When it comes to detecting synthetic id fraud, there is no quick fix. You'll require a multi-faceted strategy that ideally combines a number of technologies, such as reliable device fingerprinting, data enrichment, and digital footprint analysis. Nevertheless, here are the 3 tips for banks for synthetic fraud detection –
Tip 1: Check Data Horizontally and Vertically
At first sight, a loan application may appear to be genuine. However, focusing just on the facts of the application as it is presented to you is a horizontal view. It pays to examine additional data sources in order to gain a different, vertical perspective of the candidate.
For instance, the applicant's name may have been used in another account, or the provided phone number may be connected to someone who resides outside the country.
Tip 2: Re-think the Burden of Proof
Fraudsters primarily rely on banks to streamline the application and onboarding processes. So, it might be a good time to consider making it harder for applicants to submit identification and income documentation by introducing a tolerable amount of friction into the application process.
For instance, banks can employ step-up levels and friction layers to make it difficult for fraudsters to complete more lucrative transactions while maintaining a smooth and frictionless experience for the bulk of their dependable clients' transactions.
Tip 3: Look For Anomalies
Keep a watchful lookout for behavioural changes that don't make sense. For instance, there is nothing odd about a person from a particular zip code who has decent credit requesting a loan.
However, if the number of applicants from the same location suddenly increased from a few hundred to several thousand over the course of the previous year, that's a clue that something is off.
Moreover, if the data is extensively examined, it may be possible to tell whether one electronic device or several applications with different names are coming from the same place. By comparing activity to typical default rates, control reporting enables banks to keep an eye on their application rates to see whether they are under attack.