations, and business models accordingly. Failing to track trends in a meaningful way will put your competitive advantage and growth at risk”
To help you digest what tech trends will have a significant impact on the financial services space, we’ve broken down the key takeaways in the report to show it can apply to how banks, credit unions and issuers can think differently about where technology fits into their long-term fraud mitigation strategies.
Tech Trends Impacting the Future of Financial Services
Convergence: Where Technologies Intersect
At the heart of financial services and FinTech innovation is the convergence of multiple technologies that have evolved over time. For example, fraud detection tools now rely on AI/machine learning, automation and the meshing of big data to create more robust solutions for bank’s fraud teams to rely on. Prior to this technology convergence, many products and services acted in isolation of each other, creating silos across organizations that led to greater decision-making delays. By applying multiple technologies to solve one major problem, financial services companies will find solutions that bring about faster results — saving time, money and resources.
As FTI notes in its report: “In 2017, a critical mass of emerging technologies will start to converge, finding advanced uses beyond initial testing and applied research. That’s a signal worth paying attention to.”
AI/Machine Learning: Putting Big Data to Work
Machine learning is a powerful tool that can help issuers detect fraud faster, enabling them to react with a more strategic approach to managing (and stopping) the spread of fraudulent activity. When applied properly, this technology allows banks to thwart off breach threats faster, detect breaches when they occur, and devise a set of actionable plans of attack for when breaches hit.
By infusing machine learning technology into the fraud detection process, bank and credit union's fraud teams can eliminate costly, manual processes that are also far less accurate (not to mention far slower). Relying on organized data that’s collected using powerful software can help organizations be better prepared to fight fraud.
Today, when organizations talk about fraud detection, the concept of AI/machine learning is never far behind. Although this is a not a new concept, finding new, strategic ways of applying this technology to the payments space will transform the future of financial services.
Automation: The Ticket to Faster Fraud Detection
Another key tech trend driving organizational changes across companies is the emergence of automation technologies that reduce the need for manual processes (which lead to human error).
In the case of financial services and detecting card fraud, relying on software that automates the process can pinpoint breaches faster, leading to less fraud loss and better customer satisfaction (from eliminating the need to reissue as many cards). The trick in implementing technology that automates any process is ensuring the software can get a job done faster, safer and more effectively.
Hackers today are using these same techniques to automate data breaches, which is why financial services organizations must continually invest in new technologies that keep their services ahead of the trends that fraudsters are capitalizing on.
The monetization of compromised cards has become a sophisticated industry, and fraudsters are more sophisticated than ever. Banks and credit unions are using new tools (that incorporate automation and AI/machine learning to fight fraud — but so are the fraudsters. As a result, payment credentials are getting increasingly tangled in this fast-growing problem as more vulnerabilities are exposed across the ecosystem (as new technologies enter the market).
That’s why it’s up to organizations within the financial services space to proactively invest in the types of products, software and services that will help stop the spread of fraud before the problem balloons into an even bigger, more expensive issue.
Are you keeping up? Check out our newly released State of Card Fraud: 2017 report to see what other trends are impacting financial institutions.