But despite advances in sophisticated monitoring technologies, your own employees may be your most important weapon against fraud. Why? Because fraud exploits human nature as much as it does technology.

Consider this real life example: A company received an email from a client requesting payment for an invoice be sent to a new bank account. After a quick call to the number provided verifying the payment instructions were authorized, the accounting department paid the invoice for $54,625.34. Two weeks later the client called asking where the funds were. The initial request for payment, payment instructions and call-back number were all fraudulent. The company had fallen victim to invoice fraud, leaving it responsible for the loss.

Such instances of human error suggest increased vigilance is key to identifying and reacting to red flags before conducting transactions. The bottom line: Often fraud can be identified through common sense. “A helpful rule of thumb is, if it doesn’t feel right, don’t do it,” suggests Ken Simmons, Atlantic Capital Bank’s BSA Officer.

Here are three common sense moves that show intuition is just as important as information technology when protecting yourself from fraud.

TIP 1 – RECOGNIZE YOUR RISK

If you think you’re safe enough from fraud, think again. Reports of fraud and identity theft have increased a whopping 800% since 2001 when the U.S. Federal Trade Commission started tracking them through its Consumer Sentinel Network.

According to the FTC, individual consumers lost at least $3.3 billion to fraud in 2020, but the damage to businesses is even graver: Nearly half of companies experienced at least one fraud in the past 24 months, costing businesses an eye-popping $42 billion. “That’s cash taken straight off companies’ bottom line,” concludes PwC’s Global Economic Crime and Fraud Survey 2020.

Just as important as understanding your risk, is being aware of the types of fraud that are on the rise, as well as those that are most likely to put your business in criminals’ crosshairs.

Businesses are most likely to be targeted by customer fraud, cybercrime and asset misappropriation, found PwC. But that doesn’t mean you’re safe from other fast-growing scams, such as identity theft, which accounted for more than 20% of complaints to the FTC in 2019. And with more businesses operating online, cyber fraud is a growing threat you ignore at your own peril.

What is often the most overlooked risk for businesses though? The threat from your own employees, contractors and vendors. According to PwC, as much as 60% of fraud targeting businesses is the result of internal perpetrators, or collusion between internal and external actors.

What these numbers make crystal clear is, if you haven’t been on the receiving end of fraud, you likely will be. Fraud is unforgiving. And financial losses and damage to your reputation may not be recoverable.

TIP 2 – KNOW YOUR CUSTOMERS

Do you really know your customers? The fact is, you might not even know who your customers are. With customer fraud at the top of the list of scams targeting businesses, it’s clear that many companies are falling far short on due diligence.

It’s important to remember that all customers are good customers until they’re not. Human nature and outdated adages like “The customer is always right” fool us into believing that trusted customers can’t change. In reality, they sometimes do. And bad customers are bad for business.

“Know your customer — and your customer’s customer — before your financial institution wants to know more about your customers,” warns Simmons. Effective customer due diligence begins when building a relationship, but continues over the life of the relationship, especially when customer activities and behavior change.

Learn how to identify fraud red flags by asking the right questions: Does your customer do what they say they do? Do they have a website and does it match what the customer described for their business? Does the contact information match the data you have in your systems? Do they have a brick and mortar storefront or are they working out of their home? Does a home-based-business make sense for the customer’s business profile? And perhaps most importantly, do they answer their phone when you call?

TIP 3 – MONITOR YOUR CUSTOMERS’ TRANSACTIONS

Do you have processes in place to identify substantive changes in your customers’ behavior or the nature of their business that might be signs of fraud?

“Monitor your customers like your financial institution would be expected to monitor their customers,” Simmons recommends. And that means keeping a watchful eye on more than just ACH returns and chargebacks.

Is your customer’s activity reasonable based on the nature of their business? Do the size and frequency of their transactions reflect their product offerings and customer base? For example, if your customer sells automobiles, does the average transaction amount reflect the expected price of a car? If they operate domestically, do you see large numbers of international transactions? If the nature of their transactional activity changes, is this consistent with a change in business strategy, product offerings or geographic market?

Most importantly, if something seems off, follow through and ask questions. Conduct adequate due diligence to understand what has changed.

WE’RE ALL IN THIS TOGETHER

The threat of fraud is growing and mutating into ever more cunning ways to part you with your hard earned cash. Yet many businesses are still not prepared to respond. According to PwC, only 56% of companies investigated even their worst case of fraud and only a third reported the incident to their board.

The never ending battle against fraud is a joint responsibility. Instead of pointing fingers, we all need to do our part — customers, businesses and banks. “Fraud red flags are often found in the details,” says Simmons. “If it sounds too good to be true, it most likely is not true, so listen to your own intuition.”

Understand your fraud risks, ask the right questions, implement effective controls and processes, train your people and empower employees to say something if they see something.   Identifying signs of fraud will go a long way toward protecting your bottom line.

Scan the headlines regularly and a bit more closely, and you’ll notice that the term “fintech” occupies quite a presence in many business news stories. From updates about the latest whispers of coming consumer finance technologies in Silicon Valley to heated debates about the merits of cryptocurrency and the lists of the top startups to watch, hardly a news cycle goes by without it getting some kind of mention.

