In an age where more and more people are moving online spurred by pandemic restrictions, the importance of security and fraud detection in expanding dramatically.
A recent blogpost by OneSpan has underlined five key trends that the industry should watch out for it 2022 in the security and fraud detection space and why they will be important.
The first key trend is that digital identity initiatives will increase for governments, states and the private sector. Why is this? According to OneSpan, governments around the globe are launching digital identity initiatives that allow users to access a range of services through online or mobile applications. So far, Singapore, the UAE and Australia have already issued a digital identity scheme, while the EU is also making moves in this area with the revision of eIDAS and the European Digital Identity.
OneSpan remarked, “The availability of digital identities on mobile devices will facilitate the onboarding and authentication to digital applications and help combat account takeover fraud attacks. Once a consumer is verified, they can use their digital identity anywhere at any time online to onboard or authenticate to any application using digital identity verification.”
The company added that any application that deals with digital identities will ‘need to adapt and support the new governmental digital identity schemes in order to be relevant in the market’. Alongside this, OneSpan believes the usage of qualified electronic signatures will also climb in stature in 2022.
Another key trend to keep an eye out for is security measures and fraud prevention for embedded finance offerings. With embedded finance becoming a key mainstay in the tailoring of modern financial products, there is growing demand for it a wide range of solutions. Financial products like easy access to credit and payday loans are now easier than ever to embed into platforms.
OneSpan highlighted that both consumers and organisations are becoming more flexible to working with non-financial organisations. However, a key challenge is that while embedded finance offerings can present greater value to consumers, they also a stickler for cybercriminals due to the easy access to bank account connections and payment transactions. Therefore, as the embedded finance market matures, greater security and fraud prevention will become pivotal to the market’s continuing success.
Continuing on from greater protection for the embedded finance market, OneSpan also predicts that privacy by design – which is based on the idea privacy cannot be assured solely by regulatory compliance – will become vital for organisations to remain competitive.
If a company wants to ensure privacy, OneSpan believes privacy must ideally become an organisations default mode of operation and personal information should be protected from the design phase.
The firm noted that going forward, privacy will be used to differentiate from the competition and create a business advantage – therefore making it critical for firms to demonstrate they understand the principles of privacy by design and integrate them at all levels of the company.
An area that is severely open to fraudulent behaviour is the cryptocurrency space. The fourth trend to watch out for in the eyes of OneSpan is that cryptocurrency fraud will skyrocket in 2022.
With crypto exchange platforms taking off rapidly over the past few years, there is growing worry around the lack of seriousness being practiced regarding their security ecosystem and fraud management capabilities. As many platforms are not secure and are unregulated, there is no guarantee a customer would get their money back after a hack – and OneSpan believes that the number of hack incidents and fraud losses in this space will ‘break records’ in 2022.
Key forms of crypto hacking include phishing and social engineering attacks. According to OneSpan, the only way to mitigate such attacks is to bring in more regulation and rules, such as the requirement for Strong Customer Authentication. Customers, in addition, must be smart about the stock exchange platform they choose based on its security capabilities.
The final trend outlined by OneSpan is that AI will lead the regulatory agenda in 2022. Following a year where the use of AI/ML in finance expanded hugely, it will undoubtedly continue its expansion in years to come. With a recent OneSpan survey finding 32% of FIs are putting AI in place to comply with regulations, there is a growing belief policies and legislation pertaining to the use of AI will lead to regulations this year and beyond.
Read the full blogpost here.
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