The finetech universe is all about innovation, speed, and the promise of transforming how we manage money. The sector grows constantly, and so does the challenge of balancing sales growth with the ever-present threat of fraud.
Did you know that this year, the most popular fraud among online merchants worldwide is a refund/policy abuse? There is also a friendly fraud, or first-party misuse, that affected another 45% of merchants all around the world. The trouble is that both of these frauds are happening post-purchase. Unlike phishing or card testing, they can’t be stopped in real-time. That only makes them more difficult to deal with.
Well, boosting finetech sales while lowering fraud risk certainly sounds like balancing on the edge of a knife, but there are some strategies that you can use. Let’s take a look.
- Use advanced analytics and AI
Advanced analytics and artificial intelligence (AI) are your secret weapons in the battle against fraud. They can analyze huge amounts of data in real time and identify patterns that human eyes might miss. If there are any unusual transactions, these technologies won’t miss them but flag them for further review before any damage is done.
Plus, AI-driven tools and softwares are part of the perfect fintech fraud prevention system that can continuously learn and adapt, improving their fraud detection capabilities over time. Also, while keeping your platform secure, these systems can personalize customer experience, thus creating higher engagement and sales.
- Implement multi-layered authentication
In fintech, security can never be one-dimensional. Many fraud prevention systems, besides AI and machine learning capabilities, also use multi-layered authentication. This kind of authentication is like having several locks on your door–each layer adds an extra layer of security. You can never be too safe.
You can start implementing this security measure with something basic, like two-factor authentication (2FA). Users are to verify their identity with a password (that should be strong, so don’t forget about that) and a secondary device, like a mobile phone.
From there, you can add biometric verification, such as facial recognition or fingerprint, and behavior analysis, which monitors how users interact with your platform.
For the extra step, you can personalize the authentication system based on your customers years and preferences. Sometimes, older generations prefer extra passwords, while younger generations prefer facial recognition and other biometrics, which makes the process faster.
The harder you make it for fraudsters to access your platform, the greater trust you build with your customers, knowing they’re in the safe hands.
- Leverage tokenization
Tokenization is like giving each transaction a unique alias. By doing this, you’re making it even harder for fraudsters to exploit sensitive data. In fintech, tokenization replaces critical financial information (like credit card numbers) with a unique identifier. This identifier can be used to process payments without exposing the original data.
Besides securing transactions, this also enhances customer confidence and the probability of making more sales.
- Use behavioral biometrics
Is this about psychology? Well, to be honest, behavioral biometrics analyzes how users interact with your platform, from typing speed to mouse movements. It looks a bit like graphology, where people were analyzing personalities based on their handwriting. However, behavioral biometrics is more focused on what you like on that particular site.
Unlike traditional security measures that focus on what users know (like passwords), behavioral biometrics is more about how they act.
It’s not about spying–it’s about finding anomalies that might indicate fraudulent activity, like sudden change in typing patterns or a different way of navigating your site.
While using this feature, you can reduce false positives and minimize the chances of inadvertently blocking legitimate customers.
- Educate your customers
This step doesn’t need to take a lot of time, but having an informed customer is your first line of defense against fraud. You can inform your customers about common scams, phishing attacks, and best practices for safeguarding their accounts. Banks do this all the time, and some shopping apps too, so don’t be shy to try it yourself.
Create regular communication, whether through emails, blog posts, or in-app notifications. These messages don’t have to be essay-long, sometimes all it takes is a couple of sentences or a short but informed article. The sooner you get to the point, the better. That way you won0t be wasting customers’ time nor yours. Make your customers feel safe and appreciated.
- Integrate real-time monitoring
Imagine having a guard doing only half a shift and letting you know someone broke into your property when everything is long gone and too late to do something about it. That won’t do at all, right? That’s why real-time monitoring is so valuable. It’s the equivalent of having a 24/7 security guard that never sleeps for your fintech platform. AI is usually doing a perfect job in sleepless monitoring.
This strategy means continuous analysis of transactions and user behavior as they happen. In case of any fraudulent activity, you’ll be notified immediately and block suspicious transactions before they’re completed.
Plus, real-time monitoring isn’t just about security–it also gives insights into customer behavior, thus helping you refine your marketing strategies and improve sales.
- Adopt a risk-based authentication approach
Not every transaction needs the same level of security. Risk-based authentication assesses the risk level of each transaction based on factors like the amount, location, and user history.
For instance, for low-risk activity, you might use simpler authentication methods. On the other hand, high-risk transactions could trigger more stringent security measures.
This way you can make sure that legitimate transactions are done fast and with efficiency.
- Foster a culture of security
Security shouldn’t just be a concern for your IT department–it should be a part of your company culture. You can achieve this by organizing regular training and awareness programs for employees.
They should be aware of the latest fraud trends, understand the importance of security protocols, and know how to spot potential threats. When they are more conscious about the ways of how frauds work, they’ll be less prone to fall for them.
- Optimize customer onboarding
Customer onboarding is your first chance to impress new users, but it’s also a prime target for fraudsters. That’s why you need an onboarding process that balances security with convenience, making sure your legitimate customers can sign up quickly while fraudsters are kept out and away.
You can use automated identity verification tools that can cross-reference user information against various databases in real-time.
While onboarding, there is a small issue of going through regulations, which can sometimes be a tedious task. You can avoid this by not stuffing new customers with regulations right away–include them in the onboarding process naturally, so that people don’t run away on the first step. You do need to tell customers about regulations, but you do it in a way that everybody can understand and keep it as short as possible. Nobody likes reading a long sheet when they just want to register and go shopping.
- Offer secure payment options
Have you noticed how online stores have more than one payment option? It’s all about making customers happy, and some of them like paying with credit cards, some over mobile banking, and some like checks. Nowadays, tokenization and cryptocurrency are taking their toll, being more secure, faster, and with lower fees compared with traditional banking. Digital wallets, whether they are software or hardware, are an excellent and particularly safe option for online transactions that keeps your assets secure on both sides.
What matters the most is that you can have various payment options offered while at the same time you keep up with tight security measures. Remember to make sure that all payment options comply with industry standards and are protected by encryption and fraud detection tools.
Better security–more sales
Having these ten strategies applied, you can make sure to have a good start when it comes to finetech sales. The point is that these strategies, while they do wonders on security, are also perfect for boosting customer confidence. The more secure they feel on your platform, the more they’ll come back. And you know what that means–more sales, more profit, more happy customers. Plus, you’ll probably have free marketing when people start talking about that particularly safe place on the internet.
So, feel free to find your perfect set of security strategies, keep your customers happy and safe, and watch your finetech sales soar.
