Bank fraud: definition and issues

The amount of bank fraud in France is around 535 million euros, according to Statista. A figure which has repercussions on the health of banking establishments, but also on their customers. So what exactly is bank fraud? What does it mean for both the system and customers? Let's find out in this article. 

What is bank fraud?

Bank fraud is a malicious activity where individuals or groups seek to deceive financial institutions to obtain unfair advantages. This can manifest itself in a variety of ways, from fraudulent use of credit cards to manipulation of underwriting processes. 

This fraud can be used at different stages of the customer journey, from initial subscription to financing various services. It can also be used for money laundering and terrorist financing.  

These frauds have significant repercussions on the financial balance of banks as well as on their reputation and on customers.

Need a refresher on banking establishments? Read our article: zoom on the different banking players

The different types of bank fraud

There are five major types of bank fraud. 

Bank card fraud

This 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 and phishing fraud

Fraudsters who practice phishing use techniques to obtain information such as login credentials, passwords, or credit card details. They then use them to access bank accounts whose codes they have stolen and carry out fraudulent transactions.

Identity fraud

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 make fraudulent transactions in their name. name. They generally use stolen, manipulated or falsified documents to pass themselves off as someone else when applying to the bank.

Financing fraud

Financing fraud refers to fraud which aims to benefit from financing through false information. Fraudsters therefore use false documents when applying for financing, subscribing to consumer credit or even for factoring. 

Money laundering

Money laundering involves concealing the origin of illegally obtained funds to pass them off as legitimate funds. According to Interpol, it is often only a component of more serious offenses which range from drug trafficking, theft, 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 banking fraud, namely identity fraud, financing fraud and money laundering, are documentary fraud. They can be avoided through the use of fake document detection software. 

This is an essential tool for banks, when we know what fraud can cost them, financially but also from a reputational point of view. 

The risks of bank fraud

Let's browse the different risks of bank fraud on establishments before focusing on software solutions adapted to sustainably fight against document fraud. 

1. Financial losses

Financial institutions suffer significant financial losses due to bank fraud. Fraudulent transactions, claim reimbursements, 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.

2. Loss of customer trust

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 confidence can lead to customers leaving banking establishments and lastingly harm the good health of the company.

3. Regulatory impacts

There are strict standards for safety and consumer protection. Financial institutions that fail to prevent fraud face the risk of regulatory sanctions including fines and license revocation.

To limit the risks for your banking establishment, the use of false document detection software is recommended.

How to fight against bank fraud with Finovox?

To effectively combat bank fraud, there are many effective tools. Among them, we note fake document detection software, which are advanced technologies, based on artificial intelligence, which make it possible to detect all false documents when opening an account, but also when applying for financing.

The fake document detection solution 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 preserving the reputation of banking establishments.

To learn more about how we help banking institutions fight fraud, find our Anytime use cases !

How does the use of Finovox materialize in banking processes?

During the subscription and financing request processes, Finovox ensures that the customer does not use false documents thanks to several functionalities.

Finovox uses three different technological bricks to detect document fraud and detects fraud on 100% documents using: 

• Consistency analysis, which checks the consistency of documents ;
• In-depth visual analysis, which can detect any type of changes that have been made to documents, particularly with software such as Photoshop.
• Computer analysis, which detects signs of automatic generation or electronic falsification.

Would you like to know more about our solution? 
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