Why the finance industry has to unite against the ever-increasing threats of Financial Frauds?

Can we call this time, the peak of Financial Frauds ever reported in the history of humankind?

Maybe or Maybe not.

Even though we are at the current peak, but who knows, we might just be at the basecamp one towards the journey to the Everest.

The threat is real and more than ever. Every day we are getting phishing calls more than we get the usual calls by our family or friends. (Estimated 5-6 calls a day with my personal experience). If someone, by their innocence give out their details with these social engineering calls, the next thing they know is siphoning-off of their hard-earned money from years of toiling.

Phishing and it's subtypes - Vishing (voice call based frauds) and Smishing (SMS based frauds) are now very common type of social engineering kind of frauds. But there lies a plethora of fraud types (digital and offline) and modus operandi for Financial Frauds.

Mind you, these are not just random fraudsters who turned from normal to criminal. These are organized crimes group mostly, even though there are exceptions. But mostly these groups operate as a tight ship like call centres whose whole and sole purpose is to loot the innocent customer's money.

Bank's and other financial institutes have very limited control over the phishing (vishing/smishing) frauds. However, on the digital side, there is a lot of control. If the proper systems are in place, the digital financial frauds can be reduced to a minimum. Even the phishing frauds can be caught right after the first or second transactions has happened.

But what's stopping the Financial Industry to excel in Fraud Risk Management?

It is the co-operation which is the need of the hour. As most Financial Companies work in Silos on their fraud detection rules and logics, as they don't want to lose their business secrets and statistics which are likely input in the logics.

But what if through a network entity, all of them can cooperate?

If they share their rules/logics with anonymized datasets (meaning by removing their trade secrets but still sharing key features of their fraud detection logic) to detect these frauds.

Every institure may have their own set of Fraud Risk Management tools, but the rules and logic can be imported no matter what.

I'm not just talking about one country here. I'm talking much more than that. I'm talking about the world.

A blockchain (Pss...I'm not an expert on the blockchain) of these rules and logics can be made and it can keep on circulating from child nodes (institute level) to parent nodes (country level) and then grandparent nodes (global level) as well. This can help every node cater to their own needs by importing the rules and logics with their own needs and modify that further as per their own logic (but by keeping the fundamental of that logic same) if they make a fundamental change to the logic, it has to be uploaded to the blockchain back as a new version.

Maybe this can become A Universal Fraud Detection Network (UFDN) and serve the entire world on real-time.

Until and unless a cooperation structure is not set up, the collective effort to mitigate the frauds cannot be initiated.

This structure will behave like a collective mastermind who has all the knowledge gained from all the institutes and then can be applied everywhere on all the type of frauds.

Institutions have to stop thinking about being first in this race to reduce frauds. As without their cooperative efforts, everyone will lose. They should race where they can, maybe sales, maybe marketing or the revenues? But not in this area. Here only one thing might work and that's cooperation. Here is a formula, which worked with the biggest of obstacles humankind has faced in the history -

Together we can.

Currently, we are pretty far from the ideal scenario of a downward trend in Financial Frauds.

It's still onwards and upwards and it's going to be for a long time if we don't start cooperating.