Building a Safer Financial World: Combating Fraud and Enabling Faster Payments

Ben Melnicki, Product & Regulatory Counsel

October 20, 2023

3 min read

In today's lightning-fast world, where technological advancements are shaping the way we conduct financial transactions, one shadow looms large - fraud. Fraudulent activities have the potential to disrupt the payments industry, requiring banks and fintech companies to constantly innovate. In a recent webinar panel discussion, Responsible Innovation: Fraud Detection Meets APIs, we delved into the intricacies of this challenge and explored how technology is being harnessed to create safer and more efficient payment systems.

Meet the Experts: Simon Taylor and Emily Purnack

Our panel featured two distinguished industry experts, Simon Taylor and Emily Purnack, who provided valuable insights into the evolving landscape of fraud prevention and financial technology. Simon Taylor, the Head of Content Strategy at Sardine, heads a platform specializing in fraud and compliance. Sardine's mission is to merge risk assessment, compliance management, and payment protection into one powerful API, ultimately boosting customer trust and loyalty. Our other panelist, Emily Purnack, is the Head of Product at Orum, an AI-powered Live Conversation Platform designed to supercharge sales activities, connect teams, and drive revenue.

Demystifying the Concept of Fraud and Combatting Fraud

The conversation emphasized the importance of simplifying the concept of fraud and understanding the various players dedicated to identifying and combatting fraud. We delved into emerging threats within financial technology, with a particular focus on social engineering scams designed to thrive off the emotionally vulnerable. Sadly, these scams have increased – and succeeded – in recent years.

Fighting Fraud Through Friction & API-Based Compliance

One intriguing point raised was the idea that introducing the right kind of "friction" in payment processes can deter fraud and enhance trust. This "friction" is not intended as an intrusive roadblock but rather as a safety net. For instance, requiring users to input the last four digits of a recipient’s phone number in a Venmo transaction adds a step to the payment process, but inserts a layer of security that fosters a transaction which has less of a chance of being fraudulent.

A second measure in combating fraud lies in compliance protocols within API-based technology. API-based technology has revolutionized the efficiency of compliance protocols by streamlining processes, reducing batch processing, and facilitating end-to-end experiences.

Simon and Emily offered practical advice for those building tech stacks for financial services, emphasizing the importance of starting small with a minimum viable product (MVP), leveraging industry experts, and not waiting for a major fraud event to implement controls.

The Future of Payments: Interoperability and Innovation

Looking to the future, we discussed the growing importance of interoperability between payment systems, especially with the emergence of faster payment rails like FedNow®.  Innovation and continuous improvement will be key for interoperability and combatting fraud.  Fraudsters move quickly and are often the first adopters of AI. Therefore, industries will need to apply AI to catch the bad actors. This presents exciting opportunities for innovation in orchestrating payments across various systems.

In Conclusion

The battle against fraud in the financial sector is an ongoing challenge, but with efficient compliance protocols and strategic technology partnerships, the industry will be better equipped to protect consumers and businesses from emerging threats. As we peer into the horizon of 2024 and beyond, it's evident that innovation will continue to play a pivotal role in shaping the financial landscape, ensuring a safer and more efficient world of payments for all.

To watch the full discussion with Simon and Emily, see here: