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How businesses can use AI to tackle financial crime
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As technology continues to advance at a rapid rate, financial crime has taken on a new dimension, posing a multifaceted threat to financial institutions, writes Sonia Jain, Consultant Operations Manager at FDM Group… 

According to Kroll’s 2023 Fraud and Financial Crime Report, 68 per cent of respondents expect financial crime to increase over the next 12 months, with evolving technology posing one of the largest challenges. 

Not only does it jeopardise businesses’ reputation and client trust, but financial crime can also result in direct financial losses, operational costs, and the risk of insolvency.

Traditional methods of detecting and preventing fraud and illicit activities are no longer sufficient in the face of increasingly sophisticated criminals, but this is where artificial intelligence (AI) comes in. 

AI is a powerful tool that is revolutionising the finance industry’s approach to combating financial crime and keeping pace with new criminal tactics.

Financial crime involves illegal activities that aim at acquiring financial gain. Financial crime can have serious societal consequences which can adversely affect the shape of the global economy. 

With the help of AI, we can leverage its ability not just to combat the crime but also to monitor the financial activities in real time to prohibit the very occurrence of it.

Here are five ways businesses can use AI to fight financial crime:

  1. Real-time monitoring

AI-powered systems play a pivotal role in the battle against financial crime by enabling real-time monitoring of financial transactions. This capability is instrumental in swiftly identifying and addressing potential threats. Suspicious activities, such as unusual transaction patterns, can be automatically flagged by AI algorithms, triggering an immediate investigation.

By detecting and responding to illicit activities promptly, financial institutions can mitigate risks before they escalate and prevent crime from occurring in the first instance. The real-time nature of AI-based monitoring not only enhances security but also serves as a deterrent to potential criminals, as they are more likely to be caught in the act, thus reducing the overall occurrence of financial crime.

  1. Data analysis and pattern recognition

One of the primary strengths of AI is its ability to analyse vast amounts of data at lightning speed. Financial institutions deal with massive datasets daily, making it challenging to identify suspicious activities manually. AI algorithms excel at identifying patterns and anomalies within these data, helping to flag potentially fraudulent transactions or activities that might otherwise go unnoticed.

  1. Natural Language Processing (NLP)

Financial criminals frequently communicate through digital channels, leaving behind a wealth of text-based data that can be a treasure trove of evidence. Natural Language Processing (NLP) algorithms are instrumental in sifting through this textual data, scanning emails, chat logs, and other messages to identify suspicious or incriminating conversations.

These algorithms can detect keywords, phrases, or patterns associated with financial crimes, helping investigators uncover hidden connections, illegal activities, and nefarious intentions. NLP’s ability to parse and understand human language allows financial institutions and law enforcement agencies to stay ahead of criminals who attempt to mask their activities in written communication.

  1. Machine learning for predictive analysis

AI’s capacity to learn from historical financial crime data is a strategic advantage in the fight against illicit activities. By training on past cases, AI can construct predictive models that identify emerging threats and evolving criminal tactics. These models continually evolve and adapt, staying one step ahead of wrongdoers who seek to exploit vulnerabilities in financial systems. As AI systems become more attuned to nuanced patterns and emerging trends, they offer a proactive defence mechanism, helping financial institutions anticipate and tackle financial crime.

  1. Behavioural analysis

AI’s ability to construct detailed user profiles from transaction history and behaviour is a game-changer in financial crime detection. By establishing baseline behaviour for each customer, AI can promptly identify deviations from these norms. For instance, if a user typically conducts small, domestic transactions but suddenly initiates large withdrawals or transfers to high-risk countries, the system will trigger alerts for immediate scrutiny.

This proactive approach enables financial institutions to swiftly respond to potential threats and investigate suspicious activities, enhancing their capacity to prevent money laundering, fraud, and other illicit financial behaviours while safeguarding the integrity of their operations and the interests of their customers.

Online payment fraud losses to hit $91bn by 2028
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Merchant losses from online payment fraud will exceed $362 billion globally between 2023 to 2028, with losses of $91 billion alone in 2028 as new technologies such as AI begin to be felt in the market.

