The state of transactional fraud

The pitfalls of in-house security

The pitfalls of in-house security

Security solutions are in place…

We have seen that fraud is an increasingly important and costly issue with a growing negative impact on businesses and customers, which requires a considered approach and a state-of-the-art fraud prevention solution. Do businesses have this in place?

  • The good news is that the majority of companies already have a fraud prevention solution in place. 70% of respondents use 2FA/MFA, 60% have set up two-way fraud alerts, and 56% use verified channels like WhatsApp to keep themselves protected.

  • This shows that fraud really is an important concern for companies and that most of them are making active investments in preventing it or at least reducing its impact.

…but they don’t always do the trick

The bad news is that these solutions are not comprehensive and failproof and don’t keep fraud attempts at bay. The vast majority of companies have some level of protection in place, but as we have said, 63% of them have fallen victim to fraud as recently as in the last 12 months. The inadequacy of current solutions could not be clearer.

Are in-house solutions enough?

The vast majority of companies have or have previously tried fending off bad actors with a solution built in-house. A total of 93% of respondents are considering creating or have already created such a solution. There are several issues with these internally built or managed blockers or firewalls:

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    They are not scalable: as the business grows, the solution doesn’t automatically adapt to growing threats or the changing landscape, leaving the business vulnerable.

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    They are locally focused: custom solutions don’t have a worldwide backdrop to rely on and cannot get information from the experience of other global businesses.

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    They are not updated: internally built solutions are not equipped to deal with new and emerging types of fraud.

As expected, these issues emerge as the key results behind companies’ frustration with their current fraud solutions. 19% of respondents believe that their current solution does not reliably prevent fraud, and 25% think it is not equipped to protect them from new forms of fraud.

  • Considering the inefficacy of solutions built or managed in-house, it seems logical that companies would want to embark on a partnership with a specialist organization to make their security infrastructure more robust. The results show that this is, in fact, the case, with 78% of companies saying they are likely to recruit a partner organization to handle security issues.

  • Unfortunately, that still leaves a significant proportion thinking that they don’t need a fraud security partner. The reasons why companies aren’t willing to invest in a fraud solution are varied: 21% believe there are simply too many solutions to choose from, whereas 15% say they do not have the budget.

Security solutions aren’t up to par

It’s impossible not to see a discrepancy here. 88% of businesses consider fraud prevention an important business issue, and yet, only 31% of respondents are happy with their existing solution. The numbers are even lower amongst CaaS (Collaboration as a Service) providers, only 21% of whom are satisfied with their existing preventions.

  • The conclusion must be that the solutions these latter respondents have tried have been inadequate or failed to add value. Results seem to back this up, with only 6% of all respondents saying they have no particular issues with their current solution – the number is as little as 2% for companies of 500 or more employees.

  • It seems that many providers don’t live up to companies’ expectations, leaving them skeptical in the face of security solutions – and, ultimately, unprotected against fraudsters.

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