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Perspectives
Protecting Your Lending Business From Fraud
While new technology has certainly paved the way for new scams, it has also given us new, robust tools for safeguarding against fraud and minimizing impact if it occurs. By finding a reliable data partner, lenders can safeguard against fraud in a few key ways.
a year ago

Economic downturns can spur significant increases in fraudulent activity and schemes. (Association of Certified Fraud Examiners) With growing unemployment often catalyzing rising debt as well as inflated costs, made all the higher from unreliable supply chains, the pressure mounts for individuals to source an income to meet their needs. For businesses, revenue becomes harder to generate and profit margins tighten (World Bank Group).

Increase in identity theft has risen 26% across Africa so far this year, according to a study conducted by Smile Identity. (techtrendske.co.ke) In fact, Smile Identity’s report states that platforms offering buy-now-pay-later (BNPL) are being more frequently targeted as well as those offering investment and savings, highlighting the need for financial institutions to review their fraud strategy and ensure their technology is up to date. 

In 2021, four banks in Nigeria lost a total of N1.77bn to fraudulent activities involving the banks’ employees and consumers. (Punch.com) According to the Nigeria Inter-Bank Settlement System (NIBSS), an increase in electronic transactions has led to an increase in susceptibility to fraud, warning that “the increase in transaction processing, speed and available channels comes with an unavoidable side effect – more vectors for fraudulent activities.” (NIBSS Insight)

The rise in fraud has potential to hinder Africa’s headway in digital financial inclusion, making the call for banks and fintechs to align on fraud prevention and strategy all the clearer. (devex.com

Lenders cannot foresee what their customers may endure, nor which bad actors may target their businesses, but focusing on mitigating risk is a step all lenders need to take even in the strongest of markets.

While new technology has certainly paved the way for new scams, it has also given us new, robust tools for safeguarding against fraud and minimizing impact if it occurs. By finding a reliable data partner, lenders can safeguard against fraud in a few key ways:

Identify SIM/Device Swapping

Fraud could be at play when a SIM card is used across multiple devices or a device is utilized by multiple SIM cards. While these behaviors don’t always point to fraud, being able to quickly identify these patterns is key for lenders to accurately execute on decisioning. 

Pngme enables lenders to quickly identify sim/device swapping in their data with one API call, available in Pngme’s Feature Library as well as through the Features API. This simple snippet of code identifies if there is more than one user associated with a device ID. If a user is linked with more than one device ID, this shows that someone is putting more than one sim card into a phone, and allows lenders to make an informed decision about how to proceed with that account. 

Learn more about the 20+ features in Pngme’s Feature Library: https://www.pngme.com/blog/meet-pngmes-feature-library

See Outstanding Loans Across All Accounts

Today, the standard customer utilizes multiple bank accounts, yet traditional technology and lending checks don’t fully account for this fact, often offering only a single account view on which lenders must execute decisioning. In fact, on average in Nigeria, individuals have four or more accounts, with the bulk of their data hidden or inaccessible in mobile money transactions. 

Other technology providers enable customers to connect a bank account directly to a lender, allowing the customer to be selective and share their most favorable account. A single account view may increase the risk taken on by the lender since they are unable to assess the customer based on their full financial profile.

Pngme’s Enhanced Credit Profile optimizes our ability to connect with multiple user accounts and mobile money channels and allows lenders to easily view a customer’s full loan history, including any open or defaulted loans. Through the Enhanced Credit Profile, lenders can see a summary view of a customer’s lending behavior and dive deep into the status and balance of every outstanding loan.  

Learn more about Pngme’s Enhanced Credit Profile

Track Loan Stacking Behavior

Loan stacking has traditionally been tricky to spot, much less prevent for lenders. Loan stacking is considered a fraudulent behavior when a user is intentionally taking out loans in quick succession in hopes of evading lenders and obfuscating their full financial profile from view, in order to be granted more loans. 

While taking out multiple loans in a short period of time is not objectively “good” or “bad” it is essential to a lender’s strategy and decision flow to correctly categorize a customer’s application with a complete set of up-to-date, relevant lending information. It is only with real-time data that lenders can identify those taking out loans, versus those with possible fraudulent intent. 

Pngme collects data every 30 minutes, allowing lenders to easily identify and track loan stacking. Our data is what enables our partners to protect themselves from potential loan stacking fraud. Unlike Credit Bureau data that is updated every 30 days.

At Pngme, our early findings with Nigerian fintech, BlackCopper revealed an additional 2% of users with evidence of default not identified by Credit Bureau data alone, across a month of borrowers’ data.

Pngme was able to uncover an additional 14% of applicants with evidence of 2 or more open loans that were otherwise undetected by the Credit Bureau and leading Open Banking solution combined, ultimately helping our partner identify loan stacking behavior ahead of decisioning.

Pngme’s data draws from all accounts connected to a user’s device, instead of a singular account selected by the user. All of these factors allow us to provide broader, deeper, fresher data to our partners, ensuring they’re making informed decisions and protecting themselves from fraud.

Read our case study with BlackCopper and learn more about how we’re helping them automate loan assessment processes and more accurately assess the creditworthiness of new and existing customers.

As technology advances and connects with more people and the economy faces a significant downturn, the market is ripe for fraudulent activity. While much is unknown and cannot be controlled, now is the right time to connect with the right data partner to protect your business and your customers from fraud and leverage the tools and technology driving the future of finance. 

Interested in working with Pngme? Request a consultation

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