ApplyEasy Credit Management Monitoring and Alerts
4 mins read

How to avoid fraud in the financial sector

For as long as financial services have existed, unscrupulous entities have found ways to exploit their weak spots for personal gain. Fraud itself is nothing new, but there are concerns that those weak spots are now more plentiful and easy-to-find than ever before.

In this article, we’ll look at why fraud is on the rise and discuss how businesses in the financial sector can protect themselves with thorough due diligence, including an examination of their potential customers’ credit history and criminal risk.

Financial fraud is rising in 2022 

Over the last decade or so, we have seen the proliferation of technologies aimed at fast-tracking, simplifying, and decentralising financial processes – a field of innovation known as financial technology or ‘fintech’. These advances allow us to perform transactions that would have been unthinkable 20 years ago, like making instant transfers from one side of the world to the other or securing small personal loans outside of banking hours.

Thanks to these technological advances, companies are able to automate processes, like the approval of a loan or cash transfer, that would previously have required a credit check or at least a nod from a bank teller. This has allowed them to cut down on admin costs, increase efficiency, and reduce reliance on financial institutions to act as middlemen, but it has also opened them up to heightened financial risk.

The trade-off for the convenience offered by this kind of digital innovation has been a decrease in security. Some studies have shown that fraud occurs in fintechs like neobanks at roughly double the rate of credit card companies. Rates of financial crime like fraud, blackmail, and extortion have been rising for a number of years; South Australia Police reported an increase in financial crime of 29 per cent between 2020 and 2021.

How to Protect Your Business from Fraud

There is no question that recent innovations have helped businesses boost efficiency and achieve growth. Protecting your investment doesn’t mean you need to forgo those benefits altogether; it just means that you need to be strategic about which transactions you automate, and use only the best available systems.

It is important to conduct due diligence before taking on a new trading partner. The best way to protect your business when you extend credit is to start with a credit check. Yet, not all credit checks are equal. Gain an advantage with CreditorWatch’s credit check processes, which combine and analyse data from a wide range of sources to produce valuable insights and predictions.

CreditorWatch has developed a unique suite of financial tools that use advanced AI automation to accurately calculate the credit risk posed by a potential debtor. RiskScore is the most predictive company credit score and rating system available in Australia. It uses our vast, exclusive database to generate a detailed credit report, factoring in a company’s credit history and any high-risk indicators, and a precisely calculated credit score.

ApplyEasy is our online platform that simplifies the credit application process into a single online form. Businesses can streamline and customise their credit approval process, automating credit checks and trade reference changes, to increase efficiency and security. ApplyEasy verifies entity information immediately, ensuring you know exactly who you’re onboarding as a new customer.

CreditorWatch also offers ongoing credit monitoring and alerts for all the businesses in your portfolio. We will notify you in real-time of any adverse behaviour that could affect your debtor’s ability to meet their financial obligations. Meanwhile, our interactive trade payment program, DebtorLogic, analyses your Aged Trial Balance (ATB) to measure changes in payment behaviour over time and across markets, alerting you to adverse behaviour so you can take a proactive approach to debtor management.

Finally, our offering includes features designed specifically to help businesses identify and prevent financial crimes. Our Know Your Customer (KYC) and Anti-Money Laundering (AML) features give anyone the power to conduct advanced screening of their trading partners. Our AML reports include politically exposed person (PEP) and sanction checks to identify involvement in bribery or corruption. They also include adverse media checks to reveal any negative news or coverage associated with the entity, and verification of identity (VOI) checks and document verification services (DVS) to avoid fraud. These procedures help to protect your business from illegal activity such as corruption, money laundering, tax evasion, theft and other financial crimes. 

CreditorWatch works with some of Australia’s top financial businesses. To better understand how we can help you safeguard your business against fraud and financial crime, get in touch with us for a free demo today.

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Michael Pollack
Head of Content & Communications
Michael joined CreditorWatch as Head of Content and Communications in July 2021. He has more than 20 years’ experience in business journalism, marketing and communications strategy and digital content development. He is passionate about communicating to the business community how CreditorWatch’s product suite can help them grow and protect their companies.
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