As remote work becomes an increasingly prevalent mode of operation, credit unions and community banks face unique challenges in maintaining robust fraud prevention measures. The shift from traditional office environments to remote settings has introduced new vulnerabilities, necessitating innovative strategies to protect both the institutions and their members. 

In this blog, we explore the insights shared by industry experts Ravi Sandepudi, Co-Founder & CEO at Effectiv and Prasad Shrotri, VP Solutions at Eltropy, during a recent webinar titled: From Porous to Powerful: How to Turn Your Contact Center Into a Fraud-Fighting Machine [watch complete webinar here].

Fraud Risks for Small Business Customers of Credit Unions

Ravi Sandepudi, Co-Founder & CEO at Effectiv highlighted a significant challenge observed at credit unions or community banks that support small businesses where these businesses are increasingly becoming targets of scams due to the shift to remote work.

“We’re encountering cases of executive fraud, where a fraudster impersonates the CFO of a small business and sends a text or message to the accountant, instructing them to initiate an urgent wire transfer to a supposed vendor. The accountant, who has access to the business’s accounts with the credit union, proceeds with the transaction through online banking. Unfortunately, it’s only later that the small business realizes the transaction was fraudulent, prompting them to seek assistance from the credit union to recover the lost funds. This type of fraud is exacerbated by remote work because, in the past, the accountant could easily walk over to the CFO’s office to verify such requests. Now, with employees working remotely, this straightforward verification process is disrupted.”

To combat these issues, Ravi suggested implementing robust technology platforms at Credit Unions or Community Banks that can detect unusual transactions. 

“We need to look at whether the business has previously initiated wire transfers of this nature. Since it’s not an account takeover scenario but rather a sophisticated scam. By analyzing typical vendor transactions and identifying anomalies, such as unusual times or amounts for wire transfers, we can add an extra layer of verification. This might involve validating the transaction with the small business multiple times before proceeding, ensuring greater security and reducing the risk of fraud.”

Challenges for Executives and Employees at Credit Unions

Prasad Shrotri, VP Solutions at Eltropy addresses the challenges from an employee perspective where he talked about how remote work offers incredible flexibility and opportunities but it also brings unique challenges, particularly in terms of fraud prevention.

“Remote work introduces the issue of unsupervised access to systems. Employees are now operating from different networks and potentially running various programs, which can lead to time theft and other security risks. Previously, employees could easily consult with each other in person, but now the dynamics have changed, increasing the complexity of fraud prevention.”

To address these challenges, he suggested implementing additional controls:

1. Employee Education: It’s crucial to continuously educate employees about security best practices. This includes recognizing and avoiding phishing attempts and other fraudulent activities.
2. Monitoring Tools: We should adopt sophisticated monitoring tools that track activities anonymously yet effectively. These tools can help ensure that employees are not accessing unsafe sites or data points.
3. Transparent Communication: Maintaining open and transparent communication about the importance of data security is essential. Leadership should emphasize the responsibility everyone has in protecting the credit union’s data. Remote work is here to stay, but we must safeguard our employees and team members’ data.

Prasad also touched on the justification of expenses related to these security measures. “The costs associated with implementing security software and monitoring tools should be viewed as necessary investments to prevent more significant financial losses. Instead of focusing on the upfront costs, consider the savings from avoiding write-offs and legal issues caused by fraud. By presenting these expenses as investments in fraud prevention, it’s easier to gain board approval and ensure the credit union’s financial health and compliance.”

Overall, the experts advised that proactive adoption of these measures not only protects financial assets but also reinforces trust and reliability in the services provided by credit unions and community banks. Eltropy, with its robust suite of solutions, plays a crucial role in this landscape. By offering advanced communication platforms and sophisticated monitoring tools, Eltropy helps financial institutions enhance their fraud prevention strategies. By integrating Eltropy’s solutions, credit unions and community banks can ensure secure, efficient, and reliable operations in a remote work environment, ultimately safeguarding their members and maintaining their reputation for trustworthiness.