The Evolving Challenges of Fraud and Compliance in the Fintech Space

Fraud has proliferated in recent years. How can Fintechs balance growth and fraud risk? To find out, watch this chat between Unit21 CEO, Trisha Kothari, and Jill Malandrino from Nasdaq Trade Talks—live from the 2023 Empire Fintech Conference show floor.

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Looking for a high-level rundown on what was discussed in the interview? Read the highlights below.

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Fraud, Compliance, and the Challenges of Staying Regulated Interview Highlights

1. Fraud is a growing problem in the Fintech industry, with estimates suggesting it will reach over $45 billion this year. Fraudsters can operate from anywhere worldwide, using stolen, fake, or fabricated identities to create accounts and steal money from institutions. Companies often struggle to keep up with fraudsters, who are creative, quick, and well-coordinated.
2. Crypto has contributed to the rise of fraud in the financial industry due to the ability to move money off immediately and the lack of consumer protection. Unlike ACH transfers or credit card transactions, there is no way to recall crypto transactions. This lack of protection makes it easier for fraudsters to perpetrate scams through crypto.
3. Many companies struggle to be compliant in real-time while keeping up with the changing fraud landscape. Teams are looking for more data-driven approaches to help them identify fraudsters and quickly adapt their practices. This includes looking beyond transaction patterns to login behaviors, devices, and user activity.
4. Unit21 is a company that is helping businesses combat fraud by providing a more holistic approach to identifying and preventing bad activity. Rather than just looking at individual transactions, Unit21 is able to analyze user data, login patterns, account behaviors, and other factors to identify patterns that could indicate fraudulent activity.
5. Instead of shutting down financial innovation and real-time payments, companies are investing in their risk and compliance practices. They are using a more data-driven approach to combat fraud and regulatory risk, which includes continuous training of teams to adapt to the changing fraud landscape. Companies that invest in these practices are able to stay compliant while still offering innovative financial services to consumers.

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