How to deal with loan application processing fraud?

Credit fraud attempts are becoming more sophisticated and undetectable to humans. Bleckwen uses AI and machine learning to detect them faster.

Fraud and loan application processing: an endemic phenomenon

Many organizations have to rely on a file processing system every day to carry out their activities:

  • That Loans to individuals and companies are attracting growing enthusiasm, driven in particular by low interest rates. According to the Banque de France, the outstandings managed by the major bancassurance groups are currently growing at a rate of 5.5% per year (source: Bleckwen white paper).
  • That Auto Financing Services experience the same activity progression.

This exposes these various actors directly fraud risksand certain cheating techniques such as:

  • A identity theft allows a scammer to impersonate someone else, most often after stealing their personal information via a phishing attempt.
  • That false statements represent a fairly common type of fraud, especially in the field of recognition or tax and social fraud. The registrant will intentionally lie and provide false documents to get their money.

That detection of a scam is made more difficult by the emergence of new so-called “synthetic” or digital false identities that are being reinvented from scratch, mixing the true and the false. Fraudsters also have a well-known ability to innovate and bypass pre-existing technology. Given these different threats, the fight against fraud has become a priority.

Traditional and emerging fraud threats: some key numbers

  • Loan fraud is currently growing at 25% per year according to ASF, which is a significant increase.
  • Potential fraud is 10x more likely with a file processed 100% online.
  • According to the WPI, financial fraud of all kinds could cause total damage of 45 billion euros worldwide in 2023 (source: Bleckwen White Paper).

Which fraud prevention solutions?

With many financing or leasing specialists, the methods of fraud prevention remain traditional: it involves, in particular, requesting and verifying a large number of supporting documents that make it possible, for example, to establish the identity or the actual income of the applicant.

Funding agencies also rely on internal control mechanisms for administration “white” or “black” lists to keep an eye on scammers. You can also rely on some regulated files. In particular, let us mention:

  • The Personal Loan Discharge Incident File (FICP);
  • The Central Audit File (FCC);
  • The National Irregular Checks File (FNCI).

These different files are consulted automatically and list only individual cases that have already caused incidents. You will also be powerless in the face of a carefully executed identity theft.

In practice, therefore, human resources to combat fraud remain inherently limited given the scale of the phenomenon. The detection involves cross-referencing dozens or hundreds of variables for each file to highlight inconsistent elements: a difficult task that even controllers specialized in this type of transaction can manage.

An external and automated control application, on the other hand, offers the possibility generate alerts Real time and thus better combat the new phenomenon of financial crime.

Bleckwen: a real-time intelligent fraud detection and prevention solution

Bleckwen is a start-up founded in 2019 proprietary anti-fraud technology in partnership with BNP Paribas. Its solution in SaaS mode, based on advances in artificial intelligence and machine learning, shows remarkable performance in detecting, detecting and preventing fraud. Compared to standard software, a reduction in the number of “false positives” by two and an increase in thwarted fraud attempts could be observed.

A first application of the tool from 2020 enabled Carrefour Banque to a Reliable scoring model for granting consumer loans. Since 2021, the company has evolved its offer to address other players regularly affected by external or internal fraud, such as RCI of Renault Nissan Alliance, one of the largest players in European automotive finance in the auto finance sub-sector. A major Spanish auto financier acquired ML from Credit Fraud Services to fight credit fraud. Results: Twice as many alerts were generated and the detection rate increased from 89% to 96%.

Bleckwen has the special feature custom design of an AI model for each customer company. These models are parameterized to provide an explicit interpretation of each score obtained in full transparency.

For banks, this integration of AI into their processes is a double opportunity.
Opportunity to be more efficient and opportunity to launch other digital transformation projects by leveraging the anti-fraud data and tools already in place.

The digitization of stock exchanges and many transactions poses new challenges in the fight against fraud and the processing of loan applications. A real-time data analysis tool like Bleckwen could offer a permanent solution to many private actors trying to limit fraud on a daily basis by localizing their activities and resources in larger projects.

The three most important points to remember:

  • Loan application, car leasing… Fake documents or false declarations are ten times more common online;
  • Many companies need to improve the nature and quality of their existing anti-fraud tools to ensure more effective internal control;
  • Bleckwen has developed an artificial intelligence dedicated to the fast and efficient detection of file processing fraud.

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