That’s according to a new report for ResearchAndMarkets, which analyses the repercussions of the surge in alternative payment methods, forthcoming challenges in the realm of Open Banking APIs, and an assortment of fraud types across sectors such as banking, remote digital and physical goods, and airlines.

The report says the upswing in eCommerce transactions, especially in emerging markets, is the driving force behind this burgeoning landscape. It details how merchants operating in these markets are grappling with novel threats, prominently the heightened utilisation of artificial intelligence (AI) for perpetrating fraudulent activities.

Online payment fraud encompasses a spectrum of deceptive or illicit online transactions orchestrated by cybercriminals employing diverse fraudulent techniques like phishing, business email compromise, or account takeover.

One of the report’s conclusions is that eCommerce payment providers should extend dashboards and data visualisation tools to cater to smaller SME customers. It asserts that SMEs currently lack access to robust customer analytics, and this data holds the potential to illuminate consumer purchasing patterns and furnish insights into payment method preferences and fraud trends.

Hence, by offering supplementary services to SMEs, eCommerce payment providers can distinguish their offerings in an increasingly cutthroat and commoditised marketplace.

Photo by Jefferson Santos on Unsplash

Retail POS needs and wants: data, security and the best the market has to offer
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It’s no secret that point of sale (POS) systems and receipt printing are crucial to retailers and hospitality businesses. Without them, they cannot enable sales effectively and grow their businesses optimally. In fact, to say they are important, for many, is an understatement.

Especially when you consider their strategic importance to not only drive sales efficiency; but to track and record sales data, and provide an optimum customer experience. What is more, within this, retailers and their customers have many different needs when it comes to managing and accepting payments. So, as the market evolves and businesses grow, what should retail and hospitality organisations consider when deploying POS systems and related technologies?

Jay Kim, Managing Director, BIXOLON Europe GmbH explains what the retail market, and wider value chain, needs to consider when exploring options that enable retail sales more effectively…

POS Needs Vs Wants

Within busy retail and hospitality environments it is vital that POS systems are “always on” and that these systems do not experience downtime. Simply put: failure to execute transactions can lead to lost revenue and a poor customer experience. Therefore, when purchasing these kinds of technologies, retailers typically consider an array of important factors. This includes network connectivity options; the performance of POS systems; how these system looks aesthetically when installed; how they integrate into the business; and the price of the investment. 

Additionally, with the need to keep up-to-date with the latest technology trends and requirements, many retailers are turning away from only using Serial or Parallel connectivity for printers. Instead, they are and moving to Ethernet, USB, Bluetooth and WLAN for integration with tablets and other peripherals as part of POS systems. Since technology has always been central to buying decisions, many retailers now build their hardware solutions around their software – whether this be a simple payment solution for an independent company, or part of a more complex omnichannel ecosystem.

Naturally, the performance of hardware within these systems is key. Printers form a vital component here at checkout. They enable the printing of receipts, coupons, vouchers, and more depending on the scenario. They are rated not only on the speed and reliability of the printing hardware, but also the performance of the cutter and print head, which leads to less maintenance and possible downtime. Within retail situations, sleek, compact printer designs are becoming increasingly popular, because retailers are looking to streamline their cash desks. For instance, cube printers have increased in popularity with their compact features and front exit feed for either on-the-desk or under-desk integration – which allows it to just fit into a POS set up easily and attractively.

Ease of integration is also essential here. With many retailers looking to upgrade their systems, many look for hardware which they can essentially plug in and play. As time means money, retailers look for installs which take hours rather than days, to avoid costly downtime and loss of productivity. Pricing is also a factor; however, a lower priced printer doesn’t always provide the quality and reliability required. Typically, when you buy cheap, you buy more, as the old adage goes.

Driving insights and protecting data 
Data and reporting is important to retailers. They need to know what inventory is being sold and when to restock. Sure, smaller companies can keep a written tally; however, larger companies often link their Electronic Point of Sale (EPOS) systems with their Enterprise Resource Planning (ERP) to allow a seamless reordering of supplies – and, sometimes they also combine both their store and e-commerce sales if that makes more sense and is more effective. This kind of approach can be crucial when used in conjunction with a more sophisticated just-in-time stock control methods.

