Why preventing financial account takeover attacks is important for banks and fintechs
Financial account takeover is a form of identity fraud where fraudsters use stolen credentials to break into the digital financial accounts of genuine customers. An exponential increase in the number of consumers using fintech services and digital channels for banking needs during the pandemic has opened up the attack surface like never before, resulting in increased risk for financial institutions.
In a market where digitally-driven banking is largely replacing face-to-face transactions, there is pressure on businesses to deliver an increasingly convenient and always secure customer experience. As consumers accept and appreciate the security barriers of financial institutions more, many banks are still seeking the ideal balance between a low friction user experience and account security. Great user experience can contribute to customer loyalty, any account security issue can be a deciding factor. This is due to the fact bank and fintech account takeover attacks Users can lose their living earnings and their accounts become a vehicle for massive downstream fraud.
Takeover account fraud that targets banks and fintechs is particularly lucrative for fraudsters due to the huge amounts of monetary value these institutions deal with. Financial account takeover not only allows fraudsters to hit big – because of the value of the assets in these accounts – the potential to use them for several other types of fraud is immense as well.
The user-friendly art of fighting FinTech fraud
To perform account takeover attacks, fraudsters need valid user credentials. These inputs are collected through the enumeration of accounts, validation of accounts, ID stuffing, and social engineering. In the case of financial institutions and fintechs, email identifiers are not used as usernames. Therefore, fraudsters typically rely on social engineering to gain the required information that can fuel financial account takeover attacks. They use phishing and vishing to trick users into sharing their personal information. Scammers are also sending emails, allegedly from vendors with whom customers have an existing relationship in order to create panic and redirect them to a malicious web page for harvest. identity data At scale.
Unmarked tools, including bots and scripts, are readily available on the internet, allowing fraudsters to execute such large-scale attacks with the least investment possible. In addition, being creative, fraudsters use all possible measures to reduce investments and maximize âprofitsâ. They mobilize their resources and use a mixture of automation, robots and human labor to increase yields. This makes take-over attacks a lucrative business opportunity for scammers who cause businesses to lose millions of dollars every year. In the first semester (S1) 2021, 285 million account hacking attacks were detected and arrested on the Arkose Labs network.
Several ways to monetize an attack
Stolen user data and corrupted digital identities are used to execute financial account takeover attacks against banks and fintechs in several ways, as described below:
- Account emptying: The first and most obvious method of monetizing compromised attacks is to empty the accounts of the funds they contain.
- Money laundering: Compromised accounts serve as an intermediary for money laundering, whereby fraudsters transfer the proceeds of crime multiple times and to multiple accounts until the backdoor route results in the fraudsters recovering the money as âcleanâ money. Multiple transfers also make traceability difficult, as the origin is obscured.
- The money mixed up: This is yet another method used by scammers to convert dirty money into clean money. They recruit legitimate users who have active accounts for this purpose. Fraudsters also use compromised user accounts, both active and dormant, as money couriers to transfer funds.
- Credit requests: In this type of fraud, compromised accounts are used to open new lines of credit by making fraudulent credit applications. Fraudsters can keep compromised accounts for months before using them. This not only allows them to avoid arousing suspicion, but also makes it difficult to identify the attack.
Reduce the return on investment of FinTech fraud
Financial institutions are overloaded
The increase in the number of digital users and the use of digital channels have increased the level of expectations that customers have of their financial service providers. Therefore, it is incumbent on these digital businesses to provide a secure and seamless experience. In addition, fintechs and financial institutions have an additional responsibility to comply with a number of regulations who mandate them to ensure the security and confidentiality of customer data.
Aware of the challenges that financial institutions face on several fronts, fraudsters are taking advantage of the situation to study the defense mechanisms and find ways to circumvent them. For example, fraudsters are now aware that many defense mechanisms require more nuanced human interaction. So they found a method to bypass these defenses through the use of human fraud farms. These adaptations and the use of advanced techniques not only make it easier for fraudsters to launch sophisticated and complex financial account takeover attacks, but also extract rewards faster than deploying countermeasures.
Taking control of financial accounts can lead to serious monetary losses for banks and fintechs. If the attack is successful, these institutions also run the risk of non-compliance and bear the burden of paying heavy penalties. Additionally, they risk losing customer trust and eroding brand value, which takes years of effort to build.
A solution that works for digitally driven financial institutions
To avoid losses, both tangible and intangible, banks and fintechs need effective solutions that can help them protect the interests of their business and their customers. That said, account takeover attacks are not easy to detect. Therefore, financial institutions in the current digital age cannot rely solely on traditional defense approaches or ad hoc solutions. Indeed, these solutions often do not have the capacity to cope with the evolution of attack tactics and therefore cannot provide the level of protection required today.
The need for digitally-driven fintechs and banking is an approach that can protect in the long term and against new attack techniques, without adding friction to the customer journey. They need a solution that eases their burden and prevents them from absorbing the losses due to fraud as a business cost.
Arkose Labs for Financial Services and Fintech
“Bank” breaking the business model of fraud
Fraud mitigation can be a costly task and may not always provide the robust security so critical for banks and fintechs. Therefore, these institutions should seek to prevent fraud rather than cleaning up after the damage is done.
Most of the solutions on the market today focus on fraud detection and mitigation. Arkose Labs, however, believes in the zero tolerance approach to fraud and deters fraudsters from attacking. This deterrence is achieved by making the execution of an attack so costly that it loses its financial viability, forcing the attackers to give up.
Arkose Labs allows invisible filtering of the right users while absorbing attacks with a targeted application. The presentation of an application challenge is guided by a complex process involving the dynamic risk engine – Detect Arkose – which analyzes hundreds of parameters to assess the risk of an entering user in real time, and feeds the challenge-response mechanism – Arkose Apply – increase the complexity of the challenge for confirmed malicious users.
This targeted friction makes solving challenges on a large scale almost impossible for attackers, as bots instantly fail and human attackers must successively solve challenges that also increase in complexity. The wasted time, effort and resources quickly escalate the costs of a financial account hack attack and ultimately outweigh the returns on your investment. bankrupt the business model of fraud.
Arkose Labs is a trusted partner of the world’s leading financial institutions in customer account security with an accessible, customer-centric user experience. To find out how Arkose Labs helps fintechs and banks counter financial account hacking attacks, book a demo now.
*** This is a Security Bloggers Network syndicated blog from Arkose Labs, written by Vanita Pandey. Read the original post at: https://www.arkoselabs.com/blog/why-preventing-financial-account-takeover-attacks-is-important-for-banks-and-fintechs/