From the TOP

Jack E. Hopkins

ICBA Chairman
President & CEO, CorTrust Bank, Sioux Falls, SD

The key to driving down fraud risk

“To protect both our banks and our customers, we need to go that extra mile to verify every transaction is legitimate.”

In today’s environment, community banks are battling increasingly sophisticated forms of fraud. Artificial intelligence (AI) impersonation has grown more prevalent, and we must be a lot more vigilant, increasing our reviews of transactions that on the surface appear normal. That added scrutiny requires a two-fold approach in the form of ongoing education and technological support.

With such complex scams and fraud scenarios in play, community banks must prioritize staff training. If someone’s trying to impersonate a customer using AI or victimizing them via a scam, our teams need to be able to identify red flags and unusual behavior. To protect both our banks and our customers, we need to go that extra mile to verify every transaction is legitimate.

Fortunately, this type of scrutiny speaks to an existing community bank strength—knowing our customers—but it’s also about ensuring we are up to speed on the latest scams. At my bank, we sign up for different alerts, including those from ICBA, that summarize the latest fraud attacks. Then, we not only share that information internally, but we also make it available to our customers, raising awareness of all the types of fraud we’re seeing and sharing examples of the latest scams to help protect them, because knowledge is power.

But in a complex fraud environment, you need more than knowledge alone to thwart fraud. That’s where technological tools enter the picture. For instance, we’ve recently tightened down our Bank Secrecy Act (BSA) software, and we also implemented a detailed wire transfer questionnaire. As part of our wire process, we have begun asking a series of questions on the transaction, including where it’s going and what it’s being used for, and we’ve stopped quite many fraudulent transactions by digging deeper into purpose. In the past year, between our software and this questionnaire, we estimate we’ve stopped upwards of $750,000 in fraudulent transactions.

The fraud environment requires community banks to become detectives, charged with determining the legitimacy of a transaction. Fortunately, today’s technology can help us in doing that. ICBA Innovation, through the ThinkTECH Accelerator and Preferred Service Providers, gives a shortlist of strong fraud mitigation partners that can serve as important assets in our fight against fraud and worth considering for your bank’s needs.

Because stopping fraud requires the right mix of technology tools and current knowledge. It’s up to each community bank to ensure we have appropriate solutions in place to address both. Fortunately, we have ICBA in our corner to support our work and keep us armed with the latest fraud prevention information and tools.