For several years, digital security relied on a simple strategy—gain insight from past events, learn from them, and base security protection accordingly. However, as online threats continued to multiply, it has become more challenging for security professionals to detect attacks using traditionally siloed monitoring systems.

Some of the most common targets of digital fraudsters are financial service providers. The recent introduction of online banking apps, mobile wallets, and online remittance services has piqued the interest of fraudsters, which led to the spike in digital fraud cases. A recent survey, in fact, named payment fraud as the top concern for as much as 44% of all finance professionals, indicating an alarming 14% increase from the past year.

Similarly, Juniper Research showed that online and mobile fraud incidents account for most cases of identity theft and stolen payment information. The research firm noted that losses from online payment fraud could amount to as much as US$22 billion this year and hit US$48 million in the next four years.

Most Common Forms of Digital Fraud

Identity Theft

Among the types of digital fraud, identity theft is most commonly seen. A cybercriminal steals a person’s identity and uses it to conduct fraudulent transactions. The most common personally identifiable information (PII) stolen includes a user’s email address and payment card information. Such fraud is preventable, however, in a variety of ways.

Affiliate Fraud

Affiliate programs are vital for an online business to thrive. In general, these work in two ways—a company sets up its own program or joins an existing one. Each member plugs in ads provided by affiliates on his site and receives payment every time the ad link is clicked.

Affiliate fraud occurs when businesses are tricked into paying out commissions for false clicks. Some cybercriminals also clone a legitimate company’s domain via cybersquatting to steal its traffic and affiliate income.

Man-in-the-Middle (MitM) Attacks

Business communication often contains sensitive information. A simple email conversation can also fall prey to a MitM attack where an attacker secretly intercepts digital exchanges using a piece of malware, various eavesdropping techniques, or exploiting gaps in a company’s poorly secured network.

How Can Security Analytics Mitigate Digital Fraud?

Security analytics can be a powerful means to mitigate digital fraud. To successfully address attacks, organizations must be proactive rather than reactive. Security analytics is particularly useful for fraud investigators as it provides real-time threat visibility. For instance, fraud investigators can choose a suspicious domain and run it through a domain reputation tool to check if it should be trusted or not. It can also check if an IP address is authorized to access certain information or systems or not using an IP geolocation tool.

Financial institutions must continually enhance their analytics-based defenses depending on their inherent knowledge of the threat environment. This type of defense is achievable through the use of domain intelligence and dark web monitoring.

Security analytics can help financial service providers shift from rule-based detection to a more predictive model using historical data as a basis for risk identification. It is also crucial to make sure that their security analytics efforts won’t hamper customer experience. That is possible through integrating readily available security solutions into their e-commerce platforms, as these work in near-real-time and so won’t affect service provision or slow down transactions.

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As more and more organizations move to the digital world, online fraud would become even more prevalent. As such, businesses must look into applying intelligent security analytics to ensure business continuity while proactively mitigating threats. To start, they must articulate their operational objectives to know what to screen and act on based on their analytics.