Why one-size-fits-all onboarding no longer works in finance, healthcare, and e-commerce
Screen customers, employees, and vendors thoroughly upfront prevents expensive due diligence work and losses down the road. However, not every industry can solve those problems the same way. Onboarding challenges and solutions are very different in the financial services, healthcare, and e-commerce fields.
Organizations should adopt next-generation tools that address onboarding issues with flexibility and scalability. After all, teams may need to realign technology solutions that work today for current threats in a particular industry to tackle tomorrow’s problems.
Customers and vendors prioritize efficiency and timeliness in the onboarding process, while organizations focus on minimizing risk. Organizations must balance the frictionless transaction standards that customers and vendors want with the level of due diligence needed to ensure comfort.
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| One fraud prevention tactic that financial institutions trust |
| E-commerce’s rapid expansion leads to quickly evolving fraud risks |
| Vendor screening uncovers healthcare fraud |
| Customization is critical |
One fraud prevention tactic that financial institutions trust
When it comes to the onboarding process in the financial services sector, they are particularly well-attuned to this balance, especially around identification verification and the quarantining of high-risk customers and transactions. Verification practices can meet mandatory compliance requirements while also serving as a basic, first-pass means of excluding the most obvious fraudulent attempts.
Compliance teams focus on flagging funds and identifying illicit actors involved with terrorism, organized crime, and money laundering. However, these procedures do not always provide robust internal risk assessment. They may lack insight into current fraud patterns and practices across the industry. They also may not include comprehensive searches across various forms of data beyond those related to compliance.
For example, a large Midwestern bank made a sizeable commercial loan to an individual who, on paper, seemed like a good risk — and then he disappeared. The bank hadn’t been lackadaisical: it used a third-party firm to verify the individual’s Social Security number and gathered the typical personally identifiable information data on payment histories, name, and address. After the customer disappeared, the bank hired an investigative firm that used CLEAR to pull up all the addresses associated with each piece of submitted data. While his original SSN checked out, there was another, associated with a name very similar to the borrower’s and with a spouse by the same name. Using this tandem identity approach, this individual had serially borrowed from banks to buy commercial property, collected rents, and then defaulted.
The type of fraud was designed to enrich the elusive borrower, not to establish a banking foothold in a terrorism or a money laundering scheme, and it was the use of a comprehensive identity database like CLEAR ID that provides compliance requirements while also raising red flags that was able to uncover the criminal’s scheme.
E-commerce’s rapid expansion leads to quickly evolving fraud risks
E-commerce has transformed the consumer retail landscape, and its sheer speed and intensity has created a very desirable platform for fraud. E-commerce retailers actually have to guard against fraud on two flanks: the customer side and the supply-chain vendor side. An ability to access digital tools that can handle both is optimal.
While we normally think about big schemes involving larger platforms, it is smaller and midsize retail enterprises that are more readily targeted by fraudsters. The same fraud techniques used in the rest of the digital economy — synthetic identities, account take-overs, and credentials fishing — have left e-retailers open to both financial losses and reputational risks.
In a recent survey by the Business Continuity Institute, 60% of e-commerce firms said they plan to do more due diligence in the coming years, and that increased diligence is wise. E-commerce retailers need to remain in compliance and protect themselves from losses, material threats, and reputational injury when choosing vendors and vetting customers. This process requires a wealth of data that would be difficult to source without a scalable digital intelligence tool like CLEAR.
Vendor screening uncovers healthcare fraud
In the growing field of healthcare, having access to a digital intelligence tool can streamline on-boarding of staff and vendors, and importantly, uncover risks that go beyond the financial.
Healthcare organizations are mission-driven to ensure the health and well-being of their patients. After Memorial Health Systems of Florida, a large public healthcare network, uncovered costly collusion and kickbacks between some employees and vendors, it was determined to strengthen its screening processes. A management consulting agency incorporated CLEAR tools that match vendor applications with data on bankruptcy, lawsuits, liens and judgments, and criminal records. Part of the value provided by such screening and matching tools is the examination of third-and-fourth degree relationships between businesses that can be flagged for closer scrutiny.
In its research on behalf of the Memorial Health, the consulting agency found businesses that created fake duplicate entities with separate applications, another vendor they’d been using for 23 years with an unmentioned fraud conviction, and one business applying as a vendor that had in its leadership someone with a child sexual abuse conviction. By adopting these new screening tools, Memorial Health was able to head off potential financial losses as well as potential safety threats to its vulnerable patients.
Customization is critical
Different industries face unique onboarding security needs, shaped by their experiences with sector-specific threats and opportunities. Yet, trust remains essential for every industry. When organizations implement efficient, effective, and customizable onboarding processes, they quickly gain benefits in compliance and risk reduction.
Meeting these needs presents a challenge. Customers and vendors expect frictionless onboarding, while retailers, banks, and healthcare companies must thoroughly vet a broad range of entities. The stakes are high, and the consequences can extend far beyond financial loss.
Discover how integrating Thomson Reuters data and capabilities into your onboarding platform can transform your process by boosting efficiency, strengthening security, and ensuring compliance. Take the next step toward seamless onboarding today.
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