Security is also important. Whether it takes the form of employee log-ins, systems to track transactions, or security systems to maintain secure transactions. In many European countries, fiscal law has been brought in to avoid retailer fraud. With reporting done through the cash register, fiscalisation is always done through software. However, measures can be put in place which cover both software and the POS hardware. For example, in Slovenia fiscalisation is handled through software; in Italy and Poland it is done through a specialised module and hardware within a POS device;  or in Germany’s case, the software used needs ensure it meets criteria set out by the government.

The Best The POS Market Has To Offer
There are many types of POS solutions on the market for retailers and hospitality organisations to consider. Standout options include mPOS, mobility solutions and kiosk solutions.

mPOS – The days of traditional bulky POS setups are dead, mPOS solutions are now taking centre stage as more compact, cost-effective solutions. These interchangeable setups typically consist of a tablet, printer, card reader, scanner, customer display and cash drawer; which are commonly bundled together by resellers with additional EPOS software (electronic point of sale). These interchangeable solutions provide a cost-effective solution which can be upgraded as a business’ POS estate evolves. But these types of solutions now require more intelligent printers too, such as those that can seamlessly connect to a host tablet device while supporting a charging port and up to four USB peripherals. This solution is a great way to use existing peripherals which are operated through the printer as it communicates to the tablet device via Bluetooth.

Mobility Solutions – For busy seasonal retail periods and pop-up stores, the need for accessible printing is becoming more popular. Mobile printers are the perfect solution as they easily connect to a smart device and can print receipts or labels. As batteries continue to improve, many printers can now be used for a complete shift and recharged outside of opening hours. Many proven printer providers offer technologies that enable receipt, ticket and labelling solutions. Alternatively, another market innovation in the POS printer space is a battery-powered POS receipt printer. Much like a mobile printer, battery-powered POS receipt printers offer fixed location printing; such as at a pop-up where power is not available. This type of printer is attractive for higher volume receipting for pop-up locations; which take larger quantities of transactions; so a larger receipt roll can be used. 

Kiosk Solutions – Kiosk systems are becoming increasingly popular, which has been accelerated by the pandemic. These self-service solutions typically come with two types of printers, either a packaged printer or a kiosk mechanism, which are chosen based on the kiosk design and user requirements. Typically, stand-alone unmanned solutions are fitted with kiosk printing mechanisms which use a presenter; allowing for larger paper rolls to be used, which require fewer changes and thus less maintenance.

The Future of POS printers

The face of retail is changing. Traditional brick-and-mortar stores are being complemented with e-commerce; and, with this, the use of printing and its technology is being adapted. As orders now also come in online, new software technologies such as native, web and cloud-based mPOS applications will enable printing to come directly to a designated printer for efficient picking, shipping or collecting.

Additionally, retailers will also be looking for mixed estates of printing technology covering both receipting and labelling, with linerless labelling becoming increasingly important as a traditional labelling alternative. This eco media removes the need for label packing paper, enabling variable-length labelling with either semi-permanent or permanent adhesive. This type of media is ideal for home delivery orders, click-and-collect, product markdowns and more.

Conclusion

The future of POS is bright and offers retailers and hospitality businesses of all kinds the opportunity to manage sales more effectively. Further, during check-out scenarios it remains important to provide customers with a receipt too – which is the legal form of proving a purchase of a product or service. While some might argue that e-receipting is coming, or is already here, this will not mean the death of the physical receipt. They will work in tandem, depending on differing requirements.

Labelling, though, will continue to innovate the industry. This is because as more business is done online, the need for labelling for services such as home delivery and click and collect will continue to rise. So retailers will require printers for different logistics scenarios within their fulfilment centres.

In either case, a POS system will sit at the heart of purchases and either offer customers physical printed receipts, or they will drive organisation and logistics operations within e-commerce distribution centres. In both cases, proven, robust, reliable and accurate printers will be required to support these operations, and provide receipts and labels for customers or e-commerce logistics teams in warehouses. 

