Turning to banks, internal auditors and ERM teams may help treasury teams overcome a dearth of fraud data.
Payments fraud schemes hit 74% of companies in 2020, and two-thirds of treasury and finance professionals blame the pandemic for some of the increase in fraud at their companies, according to an AFP survey. Whatever the causes, the problem has made tools that can prevent scams more important than ever. But some treasury teams in need of those solutions are hitting a roadblock: Quantifying how much fraud the tools will prevent.
- Members at a meeting of NeuGroup for Global Cash and Banking discussed how to build a business case for a new tool if the benefits of fraud prevention software would not be clear until it’s actually put to use. “A lot of the exercise is going to be theoretical,” one member said, which can be a hurdle when treasurers must convince traditionally data-focused leadership and IT teams to spare resources.
- Some members recommended seeking answers by working with internal audit and risk management teams and the company’s bank group.
The bottom line. One treasurer said her company had several recent “very near misses” with business email compromise schemes requiring her to tell banks to pull back the company’s funds. Now she’s seeking third-party fraud screening tools that analyze a company’s accounts and flag any suspicious payments. Deutsche Bank and TIS introduced one such tool last year.
- One corporate cash manager found a solution in fraud screening functionality within the company’s payment factory, FIS Payment Hub – Quantum Edition. He said the tool screens and holds payments if there is a new beneficiary or if the instructions changed since the last payment. The entity that initiated the payment would then verify if a two-factor authentication process has been completed and reapprove the payment for release to the bank.
- The functionality required additional resources, but the member said, “given the ever-increasing fraud landscape, I believe the investment in tools to detect fraud in our systems and training are important and worth the investment.”
Help from the outside and inside. Some members are seeking advice on building a case for tools like these, concerned that some fraud may currently be flying under the radar, undetected. Those who have implemented payments fraud prevention tools recommended seeking assistance from:
- Banks. They have data on their clients’ previous fraud incidents, which can help establish a baseline for the level of fraud that could be prevented by a screening tool. One treasurer said he found success working with his bank to obtain fraud data from anonymous recaps of clients who have been scammed.
- Internal audit teams. One member suggested working with the company’s audit team instead of attempting to quantify theoretical, undetected risk. Treasury can make note of previous issues or near-misses that may have been flagged in an audit report, which can be used to build out a more robust business case for fraud prevention tools. “Never waste a good audit,” the member said.
- ERM teams. “If you have a fraud case that becomes a Wall Street Journal article or something, there’s a brand reputation connection, which tends to be flagged in the major ERM programs,” one member said. “If you can leverage what the ERM team have done, that can be helpful too.”
- Cybersecurity teams. The member working with FIS to implement solutions in the company’s payment factory added that it’s worth getting to know your company’s cybersecurity team. “We’ve had a lot of success bringing them in from an advisory perspective to talk about risks to not using a payment factory, using portals outside of our IP filtering or a VPN and the risk that that entails,” he said. “Get to know them, work with them, and they can help you build a more robust business case.”