How Financial Services Firms Can Avoid Fraud


Ever since the financial services industry has existed, unscrupulous entities have found ways to exploit weak spots for personal gain. Fraud itself is nothing new, but as the financial system becomes more decentralized, online criminals are becoming more sophisticated in how they breach security protocols.

In this article, we’ll look at why financial fraud is on the rise and discuss how businesses in the financial industry can protect themselves with in-depth due diligence tools, including a review of their credit history and criminal risk. existing and potential customers.

Financial fraud increases in 2022

Over the past decade or so, we’ve seen the proliferation of fintechs developing technologies aimed at accelerating, simplifying and decentralizing financial processes. These advances allow us to perform transactions that would have been unthinkable 20 years ago, such as making instant transfers around the world or obtaining small personal loans outside bank opening hours.

With these technological advancements, businesses are able to automate processes, like loan approval or money transfer, that previously would have required laborious paper-based credit checks. This has allowed them to reduce administrative costs, increase efficiency and reduce reliance on large financial institutions to act as intermediaries, but it has also exposed them to increased financial risk.

Studies have shown that fraud occurs in fintechs like neobanks to roughly double the rate credit card companies. Financial crime rates such as fraud, blackmail and extortion have been increasing for a number of years; South Australian Police have reported an increase in financial crime of 29% between 2020 and 2021.

CreditorWatch works with some of Australia’s largest financial firms. To better understand how they can help protect your business against fraud and financial crime, contact us today for a free demo.

How to protect your business from fraud

There is no doubt that recent innovations have helped companies increase their efficiency and achieve growth. But protecting your finances doesn’t mean you have to give up these benefits altogether; it just means you need to be strategic about which transactions you automate and only use the best systems available.

It is important to do your due diligence before taking on a new client. The best way to protect your business when extending credit is to start with a credit check. Yet, not all credit checks are created equal. For example, CreditorWatch’s credit check processes combine and analyze data from a wide range of sources to produce valuable insights and predictions about every business in Australia.

We have developed a unique suite of financial tools that use advanced AI automation to accurately calculate the credit risk posed by a potential debtor. RiskScore is the most predictive corporate credit scoring and scoring system available in Australia. It uses over 50 data points to generate a comprehensive credit report on any business, including credit and payment history and any high-risk indicators.

ApplyEasy is our onboarding tool that simplifies the credit application process into a single online form. Businesses can streamline and personalize their credit approval process, automating credit checks and trade reference changes, to increase efficiency and security. We verify entity information immediately, ensuring you know exactly who you are bringing in as a new client.

Always-on credit monitoring and alerts are also offered for all companies in your portfolio. We will notify you in real time of any adverse behavior that could affect your debtor’s ability to meet its financial obligations. Meanwhile, our interactive commercial payment program, DebtorLogic, analyzes your Aged Trial Balance (ATB) to measure changes in payment behavior over time and across markets, alerting you to unwanted behavior so you can take a proactive approach to debtor management.

Finally, we may include features designed specifically to help businesses identify and prevent financial crime. Our Know Your Customer (KYC) and Anti-Money Laundering (AML) features give everyone the power to perform advanced screening of their trading partners.

Our AML reports include politically exposed person (PEP) checks and sanctions to identify involvement in bribery or corruption. They also include adverse media checks to reveal any negative news or coverage associated with the entity, as well as identity verification checks (VOI) and document verification services (DVS) to prevent fraud. These procedures help protect your business against illegal activities such as corruption, money laundering, tax evasion, theft and other financial crimes.


About Author

Comments are closed.