AI MONTH: AI and Fraud Prevention – A confluence of technology and security
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Businesses and financial institutions face a constantly mutating landscape of fraudulent activities. Traditional systems, once hailed as robust, now frequently lag behind in detecting and preventing contemporary fraud schemes. Enter Artificial Intelligence (AI): a transformative force that’s reshaping fraud prevention by providing real-time, predictive, and adaptable solutions. Here we explore the growing influence of AI in combatting fraud and safeguarding assets, based on input from delegates and suppliers at the Merchant Fraud Summit…

  1. Real-time Transaction Analysis: AI can process vast amounts of data at lightning speeds. This allows it to assess each transaction in real-time, comparing it against patterns of normal behaviour. If a transaction looks suspicious (say, an unusually large purchase made in a foreign country late at night), the AI system can flag it instantly for review or even block it until it’s verified.
  2. Deep Learning for Pattern Recognition: Fraudsters are known for their adaptability, constantly changing tactics to evade detection. Deep learning, a subset of AI, empowers systems to ‘learn’ from vast datasets, recognising patterns and anomalies without being explicitly programmed. This means that even if fraudsters alter their tactics, AI systems trained using deep learning can detect these new patterns, keeping businesses one step ahead.
  3. Predictive Fraud Analysis: Beyond merely detecting known fraudulent tactics, AI leverages predictive analytics to forecast potential future threats. By analysing historical fraud data and blending it with current transaction trends, AI can offer predictions about where and when the next potential fraud might occur. This proactive approach allows businesses to bolster security in vulnerable areas before a breach happens.
  4. Enhanced Authentication Protocols: AI has amplified the capabilities of biometric authentication methods like facial recognition, voice analysis, and fingerprint scanning. By continuously learning and updating individual profiles, AI ensures that only the authentic user can access accounts, thereby drastically reducing identity theft or account takeovers.
  5. Natural Language Processing for Phishing Detection: Phishing emails are a common tool in a fraudster’s arsenal. AI, equipped with Natural Language Processing (NLP), can scan emails and detect subtle linguistic cues that might indicate a phishing attempt, protecting users from potential threats.
  6. Automated Reporting and Decision Making: Post-incident reports are crucial for understanding breaches and strengthening defences. AI can automate this process, collating data, suggesting remedial measures, and even implementing certain protective protocols without human intervention.
  7. Adaptable and Self-learning Systems: One of the greatest advantages of AI is its inherent adaptability. As it encounters new types of fraud or even near-miss events, it learns, refines its algorithms, and becomes even more effective in subsequent detections.

AI is not merely a tool but a dynamic shield adapting and evolving in the face of emerging threats. As businesses and transactions continue their inexorable shift online, AI stands as a sentinel, safeguarding assets and instilling trust in systems. The fusion of AI and fraud prevention is an exemplar of how technology can be harnessed to protect, predict, and prevail against malicious intent.

Are you looking for mobile anti-fraud solutions for your business? The Merchant Fraud Summit can help!

Photo by Possessed Photography on Unsplash

Do you specialise in Biometrics for Fraud Detection or IP Intelligence/Proxy Detection Solutions? We want to hear from you!
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Each month on Merchant Fraud Briefing we’re shining the spotlight on a different part of the market – and in November we’ll be focussing on Biometrics for Fraud Detection & IP Intelligence/Proxy Detection.

It’s all part of our ‘Recommended’ editorial feature, designed to help industry buyers find the best products and services available today.

So, if you specialise in Biometrics for Fraud Detection or IP Intelligence/Proxy Detection and would like to be included as part of this exciting new shop window, we’d love to hear from you – for more info, contact Jennie Lane on 01992 374 098 | j.lane@forumevents.co.uk.

Here’s our 2023 Features List in full:-

November – Biometrics for Fraud Detection & IP Intelligence/Proxy Detection

December – POS Verification & Chargebacks

For more info, contact Jennie Lane on 01992 374 098 | j.lane@forumevents.co.uk.

Ensuring a merry and secure holiday season for online retailers
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By Gav Winter (pictured, above), CEO at RapidSpike

The upcoming holiday season – including the renowned Black Friday – holds immense significance for online retailers. As early as the end of October, the shopping frenzy begins with enticing discounts that continue throughout December and after Christmas with Boxing Day sales, making it an unparalleled retail period.

