The amount of bank fraud, in France, is around 535 million euros, according to Statista. This figure has an impact on the health of banking institutions, but also on their customers. So what exactly is bank fraud? What does it mean for both the system and the customers? Let's find out in this article.
Bank fraud is a malicious activity where individuals or groups seek to deceive financial institutions to gain unfair advantages. This can happen in a variety of ways, from the fraudulent use of credit cards to the manipulation of underwriting processes.
This fraud can be used at various stages of the customer journey, from initial subscription to the financing of various services. It can also be used for money laundering and terrorist financing.
These scams have a significant impact on the financial balance of banks as well as on their reputation and on customers.
Need a reminder about banking institutions? Read our article: Focus on the various banking players
There are five major types of bank fraud.
It is one of the most common forms of bank fraud. It refers to the fraudulent use of credit and debit cards. This includes card cloning, unauthorized purchases, and other activities aimed at illegally accessing other customers' funds.
Phishing fraudsters use techniques to obtain information such as login credentials, passwords, or bank card details. They then use them to access bank accounts whose codes they stole and conduct fraudulent transactions.
Identity fraud is a tactic where fraudsters use a person's personal information, such as name, date of birth, or social security number, to open bank accounts or conduct fraudulent transactions on their behalf. They generally use stolen, manipulated, or forged documents to impersonate someone else when they sign up for the bank.
💡 Did you know?
There was a 100% increase in KYC document and identity fraud in the banking sector in 2021, according to Archimag.
Financing fraud refers to fraud that has the advantage of benefiting from financing through false information. Fraudsters thus use false documents in the context of financing requests, the subscription of consumer loans or even for their factoring.
Money laundering is the process of hiding the origin of illegally obtained funds in order to pass them off as legitimate funds. According to interpol, it is often only one component of more serious offenses that range from drug trafficking, to theft, to arms trafficking and even terrorism. To facilitate these transactions, a person can apply for credit or open a bank account.
The last three forms of bank fraud, identity fraud, financing fraud, and money laundering, are Documentary scams. They can be avoided by using software to detect false documents.
It is an essential tool for banks, when you know what fraud can cost them, financially but also from a reputational point of view.
Let's browse The various risks of bank fraud on establishments before focusing on software solutions adapted to combat document fraud in the long term.
Financial institutions suffer significant financial losses as a result of bank fraud. Fraudulent transactions, compensation payments, and recovery costs contribute to significant damage that can be difficult to overcome. The amounts lost also have a significant impact on the bank's rates.
Bank fraud rightly leads to a loss of trust among customers, who may fear for the security of their accounts and transactions. This loss of trust can lead to the departure of customers from banking institutions and permanently damage the good health of the company.
There are strict safety and consumer protection standards. Financial institutions that fail to prevent fraud are exposed to the risk of regulatory sanctions, fines, and license revocation.
To limit the risks for your banking institution, the use of software to detect false documents is recommended.
To effectively combat bank fraud, there are many effective tools. Among them, we note software to detect false documents, which are advanced technologies, based on artificial intelligence, and which make it possible to detect all false documents when opening an account, but also when applying for financing.
The solution for detecting false documents Finovox is a powerful ally in the fight against bank fraud. Incorporating sophisticated algorithms, Finovox offers early detection of fraud attempts, minimizing financial losses and maintaining the reputation of banking institutions.
To learn more about how we help banks fight fraud, read our Anytime use cases !
During the subscription processes and financing requests, Finovox makes it possible to ensure that the customer does not use false documents thanks to several functionalities.
Finovox uses three different technological components to detect document fraud and detects fraud on 100% of documents thanks to:
Do you want to know more about our solution?
Contact our experts!
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