It is difficult to find a more significant trend than the growing utilization of data. Behavioral data, in particular, has become prominent in many areas, with cybersecurity at the forefront.
The global behavioral analytics market reached $905.6 million in 2023 and is anticipated to grow at a 27.5% CAGR by 2034. But why have companies across industries suddenly become so interested in behavioral data?
The potential of behavioral data
Behavioral data refers to information collected about the actions and interactions of users or customers with a product, service, website, app, or any other digital platform, capturing how users engage with these platforms. When utilized by financial institutions, the data can reveal user behavior patterns—including login frequencies, transaction habits, navigation preferences, and keystroke dynamics. This insight not only enhances customer experience but also helps safeguard customers from modern-day fraud.
Approaches to using behavioral data can vary. A fundamental difference—especially in the area of online fraud prevention—is found between behavioral analytics and behavioral intelligence. So, how do these concepts differ and why is this distinction crucial when it comes to anti-fraud solutions?
Behavioral analytics: Assessing the past
Behavioral analytics involves the collection and analysis of historical data on user behavior. This data is used to identify patterns, trends, and insights about how users interact with a product, service, or platform over time. This is useful when you want to reduce customer friction, improve your product or service, or enhance your marketing strategies. In this regard, behavioral analytics has proven extremely useful.
However, as valuable as behavioral analytics is, it only examines the past. While this might not be a problem in most areas, when it comes to fraud prevention and cybersecurity, looking at the historical data alone is not enough.
The challenges of modern-day fraud
In a fast-paced digital environment, where payments happen in real time and fraudsters use increasingly sophisticated methods to deceive their victims, relying on historical data is insufficient, to say the least. Account takeovers, authorized-push payment (APP) fraud, and remote access tools and trojans are all attacks that often pass unnoticed by traditional fraud-detection systems relying on legacy rules — even when these rules are based on behavioral analytics.
For example, during APP fraud, the top fraud globally, the legitimate user logs into their account from the verified device and location, with appropriate credentials to carry out the transaction. How can a fraud-detection system flag such a transaction? The answer is: with the help of behavioral intelligence.
Behavioral intelligence: Preventing future fraud
The increasing speed and sophistication of fraudsters—often backed by their misuse of AI—is why behavioral intelligence is becoming the gold standard of fraud prevention. Unlike behavioral analytics, which identifies patterns and trends over time, behavioral intelligence focuses on real-time analysis and interpretation of user behavior along with other data sources. It aims to understand and predict user actions as they happen, providing immediate insights that can be acted upon quickly.
ThreatMark’s Behavioral Intelligence Platform, for example, combines transaction risk analysis, threat detection, and user behavior profiling capabilities into one comprehensive solution that monitors a wide range of signals in real time and across all digital channels.
Due to this holistic approach to fraud detection, behavioral intelligence works in areas where other solutions fail. With APP fraud, for example, there are subtle but clear signals that APP fraud might be happening. An ongoing phone call during the online banking session, transitions of the banking application between foreground and background, opting for instant payment, an unusual transaction amount, or a new beneficiary; these are all signals of APP fraud in progress that the Behavioral Intelligence Platform identifies.
Embracing advanced technology is the key
As fraudsters continue to evolve their tactics, we must leverage the state-of-the-art technologies available to combat these threats effectively.
The fraud occurs in real time, and it only takes a few minutes or even seconds for stolen funds to disappear irretrievably through a chain of transactions to the money mules’ accounts. By embracing behavioral intelligence, businesses and financial institutions can stay ahead of sophisticated fraud schemes, ensuring robust protection for their customers and their money.
In an era where fraud is becoming increasingly complex, adopting cutting-edge technology is not just an option—it’s a necessity.