In 2022, US consumers shattered records by spending a staggering $9.2 billion on Black Friday, proving the popularity of discount events despite economic challenges. However, this surge in online shopping also makes it an attractive target for cyberattacks, with hackers seeking to exploit unsuspecting customers.

The escalation of payment scams and the increasing sophistication of cybercriminal tactics highlight the substantial financial risks faced by retailers without robust security measures. Furthermore, the surge in website traffic during this high-demand period can strain website performance, potentially compromising the overall user experience.

Given these challenges and the vital importance of website performance and reliability, there is no better time for retailers to put preparations in place. 

Avoid online traffic jams 

In 2023, the eCommerce industry is grappling with a multitude of challenges that require innovative solutions, particularly in the face of intensified web traffic during peak shopping seasons. The ever-increasing customer demand and evolving online expectations set the stage for heightened competition. Today’s customers demand nothing less than seamless shopping experiences, characterised by lightning-fast website performance and immersive features like augmented and virtual reality, for example.

However, meeting these expectations while maintaining website reliability during the holiday shopping season is a complex task. Slow-loading and underperforming websites pose a significant risk, potentially frustrating customers to the point of cart abandonment and seeking alternatives. 

A lagging site can disrupt the flow of shoppers as they explore and add items to their carts, undermining the convenience and enjoyment of the shopping experience. Impatient buyers are more inclined to abandon their carts, leaving behind potential purchases. These abandoned carts not only translate into lost sales but also represent missed opportunities to engage with customers and foster brand loyalty.

Data from Statista underscores the critical importance of a seamless user experience in online shopping. In the second quarter of 2023, approximately 85% of mobile orders in the UK were left uncompleted, with seven out of 10 carts abandoned on computers as well. This evidences the significance of an optimised website, especially when competitive prices for similar products are available elsewhere.

To combat this challenge, online retailers must prioritise website optimisation to ensure swift and seamless experiences for their customers, especially during high-traffic periods like Black Friday. A responsive and well-optimised site not only reduces the risk of cart abandonment but also enhances customer satisfaction, encourages repeat business, and reinforces a positive brand image. 

The rising threat of cybersecurity

While the digital age has brought tremendous opportunities for online retailers, it has also increased the threat of cybersecurity breaches and data theft, particularly during high-traffic periods like Black Friday. 

One of the most insidious among these threats to the eCommerce sector is the Magecart skimming attack. This type of attack involves cybercriminals injecting malicious code into a retailer’s website, allowing them to steal customers’ payment data. With the holiday season approaching, these attacks become even more tempting for cybercriminals seeking to capitalise on the surge in online shopping.

But Magecart attacks are the tip of the iceberg. Cybersecurity threats come in various forms, including distributed denial-of-service (DDoS) attacks, ransomware and phishing attacks.

Online retailers must be prepared to defend against these threats to ensure the security of their customer’s data and the reliability of their websites.But, strategies and solutions for website owners must encompass the full spectrum of web health: performance, reliability, and security.

A multi-pronged defence and optimisation strategy

Online retailers must adopt a holistic approach to address these challenges, safeguard their customers’ trust, and optimise their websites for the upcoming holiday shopping rush. While monitoring and optimisation are essential year-round, specific tools can help during busy periods like Black Friday and Cyber Monday:

1.      Implement a layered security approach

The best approach to eCommerce security is a layered one that uses multiple tools. Online businesses must have security measures in place to both prevent and detect attacks. Cyber attackers are constantly devising new ways to disguise their techniques, so it’s crucial to analyse your site for vulnerabilities, as well as attacks in progress.

2.      Conduct stress testing

To prepare for the holiday season, carry out stress testing to understand your website’s normal performance limits. Scaling up your infrastructure is vital to handle the increase in traffic. This could involve adding more machines or using auto-scaling and load balancing for cloud-based solutions.

