As more companies shift their operations online, cybersecurity has become a vital service. This is especially true for organizations that handle sensitive data. Having a robust security infrastructure is important to their stability.
One prominent example of the need for cybersecurity in the financial sector. In 2020, around 47% of Americans experienced financial identity theft; in 2021, this figure increased 7%.
As cybercrime methods become more sophisticated, you must educate yourself on the potential threats that can destabilize your financial institution. One growing threat is the use of synthetic identities.
What is Synthetic Identity?
A synthetic identity combines different but legitimate pieces of a person’s credentials to form a fake identity. It usually begins with fraudsters using sensitive information, such as actual social security numbers, and combining them with fraudulent or fabricated data. Synthetic identity is popular among fraudsters because it has a high chance of passing bank verification checks.
Staying Safe from Synthetic Identity Fraud
Synthetic identity activities are a growing problem for most financial institutions, especially if your company is unaware of its impacts. They are challenging to identify, with no standardized processes for recording losses once discovered. While it’s hard to pinpoint when it happens, there are several ways banks can stay safe from synthetic identity fraud.
1. Review and optimize the client onboarding process
The shift online has made it easier for applicants to get financial services. However, it’s important to know that rapid digitalization can make it easier for synthetic fraud activities to take place.
Banks can implement a solution by requiring clients to submit additional proof of identity and employment to verify that they are the correct person. Moreover, reading the best practices in knowing your customer (KYC) will also prove useful.
2. Apply biometric authentication when authorizing transactions
One effective way to deter fraudulent activity is by implementing biometric authentication. Whether through facial recognition or device fingerprinting, biometric authentication reassures your organization that the person trying to access or authorize information is legitimate.
3. Use a multi-layered approach
Using an effective multi-layered approach can help alert companies to fraudulent activities. Detection tools are the first step to any multi-layered approach and a database of critical information shared between law enforcement and financial institutions.
4. Watch out for suspicious behaviors
Banks can watch out for suspicious activity to expose a potential scammer. An example is someone with a good credit score suddenly doing activities that may negatively impact their score, or multiple accounts being accessed from one location.
5. Analyze digital footprints
Your organization can also identify suspicious activity by following its digital footprint trail, by looking into email, social media, and phone number information to verify that the information presented is legitimate. Utilizing tools like anti-fraud software, which quickly scans different websites, helps make the process faster and more convenient for the user.
Synthetic Identity Theft: Rampant in an Online World?
Even as synthetic identity fraud continues to grow in the financial sector, the industry can take additional measures to prevent it from happening. Early implementation of the mentioned security measure makes a difference in the success or failure of these fraudulent activities.
If your company wants to improve its cybersecurity, consult with the leading professionals in the field. With our proven identity verification solutions, Q5id is your perfect partner in securing your organization from unwanted cyber activities.
Get in touch with us to learn more.
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