In 2022, banks must counter the continued growth of fraud, which saw increased frequency in the wake of the COVID-19 pandemic, while also acknowledging competitor fintechs as equal players in the financial services space.

That will be key to combating the growing fraud wave, Naftali Harris, co-founder and CEO of identity verification fintech SentiLink, told Bank Automation News.

“Fraudsters will be more aggressive and more creative off their hugely successful 2021,” Harris said. “This is perhaps the greatest year ever for a fraudster.”

Harris also identified fintech predictions for 2022, noting that top fintechs are due for widespread recognition.

“I think 2022 will be the year when fintechs really start to get mentioned in the same breath as the largest banks in the United States,” Harris told BAN.

Harris, who leads operational strategy for the $84 million fintech, and other fintech leaders shared their fraud and fintech predictions for 2022 with BAN.

Automating banking security

Harris had a first-hand view of the fraud that ran rampant in 2020 and 2021 as head of SentiLink, which provides identify verification and security risk mitigation to financial institutions. Most fraud was directed at government programs like the Paycheck Protection Program (PPP), with financial institutions serving as platforms for laundering and stashing fraudulent gains.

“Every bank, credit union, and fintech we serve saw huge influxes of identity theft attempts,” Harris said. “The fraudsters weren’t trying to steal money; they were just trying to launder it.”

To counter fraud, SentiLink uses a real-time API-enabled framework which gathers personal information about potential customers from the client. The information is analyzed, then processed through a library of fraud vectors for accuracy.

“We check each element of that application against a known list of fraudsters that we’ve identified and ultimately run it through machine learning models,” Harris said. “This all takes 300 milliseconds, and we do over a million identity verifications every day.”

While verification and detection are helpful, institutions will still need to drive efforts to their internal and external security, especially after government programs wrap up and new targets are determined for 2022, he said.

“I do expect that as some of these benefits programs dry up, the fraudsters will move away from them to other things,” Harris told BAN. “But I think having just come off stealing all this money, they will be more aggressive than they’ve ever been and more creative than they’ve ever been.”

Jed Rice, CEO of payments fintech Aliaswire, adds that “conversational” payment solutions like Alexa and Google Assistant will grow in use, as consumers use smart devices and home assistants to make purchases. Though there are fraud concerns, developments in 2022 will increase security.

“One of the biggest obstacles to date has been the potential for fraud by voice bots. The use of voiceprints as biometric signatures now provides an added security layer to overcome these concerns,” Rice told BAN.

Real-time boom creates security bottleneck

As real-time financial solutions grow in size and scope, security will become a top concern in 2022.

Digital transactions like ACH payments and direct deposits traditionally take a few days to clear, allowing up-front security to be lax and potential issues to be fixed with ease. ACH payments alone saw 33 billion transactions in 2021, Rice told BAN.

However, real-time solutions may not be so kind, and banks may be slow to adapt as a result, Harris noted.

“Because the stakes are raised a lot, you’ll find many organizations being more conservative, just so they don’t immediately lose a ton of money from this,” Harris said. “The time delay for certain payments is actually a security feature.”

Harris does expect a real-time switch to occur eventually, as consumer expectations increase, market size grows, and fraudsters find chinks in the armor of traditional security measures.

Fintechs to rival major banks

With automation and adaptability becoming consumer priorities, fintechs could soon rival the big banks in their importance and influence.

“I think 2022 will be a year where, in multiple categories, whether that’s traditional banking, or credit cards, or auto lending, or purchase finance, fintechs will really start to be considered as equals with the more traditional banks that are out there,” Harris told BAN.

Harris also looks to fintechs to provide “unprecedented customization” for their customer-facing platforms, with many companies already delving into deep use case specialization. Innovations range from custom banking experiences for immigrants and students to independent contractors in a trend Harris calls “very special.”

Drew Howell, vice president of customer solutions for brokerage fintech Bumped, offered similar thoughts, predicting “Embedded finance, rapid money movement, digital experience creation, non-traditional finance entrants, new payment cards for everyone — these are a small glimpse into what can be expected next in finance and innovation throughout 2022.”

Bank Automation Summit, taking place March 1-2 in Charlotte, N.C., is the first and only event to focus solely on automation in banking. The event will feature the brightest minds from across financial services on intelligent automation strategies and deployment. Learn more and register for Bank Automation Summit 2022.