3.      Implement uptime monitoring

Uptime monitoring is essential to ensure your website remains accessible during busy sales periods. Use uptime monitoring tools to detect issues and ensure prompt resolution. In case of problems, leverage social media to keep customers informed and consider extending the same discounts to customers who couldn’t access them on the sales day.

4.    Utilise performance testing

Prioritise website performance by conducting load testing to understand your site’s capacity and potential bottlenecks. Ensure static content is delivered from a content delivery network (CDN) to enhance loading times. Implement load balancers to distribute server loads and consider serverless cloud technologies for scalability.

5.     Synthetic monitoring

This can play a crucial role by providing a comprehensive view of the user experience. It ensures that website owners can meticulously track the entire customer journey, starting from the home page and extending to product pages, item selection, cart management, and the checkout process. By regularly conducting synthetic checks, website owners can rest assured that these vital processes are functioning correctly and consistently over time. This proactive approach not only helps identify and address issues before they impact real users but also contributes to maintaining a seamless and reliable online experience, ultimately leading to higher customer satisfaction and improved website performance.

Mitigating the effects of holiday season traffic

Black Friday and the holiday season present both opportunities and challenges for online retailers. While the potential for increased sales is enticing, the risk of cyberattacks and website performance issues looms large. Protecting and optimising your online retailer website is not just about safeguarding your business for a single day; it’s about building trust with your customers for the long term.

A comprehensive approach that combines cybersecurity measures, performance optimisation, and synthetic monitoring is essential. By implementing these strategies and staying vigilant, online retailers can ensure their websites remain operational, customer-friendly, and secure throughout the demanding holiday season. Remember, preparation today will safeguard your reputation and revenue for many years to come.

MOBILE MONTH: Selecting mobile fraud prevention solutions
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Mobile phones, as personal devices frequently used for financial transactions, communications, and data storage, have become a prominent target for fraudsters. In the UK, mobile phone-based fraud prevention is a growing concern for many businesses. As anti-fraud professionals look to tackle this challenge, selecting the right supplier and solution is pivotal. Here are the principal considerations to bear in mind, based on input from delegates and suppliers at the Merchant Fraud Summit…

  1. Understanding the Threat Landscape:
    • Diverse Threats: Ensure your chosen supplier has expertise in diverse mobile threats, from SIM swapping to malicious apps.
    • Continuous Monitoring: The solution should proactively monitor and predict threats, evolving in real-time as new mobile-based fraud methods emerge.
  2. Integration and Compatibility:
    • Cross-platform Support: The solution should be compatible across various mobile operating systems, notably Android and iOS.
    • Integration with Current Systems: It’s crucial that the chosen solution integrates smoothly with your existing IT infrastructure and security protocols.
  3. Real-time Protection:
    • Immediate Alerts: Given the personal and immediate nature of mobile phones, real-time alerts for suspicious activities are essential.
    • User Verification: Implement multi-factor authentication (MFA) that leverages mobile capabilities, like biometrics or SMS codes.
  4. User Experience:
    • Balancing Security with Usability: While fortifying security, the solution should not overburden legitimate users with cumbersome processes.
    • Adaptive Security: Consider solutions that adapt based on user behaviour, raising security measures for unfamiliar patterns but easing them for recognised behaviours.
  5. Comprehensive Reporting:
    • Insightful Dashboards: Solutions should provide detailed reports, highlighting vulnerabilities, attempted fraud incidents, and successful interventions.
    • Predictive Analysis: Leveraging AI and machine learning, the system should predict potential future threats.
  6. Regulatory Adherence:
    • Data Protection: Ensure the solution is compliant with UK and EU regulations, especially GDPR, ensuring user data’s privacy and security.
    • Industry Standards: For mobile payments or financial services, ensure compliance with relevant industry security standards.
  7. Supplier’s Reputation:
    • Proven Expertise: Prioritise suppliers with a strong track record in mobile security and fraud prevention.
    • Client Feedback: Reviews and testimonials can provide a genuine sense of the solution’s efficacy and reliability.
  8. Cost Considerations:
    • Value Proposition: Evaluate the potential financial losses from mobile fraud against the cost of the solution, ensuring a favourable return on investment.
    • Flexible Pricing Models: Some suppliers may offer tiered or scalable pricing, allowing you to choose based on your specific needs.
  9. Support and Training:
    • Initial Setup: Comprehensive onboarding will ensure your team maximises the solution’s potential from day one.
    • 24/7 Support: Given the always-on nature of mobile devices, round-the-clock support is crucial.
  10. Future Preparedness:
  • Ongoing Updates: With mobile technology rapidly evolving, the chosen solution should receive frequent updates to counter emerging threats.
  • Scalability: As your organisation grows and mobile usage patterns change, the solution should adapt accordingly.

