How to optimize your conversions with sophisticated document fraud detection
The innovation of financial services has given people around the world greater flexibility. And, as improvements to service gather pace, the bar continues to rise.
By The Fourthline Team
Prospective clients expect a seamless experience throughout their whole journey. This begins with their initial onboarding, which sets the tone for the rest of the relationship. And today, thanks to excellent standards set by fintechs and neobanks, they expect their new accounts to be opened and ready to use immediately.
However, on the other side of the onboarding process, are the financial service providers who must perform thorough Know Your Customer (KYC) checks to keep fraudsters out and prevent money laundering. For them, compliance is crucial to the KYC process. But it cannot come at the cost of conversion. The key lies in developing an onboarding flow that is not just compliant but also delivers an excellent customer experience. And there is a huge opportunity for those that get the balance right.
There are multiple building blocks and they vary from market to market but identity verification and ID document checks are needed in all of them - which is why they’re so important.
In this article, we’ll explore what efficient document fraud detection looks like and how you can leverage it to increase conversions during customer onboarding.
Why is document fraud detection important?
Document fraud is getting more sophisticated, which can make assessing the authenticity of a document cumbersome and prone to error. This not only poses a major threat to the integrity of your business, but it can also slow down the onboarding process and negatively impact the user experience.
There are various ways a fraudster can try and trick the system. Some attempts are more advanced than others. ID theft and pictures of paper or screens are relatively easy to catch. However, there are more advanced fraud techniques, which require advanced technology and skills both to achieve and prevent it.
As you can see in the figure below, document fraud, such as counterfeits and ID tampering, accounts for a big chunk of all the fraud attempts we observe at Fourthline (4 out of 10). Which is why it’s essential to have the right technology and skills at your disposal to combat it.
At Fourthline, we have built advanced models based on machine learning, which can determine the authenticity of a document in less than one second. We have seen tens of thousands of fraudulent cases from which we continuously learn. These cases give us the fuel with which to train our proprietary machine-learning models. By combining sophisticated AI modelling with our vast amount of data, we can create predictive algorithms that understand many combinations of fraudulent patterns. These models can then make consistent decisions within milliseconds.
It is vital to stay up to date with advances in technology, both from an AI perspective and to keep pace with fraudsters' document forging techniques. So we continuously update our AI engine to ensure we are multiple steps ahead of fraudsters while maintaining a smooth onboarding solution.
So, how does it work?
Document fraud can occur in various ways but we can divide fraudulent behaviors into roughly two categories: counterfeits and tampering.
In this scenario, a new document is forged from scratch. It can be as simple as printing a document on a piece of paper or as complex as creating a laminated plastic card with all the correct information and formatting.
While counterfeits are documents created from scratch, tampering is when valid documents that are altered, for example by replacing the photo or changing the text.
In short, a fraudulent document is either completely or partly fake.
Thanks to our historical data, we have a broad knowledge of how fraudsters attempt to generate counterfeits and in what ways they tamper with authentic documents. Our machine learning algorithms combine this with our experts’ knowledge of how legitimate security features should look. The result is fast and accurate assessments that ensure legitimate customers are approved quickly and fraudsters are blocked.
How do Fourthline’s technology and people work together?
Our internal fraud experts rely on our document fraud detection technology to catch fraudsters in an efficient and scalable way. At the same time, their expertise contributes to improving our systems by incorporating continuous feedback from the time spent investigating special cases and monitoring global trends. This partnership between technology and humans ensures that our service is constantly updated with the latest fraud trends, allowing us to catch more fraud every day.
“Document fraud detection fortifies Fourthline defenses and ensures that every document we process is another secure step towards financial security.” – Ximena Ortega, Anti-Financial Crime Expert
“Document fraud detection: Our partner in the fight against financial fraud, simplifying enhanced fraud investigations while empowering our AFC team to safeguard financial integrity one document at a time.” – Lyudmila Evtimova, Anti-Financial Crime Expert
At the end of the day, it is all about achieving the best results in optimal time for our business partners.