The Role of Technology in Revolutionizing Business Finance
Artificial Intelligence (AI) is not the only technology transforming the landscape of business finance. Electronic payments have witnessed a surge in both volume and sophistication, enabling businesses to process a higher number of transactions efficiently. This advancement in technology has accelerated money movement, allowing smaller teams to allocate resources to areas that demand greater attention. However, with the increased automation and digitization of payment systems such as ACH, wire transfers, and real-time networks, the risk of cyber threats, fraud, and operational errors has also heightened. It is crucial for businesses to not only implement fraud mitigation policies but also ensure that employees and stakeholders are well-informed and compliant with these policies.
The Challenge of Faster Payments Leading to Increased Fraud
As businesses embrace process automation, it becomes easier for fraudsters to exploit vulnerabilities in internal controls and processes that may not have been updated simultaneously. Real-time payment systems allow for immediate transaction approval, potentially transferring funds before standard verification protocols like dual controls or secondary reviews can be applied. This immediacy increases the risk of unauthorized or fraudulent activities, posing a significant challenge for businesses.
The rapid processing capabilities of modern payment technologies are undoubtedly advantageous in handling a high volume of transactions. However, the downside is that higher transaction volume also amplifies the potential for fraudulent activities. With the aid of AI, fraudsters can target a vast number of businesses at an alarming rate, particularly as businesses increasingly rely on digital payments and real-time processing for financial operations.
While fraudsters are leveraging technology to their advantage, businesses can take proactive measures to safeguard their finances and operations.
Utilizing Technology to Safeguard Finances
Education plays a pivotal role in any robust fraud mitigation strategy. At Synovus, we emphasize three key questions to help our clients identify vulnerabilities and mitigate fraud risks:
- What are the latest regulations and policies?
- What are the potential risks associated with different payment rails?
- What are the right channels to meet business needs?
Adhering to regulations and policies designed to protect end users is essential for businesses integrating new technologies into their operations. Understanding the implications of technology within the Federal Reserve Bank Fedwire Funds ISO 20022 messaging format is crucial, as it impacts fraud risks related to payment communications. Compliance with these changes necessitates upgrading payment interfaces, adopting compatible platforms, and training employees to ensure adherence to requirements.
Identifying operational vulnerabilities across payment channels is vital to address gaps and mitigate risks effectively. Real-time risk monitoring and enhanced cybersecurity measures can help businesses proactively combat fraud and ensure secure money movement.
Evaluating the operational exposure of each payment channel against the risk appetite can assist businesses in selecting the most suitable options that align with their needs while minimizing fraud risks.
While technology has accelerated money movement and streamlined processes, it has also empowered fraudsters to devise sophisticated schemes. Collaborating with a reputable bank and engaging in discussions about fraud mitigation and employee education can enable businesses to leverage cutting-edge technology effectively while mitigating unnecessary risks.
Chad Parramore is Head of Product Commercialization at Synovus Bank.
