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Keeping Up With Fraud: How Neobanks Can Identify and Prevent them

Keeping Up With Fraud: How Neobanks Can Identify and Prevent them

Fintech
Sayoni Sinha
Sayoni Sinha

December 27, 2021

The Covid-19 pandemic has changed the way financial transactions are conducted around the world, bringing neobanks to the forefront of this digital revolution. With no physical branch network or legacy infrastructure to rely on, these digital-first banks are focused on uplifting customer experience to make it seamless, faster and secure. 

However, the predominant use of online banking has made neobanks lucrative targets for fraudsters looking to take over accounts and siphon off funds. There are several fraud and risk challenges that plague neobanks.

Types of fraud in neobanks

Account opening fraud

Fraudsters try to open new accounts by mimicking legitimate customers or using stolen or synthetic identities to obtain a line of credit. 

Identity theft

Scammers commit identity thefts using sophisticated social engineering methods such as phishing and vishing to access users’ accounts.

Fraud rings

Fraud rings are coordinated attacks on neobanks. Scammers abuse the system, buy goods and claim benefits apart from maximizing available credit with stolen cards and identities. 

Transaction risks

Bad actors cause financial losses by claiming illegitimate chargeback. 

Bureau’s solutions to counter frauds

Unlike traditional banks, neobanks run the risk of increasing customer churn, by applying more checks and frictions. Hence, they need a solution that verifies identities in the background and pulls up data in real time. 

Bureau's risk intelligence solution addresses these pain points and helps onboard customers without any friction. With the help of features such as silent authentication (which allows neobanks to silently authenticate users via carrier networks without any multi-factor authentication), device intelligence (creates a unique device fingerprint and detects suspicious elements such as emulators, spoofing, and rooted phones) and persona intelligence (harnesses data associated with a device, user inputs, MNOs, and third parties and provides real-time actionable intelligence), Bureau Onboard draws up comprehensive risk-gauged profiles for each user and matches them with the details provided by the applicant. 

If the fraudsters try to open accounts with legitimate user details such as name, phone number and email address, Bureau's device intelligence solution can still pick up suspicious signals that may indicate identity theft or account takeover in progress. It also checks for other suspicious markers such as prevalence of multiple account opening attempts arising from the same set of devices, potentially indicating a fraud ring.

Such high-risk profiles are then flagged for further checks while those with matched-up profiles have a smooth onboarding process. And it’s a win-win for both parties. While customers have a swift onboarding, neobanks have verified customer identities.

Should neobanks use a fraud-risk solution?


Fraud is one of the biggest hurdles in a neobank's growth. With a fraud prevention solution such as Bureau's, you can:

Converts more good users

Good, creditworthy users should not be plagued by stringent account opening and operating processes. Bureau Onboard runs in the background and accelerates conversions of good users.

Uplifts customer experience

Customer experience is a crucial differentiator for neobanks. We help you chart out frictionless itineraries that improve customer experience and stickiness, resulting in more customer loyalty.

Grows your revenue

Maximise your revenue by approving more transactions, reducing false declines, and blocking suspicious transactions.


Prevent fraud and grow your business

While neobanks are changing how banking works, they come with their own challenges. With prevailing fraud and scammers becoming more sophisticated, neobanks need to ramp up their fraud-risk intelligence. Rather than spending product and engineering bandwidth on building a risk engine, neobanks can utilise Bureau's plug and play solution to convert fraud prevention into a growth engine.

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