Reactive to Proactive Fraud Fighting for Credit Unions & Community Banks

Reactive to Proactive Fraud Fighting for Credit Unions & Community Banks

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It was a close call until my wife grabbed the phone from my hand and said, “You dummy, you’re being robbed!” She could have been a bit more gentle, but she was right.

In today’s digital age, fraud prevention has become a critical concern for credit unions and community banks. As these institutions increasingly rely on digital communication channels, the potential for fraud has grown, requiring innovative and proactive measures to protect their members and assets. Recently, our VP of Solutions, Prasad Shrotri, shared insights on emerging fraud threats and how credit unions and community banks can prepare for them at a recent webinar titled: From Porous to Powerful: How to Turn Your Contact Center Into a Fraud-Fighting Machine [watch complete webinar here].

He began by sharing a personal story about almost falling victim to a sophisticated phone scam to illustrate the sophistication of modern fraud schemes. He recounts receiving late-night text messages and a subsequent phone call from someone posing as his credit union, attempting to steal his account information through a fake two-factor authentication (2FA) request. Thankfully, his wife knew better 🙂

Here are some excerpts from the discussion (edited for clarity).

How does Eltropy prevent & mitigate fraud for credit unions & community banks?

Our goal is to be proactive, not reactive.

We are neither just a texting solution, nor just a voice solution, nor just a pass-through solution. We are truly creating what’s called a member relationship management solution, which creates a unique blend of conversations and transactions happening together. That’s how we deliver the best possible experience to our clients i.e, credit unions and community banks while ensuring the security and protection of our clients members and customers. 

We aim to strike a perfect balance between member experience and security. 

Eltropy provides a single pane of view for all member interactions, allowing for risk profiling and targeted communication. This empowers institutions to educate users about potential scams and red flags,  helping to stop fraud before it starts.It also detects high-risk interactions early, alerting agents to potential fraud before it occurs. For instance, when a text or voice interaction enters our platform, we are first to alert agents if an individual appears to be high-risk. For example, if there are suspicious charge-off requests, we can prompt an investigation before proceeding with a wire transfer, cross-account transfer, or any other transaction, helping prevent fraud before it impacts the institution.

How does Eltropy collaborate with partners for enhanced fraud prevention?

One of the key strategies used in fraud prevention and mitigation is the creation of detailed risk profiles for members. There are several advanced technologies that can be leveraged to build these profiles:

  1. Artificial Intelligence (AI) and Machine Learning (ML) can be used to analyze transaction patterns to detect anomalies that may indicate fraud.  
  2. Unique biological traits (biometric verification) such as fingerprints or retinal scans can verify identities and prevent unauthorized access.
  3. Behavioral analytics across different platforms can help identify suspicious activities.
  4. Natural Language Processing (NLP) can be used to analyze communication patterns for detecting potential fraud attempts.

In our work with contact centers at Eltropy, we focus on creating these comprehensive member profiles that consider the risk and fraudulent activities over time with the help of our partners such as Effectiv. If the profile flags suspicious activity, such as a phone number associated with previous fraud or an unfamiliar IP address, it triggers additional security measures, possibly requiring face-to-face verification which is achieved by our gamut of communication channels like video calls and appointment management for in branch  to create safe interactions that can ultimately prevent fraud before it happens.

The best kind of fraud is the one that you can avoid!

How can fraud prevention teams justify investment in new technologies?

The costs associated with implementing fraud prevention technologies should be seen as necessary investments. We need to stay ahead of the curve, using technology wisely to combat fraud. There’s no one-size-fits-all solution for this complex issue. It requires education, guidelines, and technology, but most importantly, collective action. It’s an ongoing effort, not a quick fix. 

And, to justify this expense, you don’t have to look far. Simply compare the annual write-offs due to fraud with the potential cost of new software. Ask the board whether they prefer to continue absorbing these losses or invest in technology to mitigate them. The answer is clear: nobody wants to see write-offs on the books due to their negative implications for compliance and legal standing. By presenting the expense as an investment to prevent these write-offs, the justification becomes evident.

As the digital landscape evolves, so do the threats posed by increasingly sophisticated fraudsters. Fraudsters are no longer executing point-in-time attacks. They are running elaborate schemes designed to exploit trust and trick individuals into revealing sensitive information. As they grow more sophisticated, our defenses must evolve as well. Eltopy’s proactive adoption of advanced fraud prevention measures will not only protect your financial assets but also reinforce trust and reliability in the services provided by your credit unions and community banks. 

Prasad Shrotri is a recognized thought leader in the solutions engineering space. He is currently VP of solutions at Eltropy, the Industry’s first AI Everywhere Unified Conversations Platform for CFIs.

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