Gartner predicts that 50% of large organizations in APAC will adopt privacy-enhancing computation techniques by 2025 in an effort to prevent online fraud from hurting their customers. These findings are, indeed, concerning. They send a clear signal that financial institutions (FIs) are under constant attack. This new reality requires FIs to adopt a new strategy that focuses on financial fraud prevention instead of just detection.

Cybercriminals are finding new ways to penetrate existing security systems. Online fraud attacks are becoming increasingly difficult to detect.

Due to these persistent threats, there are two groups of FIs:

  • Those who know they have been attacked;
  • Those who have been attacked but have not yet discovered it.

Ideally, the most effective way to stop these attacks is to find the attacker before they steal your customer’s data or money. Your defense system should be able to shut down all front, back, and side doors. This is an area where FIs must improve, a reality for which many are unprepared. Banks need to learn how to prevent online banking frauds before they can cause any harm.

Passive Defense Tactics Do Not Work

Most financial institutions rely on typical security solutions, like device recognition and IP geolocation. The core focus of this approach is limited to detection and notification. While your bank receives timely alerts, your team cannot react in time to stop a potential crime. The security systems fail because of a lack of active defense.

FIs are left to tie together multiple security solutions for each attack stage. The inefficient integration leads to a delicate setup that is difficult to maintain. It also leaves many loopholes open for cybercriminals to slip through.

To tackle these daunting challenges, FIs need proactive defense strategies to prevent online fraud. What you need is a solution that goes one step further. Invest in a modern online fraud prevention system that takes a multi-dimensional approach to protecting customers’ end-to-end journeys.

Any online fraud prevention system that banks invest in should be able to seamlessly connect to the organization’s technology stack and more importantly, all applicable information. It also maximizes efficiencies while reducing the banks’ false positives and negatives.

How an Active Defense System Prevents Online Fraud

Active defense systems are proactive systems that detect and derail potential fraud attacks before they can inflict harm. These defensive systems rely on a combination of intelligence gathering, monitoring, and pattern recognition through extensive customer profiling to stop an attack as early on as possible.

Most modern active defense setups are excellent at pattern recognition. The fraud prevention system identifies each user based on an extensive customer profile, including behavioral biometrics (e.g., phone or mouse movements, keystrokes, etc.), device profile, and geolocation data. This enables FIs to better understand their customer’s usual patterns. By clearly understanding how the customer normally behaves and interacts with their FIs, banks can better distinguish between legitimate customers and potential fraud threats.

With these modern fraud prevention solutions in place, everything works automatically, with continuous and frictionless verification occurring at every interaction. The system proactively responds to fraud attacks regardless of when or where the attempt occurs in your customer’s journey.

2 Essential Pillars of an Active Defense Strategy to Prevent Online Fraud:

1. Protection at all times

The most effective banking fraud prevention solutions continuously analyze customers’ behavior across all stages of the user lifecycle. This creates the opportunity for banks to truly understand their customers holistically, and subsequently use that data to drive timely intervention or create additional context for future risk decisions.

In case of any observed discrepancy, the bank can react to a range of fraud types with an authentication mechanism that is reflective of the risk posed.

Armed with an understanding of who customers really are, how they normally interact with their banks, and their typical transaction patterns, banks can let good customers continue their business and immediately stop potential threats. In other words, customers are protected with dynamic response measures that respond when an actual attack occurs. This includes notifying and requiring additional authentication or even session termination if needed.

2. Frictionless user experience

The job of an active fraud detection system is to prevent online fraud by stopping threats as they happen – all without annoying the customers with unnecessary authentications. The system also works silently in the background, from account opening to logout. In addition to detecting fraudulent activity, it is just as important for an online fraud prevention solution to establish digital trust. Establishing contextual baselines for customers not only enables accurate anomaly detection, but also behavioral consistencies. This empowers strong fraud detection performance with low false positives, and therefore improved customer satisfaction and confidence.

With this two-pillar strategy in place, FIs can increase their ability to curb fraud without disrupting the end-user. It’s a win-win for everyone.


The stakes are high. It is not a question of “if” but “when” online fraud attacks will be attempted. Consider this question: Are you taking concrete steps to ensure that risk is being mitigated effectively to prevent online fraud from impacting your organization and your customers?

Fraud evolves fast. Download our eBook 6 Crucial Capabilities to Protect the Online Banking Journey to learn why it’s important to future-proof online fraud prevention solutions.