For many companies, the pandemic further heightened the importance of effective cash management as businesses worldwide experienced interruption on a global scale. Being able to pay and get paid while workforces, customers and suppliers moved to unconventional working environments was key to business survival. In many cases, the rapid digitisation of business processes, for accounts payments and receivables, was solved for the contactless financial transactions that suppliers and customers demanded during this period of uncertainty.

But because of that necessary shift to a digitally transformed business process, companies also faced a rising concern about financial fraud as prevention controls initially designed for an in-office workforce weren’t adequate for employees acclimating to remote workspaces. Add in the accompanying personal hardships employees faced due to the pandemic and better understand the many new vulnerabilities fraud prevention teams must anticipate.

To measure the real impact this and other market influences has had on companies, Bottomline surveyed 800 financial decision-makers across Great Britain to gather intelligence for the 2021 Business Payments Barometer report. In its 6th consecutive year, these most recent results tell a tale polarised around global disruption and resilience. The chapter that focuses on protecting business payments reveals a criminal force poised to exploit newly exposed vulnerabilities and how businesses are fighting back.

Perhaps not surprisingly, the results show that of the three fraud types, businesses top concerns centre on employees:

  • Insider Fraud & Collusion – when an employee abuses their position of trust for personal or malicious purposes, often to misappropriate funds or sensitive information
  • Authorised Push Payment – when an employee actions a payment instruction from a perceived ‘credible source’ to transfer funds from a validated account into one controlled by a fraudster

These concerns are underscored further, with respondents reporting a 20% year over year increase in overall fraud, with insider fraud incidents increasing 48% for businesses of all sizes.

A recent report from Ipsos MORI explains why this isn’t going away any time soon. It cautions that many of the employee location changes that stemmed from COVID-19 protocols are here to stay, in some capacity, and urges businesses to adapt their fraud prevention measures or risk a continued rise in this type of fraud.

Another critical insight from the 2021 Payments Barometer derives from a 3-year comparison of historical data that indicates a potential pattern of ‘fraud complacency’. These results show a teeter-totter of fraud losses that go up, dip down, and go up again. Possibly due to companies spending more on prevention in the immediate aftermath of fraud losses, reallocating those funds when losses decline, and then only responding again when fraud upticks once again.

While this is understandable, this approach will continue to fall short from a practical standpoint as financial criminals are most definitely NOT complacent when it comes to finding new ways to circumvent even the latest fraud controls. 

Thwarting fraud complacency before it starts becomes even more urgent when you consider that the recovery of fraud losses hovers at only 20%, making strong and updated prevention strategies – like enterprise case management – key to holding on to those funds in the first place. The answer? An ongoing review and update of fraud measures centred around technology, processes and people. 

For more insights into Bottomline’s 2021 Payments Barometer, including expanded results on the importance of fraud prevention, the latest tactics and how recent payment regulation initiatives can help protect businesses, download the full report here.

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Posted by James Richardson

James Richardson has 15+ years’ experience in payments, working with FIs and Corporates to secure critical payments and reduce fraud risk. James is Head of Market Development, Risk & Fraud, for Bottomline Technologies.