At its core, lending is a business of making good decisions. One chink in the underwriting armour and a lender might find themselves struggling to collect the loans they disbursed. This is the core thesis behind FinBox’s risk intelligence and underwriting products, which harness the power of technology and intelligent analytics to detect problematic borrowers and fishy documents before entering the system. 

However, frauds continue to rise. More than 85% of all frauds reported by public sector banks were on the loans and advances side. This means that banks repeatedly become victims of forged identities, documents, and applications - thereby losing large sums of money over time.

Even though RBI has set some strict guidelines to crack the whip on online fraud, almost 70% of fraud occurs due to inadequate re-KYC measures during the onboarding process. This is a recurrent problem in the industry as seemingly bonafide customers turn out to be ghost operators after years of relationship with a lender. At the same time, there’s also the issue of net-new customers showing up with fake documents and availing loans, whereas lenders remain in the dark about the validity of those submissions. 

Compounding the issue, there is a significant gap between the date and time of the fraud and its discovery .

As a result, digital lenders are facing the following problems:

1. Increased expenditure on losses incurred through fraud 

2. Increased spending on fraud control units and interventions 

3. Reduced efficiency due to increased manual intervention by staffers

4. Broken customer experience - due to clunky fraud prevention systems 

5. Limited confidence in business expansion due to unreliable fraud systems

Due to the increased volume of loan applications and the sophistication of fraud, financial institutions are investing in technology to help detect fraud before it happens. For instance, more than two dozen lenders use FinBox BankConnect as their preferred bank statement analyser to detect frauds in the onboarding stage itself. 

As a result, digital lenders like IIFL Finance have saved costs and produced unique customer experiences that are seamless while being effective

“We migrated all our traffic from a large legacy bank statement analysis company to FinBox BankConnect. Top reasons for migration were fraud detection, analytics quality, speed of the solution and better unit economics.”

Rahul Sanklecha, (Head - Credit, Risk & Policy), IIFL Finance

FinBox BankConnect is among the leading bank statement analysers in the industry. With more than two dozen lenders as customers and crores of processed transactions, the platform is the gold standard of onboarding and underwriting systems geared for a digital-first lending organization. 

Behind the scenes, FinBox’s rule-based fraud detection system forms the backbone of its risk management strategy, enabling financial institutions to approve, review, or automatically reject activities based on pre-set criteria. This system is built on four key methodologies:

• Static Rules: Straight forward rules based on if/then logic that block fraudulent actions instantly.

• Risk Scoring Rules: Assigns a risk score based on user behaviors and actions, allowing lenders to assess the level of risk dynamically.

• Velocity Rules: Identifies abnormal activities such as multiple login attempts, and flags suspicious behavior in real-time.

• Machine Learning Rules: FinBox’s AI-driven models analyze vast datasets to detect outliers and segment customers, helping to flag potential fraud efficiently.

These rules are mostly based on statistics, co-relations and logical comparisons.

FinBox’s Bank Connect Bank Statement Analyser is at the forefront of fraud detection, identifying over 15 distinct fraud patterns across four main categories:

• Document Fingerprinting: Detects tampering in bank statements, and documents. Catches discrepancies during the onboarding journey.

Long onboarding journeys, which amount to 68% customer drop offs and 70% fraud happening during the same time were two main reasons Capital Now sought to simplify the onboarding process without compromising security. By integrating FinBox’s BankConnect, they efficiently processed thousands of bank statements simultaneously, instantly performing real-time fraud checks that flagged issues. This allowed Capital Now to streamline customer onboarding, enhancing both security and user experience.

“We want to make our user journey swift and for this to happen we need to be backed by reliable tech integration and partners.” 

- Dhaval Shah, Product Manager, Capital Now

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• Accounting Fraud Detection: Matches credit and debit balances to highlight inconsistencies.

• Behavioral Fraud Detection: Analyzes user behavior to spot suspicious activities at a granular level.

• Transactional Fraud Analysis: Identifies unusual transactions that could indicate fraudulent behavior.

Dhan, a leading stock trading platform, successfully onboarded over 5,00,000 users using BankConnect. By classifying income sources and identifying suspicious activities, Dhan reduced fraud incidents by 2x while simplifying the onboarding journey for their traders and staying within compliance. 

Anirudha Basak, Product Manager at Dhan, noted, “FinBox has enabled us to stay compliant while providing a user-friendly experience for our traders.”

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“Focusing on robust fraud prevention technology not only safeguards assets but also fortifies lender confidence, helping meet both regulatory and customer expectations” - Rajat Deshpande, CEO and co-founder, FinBox

As the digital financial landscape evolves, fraud prevention remains a top priority for lenders. In a study conducted by Finbox , we found out 7% is the average default rate. Wherein, backstating our fraud detection model revealed 24% of the 2.2% population identified with fraud are eventual defaulters. By integrating advanced AI and machine learning models, FinBox equips lenders with the tools they need to protect their assets, enhance customer experiences, and maintain compliance. To know more about Finbox’s Bank Connect Bank Statement Analyser with pre-integrated Account Aggregator - book a demo today.