In the dynamic landscape of mobile phone-based fraud, UK anti-fraud professionals must be diligent and forward-thinking in their choice of prevention solutions. A strategic approach, underpinned by these considerations, will pave the way for robust mobile security.

Are you looking for mobile anti-fraud solutions for your business? The Merchant Fraud Summit can help!

Image by Pexels from Pixabay

Meet with Ravelin, Kount, Checkout.com and more at the Merchant Fraud Summit
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The Merchant Fraud Summit takes place on the 1st November,  at the Hilton, London Canary Wharf – and as an industry professional this is your chance to secure one of the few remaining delegate places.

Your complimentary pass includes:

🤝 A corporate itinerary of one-to-one meetings with solution providers
💭 A seat at our industry seminar sessions (included within your itinerary)
☕ Lunch and refreshments throughout 
👋 Networking breaks to make new connections within your field

Solution providers attending include Ravelin, Alphacomm, Telesign Corp, Nethone, Kount, Ekata Inc, Darwinium, Forter Solutions, NICE Actimize, Checkout.com, Justt, Sift, Riskified and more…

Places are extremely limited, so if you or a colleague are interested in attending, you can confirm your free place via our short booking form.

Data and app security to drive risk management spending growth
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Global end-user spending on security and risk management is projected to total $215 billion in 2024, an increase of 14.3% from 2023 when spending will reach $188.1 billion – with application security, data security and identity access management among the key drivers.

That’s according to Gartner, which says the continuous adoption of cloud, continuous hybrid workforce, rapid emergence and use of generative AI (GenAI), and the evolving regulatory environment are forcing security and risk management (SRM) leaders to enhance their security and risk management spending.

Shailendra Upadhyay, Senior Research Principal at Gartner, said: “At the same time, they are focusing their efforts by adopting technical security capabilities that provide far greater visibility and responsiveness across the organisation’s entire digital ecosystem and restructuring the way the security function operates to enable agility without compromising security.”

Spending on data privacy and cloud security are projected to record the highest growth rates in 2024, with each segment increasing more than 24% year-over-year (see Table 1). Privacy remains a top organizational priority as regulations that impact the processing of personal data continue to emerge, including those related to the use of AI. Gartner predicts that by 2025, 75% of the world’s population will have its personal data covered by modern privacy regulations.

Table 1. Security and Risk Management End-User Spending for All Segments, Worldwide, 2022-2024 (Millions of U.S. Dollars)

Segment2022 Spending2022Growth (%)2023 Spending2023Growth (%)2024 Spending2024 Growth (%)
Application Security5,047.610.95,765.214.26,670.315.7
Cloud Security4,487.424.05,616.725.27,002.624.7
Data Privacy1,129.29.91,338.718.51,667.324.6
Data Security3,072.921.43,692.120.14,333.317.4
Identity Access Management13,944.113.616,169.116.018,556.514.8
Infrastructure Protection24,089.019.928,359.617.733,319.617.5
Integrated Risk Management5,157.39.65,687.110.36,277.710.4
Network Security Equipment18,932.511.921,383.612.924,360.113.9
Security Services73,394.73.980,835.710.189,996.711.3
Consumer Security Software7,443.42.97,901.76.28,406.76.4
Others8,029.850.111,365.441.514,362.826.4
Total 164,728.010.6188,114.814.2214,953.714.3

Source: Gartner (September 2023)

The continued growth in public cloud services will bolster spending on cloud security tools. In the cloud security segment, the combined spending on cloud access security brokers software (CASB) and cloud workload protection platforms (CWPP) is projected to total $7 billion in 2024, up 24.7% from 2023. Demand for cloud-based detection and response solutions — such as endpoint detection and response (EDR) and managed detection and response (MDR) — is also expected to increase in 2024.

