- Mar 04, 2021
Tech trends: Fighting fraud in 2021
It’s been a big year for all of us. Now it’s time to look forward, to how evolving tech—including distributed cloud, automation and AI—will help bolster consumer confidence, create great experiences and combat fraud now and beyond the pandemic.
Companies’ digital transformations—meticulously planned and executed as long-term strategies—have had to accelerate at pace in response to the events of the last year. In a short space of time, businesses have had to adapt to new ways of working, putting the tech in place to enable productivity from anywhere, while ensuring customer and employee experiences didn’t falter.
And as we’ve transitioned to both living and working from home, we’ve had to adapt as consumers too. Shops closed their doors, businesses scrambled to move more of their operations online, and our reliance on ecommerce skyrocketed.
While we’ve seen many stories of successful migrations from the physical to the virtual, this rapid shift has created challenges across the whole ecommerce ecosystem. Specifically merchants have had to change their operating models overnight, scale at speed, and assess their payments strategies to accommodate the rise in non-cash transactions. If that wasn’t enough, they also have an even greater challenge of combatting an ever-growing threat. Fraud.
From crisis comes opportunity, but not just for the good
Unfortunately, we know that the pandemic has provided opportunities for fraudsters. As the volume of online transactions has surged, so has the number of individuals waiting to capitalise on the situation. History tells us that criminals often thrive in times of crisis, and the threat of cybercrime during COVID-19 is being compounded by the volume of easier targets. Consumers who are unfamiliar with online payments are being forced to shop and share their financial details online for the first time, and in many cases are unaware of the precautions they need to take.
UK Finance has already issued warnings that criminals have adapted to the new circumstances brought about by the pandemic, exploiting people’s need to increasingly transact online. It’s clearly a concern for consumers—41% state they’re now limiting their online shopping through fear of being a victim of fraud—and a major issue for merchants. Businesses need to think about their payments capabilities in a smarter way to ensure seamless, secure consumer experiences at scale, as well as keep several steps ahead of the bad actors.
Putting cloud tech nearer the action
There are key tech developments that will play a significant role in evolving payments solutions and keeping consumers safe. The next-gen of cloud computing is one. Over the last couple of decades organisations have moved from operating their own on-premises data-centre infrastructures, at immense cost, to using combinations of public and private clouds in an effort to boost agility, reduce expenditure, and provide more innovative services to customers.
But some shortcomings of the hybrid cloud strategy—namely, the location of services—has hampered companies’ abilities to harness the potential of the cloud, especially in relation to artificial intelligence (AI) use cases and data analytics.
Distributed cloud essentially gets the compute, storage and networking technology closer to where it’s needed—nearer to the merchant and the consumer, where the data is being generated. It also carries advantages around compliance and regulatory requirements related to where data resides, which can be one of the sticking points of public cloud offerings.
The benefits of distributed cloud for merchants are obvious. The proximity of the data makes it easier, faster, and cheaper to analyse. This allows merchants to use AI, machine learning, Internet of Things—and other technology that involves massive data sets—more effectively, which means more insights into customers and transactions.
As a result, businesses can understand how their customers behave, anticipate their needs, and personalise services. It helps them know their customers better, both from a behavioural and an identity perspective. More importantly in today’s climate of increased risk for consumers, it can help companies more proactively address cybercrime, uncovering unusual transactions and mitigating attempts at fraud before a customer even knows they were a target.
Add a bit of automation…
Automation of all manner of business processes is nothing new, but automation in combination with AI is a game-changer.
With the two technologies working together, organisations can crunch huge amounts of data cheaply, intelligently and at scale. This enables companies to make faster and more accurate decisions across the business—from credit risk to product development—because they have insight into every point of the customer journey.
It can help merchants understand consumer buying behaviour and how they’re making payments in order to create frictionless routes to purchasing products and services, and ultimately drive revenue. And when applied to complex issues such as fraud, for instance, the ability to detect patterns, make connections, and spot anomalies becomes infinitely easier.
Even cutting-edge tech takes time to mature
While it might feel as though cloud, automation, and AI have been around for a long time (in tech terms), the potential of these technologies is still being fully realised. But as they reach critical stages in their maturities, we’ll see them continue to develop into critical tools for merchants and players in the wider payments landscape. We’ll see opportunities emerge for enhancing consumer experiences and increasing confidence in the face of new and more sophisticated threats—as well as finding innovative ways to address old challenges.