But while fintech casts a long shadow over the many ways we conduct business both personally and professionally, many consumers remain unclear as to precisely what “fintech” even means. “Fintech” is a portmanteau of “financial technology;” easy enough to understand, but putting your finger on where exactly the boundaries of fintech lie is a bit murkier. What kinds of businesses fall under its umbrella, and what the landscape looks like today is another matter entirely.

And there are questions: Who are the major players? And what new services or technologies do they offer? How can fintech products help me better navigate the countless monetary transactions taking place in my life? Why should I stay informed about the latest developments? What am I risking by failing to stay ahead of the curve?

This article aims to help clear up some of the confusion and leave you better informed about how fintech can help make life and business a little bit simpler.

An easily understood definition.

Fintech is a catchall word. And like any catchall word, its usage is broad and with blurred lines that can result in misunderstandings.

At their core, fintech companies move money, and they do this to enable things like saving, investing, and lending. Generally, they are built to facilitate money transfers, making them quicker, more reliable, and more cost-effective.

In other words, fintech companies can look vastly different from one another. When talking about business-to-consumer (B2C) products, one might think about Venmo or PayPal. With business-to-business (B2B), you have corporate payroll and HR solutions like Gusto, global payments and remittance platforms, virtual credit cards, debt management apps, and crypto wallets. At the end of the day, all of these fall under fintech’s giant umbrella.

A common misconception is that fintech refers only to young, hip startups with hoodie-clad employees working from beanbag chairs. However, the reality is that the classification just as accurately applies to many 50- or 60-year-old companies that, over the years, have modernized their processes to fit the changing times.

The primary requirement for being a fintech company is using technology to improve the speed, accuracy, and efficiency of financial transactions and their activities.

Fintech touches all of us.

At this point, it’s more difficult to avoid interacting with a fintech company than not. Whether through business or everyday life, financial technologies have all but thoroughly permeated even our most basic money-related activities.

Building your savings, paying bills, using your credit card online, making charitable donations, repaying a loan, sending a friend some cash – by now, all of these interactions rely heavily on fintech products.

And for business owners, the situation is the same. If you’re paying rent or a mortgage, disbursing payroll to employees, compensating vendors, or managing assets, you’re likely using fintech applications.

How do banks fit into these developments?

A few years ago, popular opinion among critics was a doomsday scenario: “fintech means the death of banks.” The idea was that startups were disrupting the traditional models, driving down costs and making complicated processes so accessible and user-friendly that they would change banking as we know it today.

That theory has not proven true. Instead, the conversation around fintech companies replacing banks has shifted to a discussion around those companies partnering with them, and in a variety of ways.

Because banking is one of our country’s most heavily regulated industries, requiring extensive licensing, permits, oversight, etc., fintech companies have found that venturing past a certain point into banking territory means more cost than benefit.

And with many fintech companies realizing that partnering with banks is more efficient than directly competing with them, mutually beneficial relationships are evolving. Through partnerships, fintech companies get the support they need from established banks with years of expertise as a regulated institution. In return, banks gain access to new customers and product offerings.

For now, it looks like both are here to stay.

So … how can fintech help me?

The short answer is, any time you’re looking to improve how you manage your business or personal finances, there’s most likely “an app for that.” A quick web search will pull up popular apps such as Mint.com, Personal Capital, QuickBooks, and FreshBooks.

If you’re a business owner, fintech products can help you streamline your operations and create significant savings in time and cost. Companies are developing technology to make all kinds of transactions more accessible and cheaper – the important thing for you to do is figure out which products on the market will best meet your needs.

Some fintech companies specialize in making access to services (like commercial liability insurance, for instance) more straightforward and more affordable for small businesses. Others offer financial management solutions to help keep you organized, such as Concur. But one of the most significant benefits of utilizing fintech is its tendency to emphasize the user experience.

In both business and personal operations, user experience is a valuable commodity when it comes to applications. Consider Venmo, an app that has made transferring money between people so easy that it’s almost impossible to ignore.

Similarly, a significant focus and benefit of many fintech products is the resulting “financial inclusion”: allowing people of all demographics to easily understand and do things in their business operations and personal lives that they may not have previously had access to or considered. Fintech is in the process of making all kinds of complex tasks much more accessible. For small business owners without a financial background or professional guidance, this can be especially useful since many of them are left to run large portions of their finances on their own.

Conclusion – The importance of staying current.

Whether in the business world or in day-to-day life, most of us are looking for ways to accomplish things more easily. Fintech makes this possible.

In business, the risk of being ignorant of advancements in technology is that competitors may gain a valuable upper hand. It’s important to figure out the ways your processes might be lagging and to do some research into the products available on the market. Alternatively, you can talk to your banker about possible applications to help streamline your operations.

But however you choose to remain up-to-date on recent developments, be sure you’re making the most of the incredible opportunities financial technology can provide. You won’t regret the improvements it will make to your bottom line.