Spending on security services – consulting, IT outsourcing, implementation and hardware support –is forecast to total $90 billion in 2024, an increase of 11% from 2023. Security services is expected to represent 42% of total security and risk management end-user spending in 2024, and to remain the largest area of security and risk management spending in 2024.

“In light of cyber risks increasing, cyberthreats proliferating and a changing operating environment, it is more critical than ever for organizations to build and optimize a cybersecurity program,” said Upadhyay. “It is the cornerstone of cybersecurity initiatives which help SRM leaders secure new environments, protect against the expanded attack surface, consume security capabilities in new ways and create better efficiencies through automation.”

Image by Emilian Robert Vicol from Pixabay

90% of online retailers losing money to policy abuse
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Policy abuse–behaviours such as excessive returns, refund scams such as claiming an item was not received or returning empty boxes, abusing promotions like coupon codes or loyalty program rewards, or reselling limited-inventory items is soaring, with 90% of online merchants believing the issue is a significant problem for their bottom lines.

That’s according to Riskified’s Policy Abuse and Its Impact on Merchants: Global Benchmarks 2023, which found that two-thirds of retailers (67%) said they can recoup less than half of the total value of a returned item. A representative from a leading fitness apparel brand that Riskified interviewed even said that, depending on item cost, their company might be better off financially if the customer broke into their warehouse and stole an item, rather than purchase and then return it. 

Lenient return policies and promotion programs are driving lost profits, yet merchants feel they must maintain their approach: 93% of retailers said it is “somewhat important” or “very important” for their organizations to offer generous refund and return policies to win new customers and retain loyal ones. 90% of respondents said they are reliant on promotions to drive sales and remain competitive.

Other key findings from the Riskified’s policy abuse benchmark report include:

  • 9 out of 10 online retailers said they face significant costs due to policy abuse.
  • Policy abuse “peaks” at certain times of year. 70% of online merchants experienced a rise in all forms of policy abuse during the summer shopping season, and two-thirds (67%) saw more policy abuse during the post-holiday returns season.
  • Losses from policy abuse have increased year-over-year (YoY). 57% of merchants faced increased costs from INR (item-not-received) abuse between 2021 and 2022, compared to a 45% YoY increase for reseller abuse, a 38% YoY increase for promotional code and loyalty program abuse, and 37% YoY increase for returns abuse.

Amidst the challenging economic climate for ecommerce enterprises globally, the report identifies the key trends that are contributing to the rapid rise in policy abuse in 2023.

According to Riskified’s data, the motivation for committing policy abuse is due to a mix of economic factors (such as inflation or entering a holiday period during which consumers have stretched disposable income) and emotional factors (such as a bad customer experience with a retailer).

Policy abuse is a unique problem for merchants to tackle because, unlike traditional fraud, it can be committed by people who are otherwise good customers, and in most cases it requires no special skills or access to stolen credentials or accounts. An analysis of Riskified client data, for example, shows that on average 20% of all refund claims are abusive. Notably, policy abuse can cost some merchants even more than traditional fraud chargebacks, resulting in over $100 billion in losses for ecommerce merchants worldwide. 

Merchants are also burdened by the operational impacts of processing refunds and returns, most of which are handled manually. 62% of merchants said they do not currently have automated systems (including machine learning) to accurately identify and address policy abuse, and 65% of respondents use a manual review process for the majority of refund and return claims. It takes most retailers (68%) three to four days to process a refund or return.

“Between Amazon fast and free returns, and popular deep discount flash sales, it has been a race to the bottom for merchants who feel that they must offer increasingly lenient programs in order to remain competitive,” said Jeff Otto, CMO at Riskified.  “Although a wonderful experience for good consumers, a growing spectrum of hidden policy abusers have tipped the scales — deeply hurting merchant profitability. The key to solving this challenge is resolving the true identity of the consumer, extending trust and frictionless experiences to good customers, while curbing the abusers, and stopping the fraudsters.” 

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