Organizations race to adopt new anti-fraud technologies after slow start, ACFE/SAS technology report shows

Technological advances, such as artificial intelligence, machine learning and biometrics, have expanded the universe of tools available to fraud fighters. Yet while organizations have been slow to adopt these emerging technologies amid the COVID pandemic, many are quickly preparing to upgrade their anti-fraud systems.

That was one of several interesting insights from the 2022 Anti-Fraud Technology Benchmarking Report, which the ACFE recently developed in collaboration with SAS to determine the types of technologies anti-fraud professionals commonly use and wish to use in the future. (See the 2022 ACFE and SAS Anti-Fraud Technology Benchmarking Report.)

According to the survey the ACFE and SAS used to develop the report, 34% of respondents are using physical biometrics such as fingerprint, vocal or facial recognition tools with just 17% saying their organizations plan to adopt them. Only about 20% of respondents said their organizations were using computer vision analysis — the use of computer or artificial intelligence–based analysis of video or photographic data — and another 18% said they plan to adopt it in the next two years.

Against that backdrop, SAS Senior Vice President Stu Bradley recommends that anti-fraud professionals consider the organization’s ability and readiness to adopt new technologies.

“The purpose of the benchmarking study is for organizations to pulse check and really understand their maturity, both from an analytics perspective and a wider technology standpoint,” Bradley says.

“Understanding where they are relative to their peers can help them strategize and ultimately determine how to advance up that maturity curve."

Growing interest in biometrics and other technologies

Bradley and ACFE Research Director Andi McNeal, CFE, say they’d expected to see a greater percentage of respondents adopting biometrics but pointed out that the pandemic might have stymied those plans.

“The physical component is obviously somewhat affected by remote operations for many organizations,” says McNeal. “But anecdotally, we’re hearing a lot of interest in the use of behavioral biometrics as part of authentication and monitoring efforts, especially with the observed increases in cyberattacks and identity fraud, where the use of behavioral biometrics can help with authentication concerns and discerning human from nonhuman interactions.”

Indeed, as cyberfraudsters become more sophisticated in their attacks, organizations are expected to ramp up the use of biometrics and other advanced technologies to better defend themselves.

And the survey underscores such assumptions. Sixty percent of organizations expect an increase in their anti-fraud technology budget over the next two years, while more than 40% expect to add computer vision analysis, robotics or blockchain/distributed ledger technology to their anti-fraud technology toolkits in the future.

“I think both government agencies and financial institutions will be looking at [those capabilities] in catching up to plug the holes that have naturally occurred within those applications,” says Bradley.

“And one of the ways they’ll do that will be in behavioral biometrics. So, if I were to make a prediction, the next time we do this benchmarking study, we’ll see a much greater acceleration in that space.”

A tried-and-true approach

The results of the survey show most organizations are currently sticking with traditional data analytics technologies for their daily fraud detection. More than half of the organizations in the survey currently use exception reporting and anomaly detection (55%) and automated monitoring of red flags and business rules (54%) as part of their fraud detection repertoires. Another 13% and 17% said they expect to adopt, respectively, exception reporting, and anomaly detection and automated monitoring in the next two years. In total, more than two-thirds of organizations will use these analytic techniques by 2023.

Most respondents (80%) also reported relying on the traditional analytics of internal structured data in contrast to the one-third of respondents who reported currently using internal unstructured data. Organizations have long used structured data, such as phone numbers and zip codes, that are easily searchable. However, unstructured data like audio and social media postings are less easily searchable for information, and are only just coming into their own in the data analytics field. (See “Structured vs. Unstructured Data,” by Christine Taylor, Datamation, May 21, 2021.)

Putting the benchmarking report to work

A goal of the benchmarking survey is to provide anti-fraud professionals a tool for assessing current technologies and how those technologies might work best for their organizations. To determine that, it helps to know why other organizations have chosen certain technologies and how successful they are with them. A clear example of this is how nearly all survey respondents said that data analytics allows them to review more transactions, identify more frauds, and detect frauds more quickly and efficiently with greater accuracy.

“It’s important to take a ‘right-sized’ approach to technology for your fraud program,” says McNeal. “Don’t go chasing the latest tool or tech trend just because you hear about other companies using it. Make sure you’re considering your organization’s fraud-risk profile, budget and appetite for automation, as well as the strategic priorities of company leaders.”

[See "SAS Visual Analytics report"]

Nominations open for 2023-2024 Board of Regents

Nominations will open on June 1 for two positions on the ACFE’s 2023-2024 Board of Regents.

“I am truly grateful for the opportunity to serve as a Regent and give back to this indispensable community of anti-fraud professionals,” says Hannibal “Mike” Ware, CFE, chair of the Board of Regents.

“All of us as CFEs can maintain and grow the culture of excellence and high ethical standards that is the ACFE by contributing in various leadership or volunteer roles. Be it through your local chapter, a formal or informal mentorship, or even applying to be on the ballot to serve as a Regent, each of you can have a lasting impact in this community.”

The Nominations Committee will select six applicants to vie for two available positions in this year’s election. Beginning Nov. 1 and ending Nov. 30, certified members of the ACFE will vote for their selections for the two new board members. The new Regents, who’ll be installed in February 2023, will each serve two-year terms.

“I urge each CFE to consider opportunities that can contribute to this community and help continue our long tradition of maintaining rigorous member standards and professionalism,” says Ware.

Key dates in the Regent election process

• June 1: Nominations open
• July 31: Nominations close
• Sept.: Nominations Committee selects final candidates
• Nov. 1: Voting opens
• Nov. 30: Voting closes
• Feb. 2023: New Board of Regents sworn in

To participate in the nominations process, complete the online application at ACFE.com/BoR.

SAS Visual Analytics report

Further explore the Anti-Fraud Technology Benchmarking Report's survey results with SAS's interactive Visual Analytics report. The complimentary report allows users to investigate the data based on various demographic categories, including industry and geographic regions. View the Visual Analytics report at SAS.com/fraudsurvey.