Fraud is a major problem for businesses today, especially those with digital operations. According to Grand View Research, the global fraud detection market will grow to $63B by 2028, up from $23B in 2021. This growth will be driven by consumers relying increasingly on digital transactions to exchange monetary value and information.
Fortunately, the cloud makes fraud detection easier. On the cloud, companies can create, train, deploy, and maintain artificial intelligence/machine learning (AI/ML) models that are designed to detect fraud quickly. These algorithms can evaluate millions upon millions of interactions, uncovering patterns that would otherwise go unnoticed by human analysts. At a time when cyberattacks and cybercriminals are becoming more sophisticated, AI/ML-enabled fraud detection is the only way to keep up.
Cloud service providers, like AWS, recognize how important fraud detection is and are responding accordingly. For example, AWS users have access to Amazon Fraud Detector, which empowers cloud engineers to build fraud detection models from scratch with little ML experience. AWS also has Amazon GuardDuty for monitoring resources and applications, and Amazon CloudWatch, which makes IT maintenance easier. Knowing what options are available and how to leverage them is key to keeping fraud from affecting the business.
In this blog, we’ll take a look at what industries are most affected by fraud today and how the cloud may be able to help. We’ll also highlight a few projects that ClearScale has worked on to boost fraud detection for clients in different sectors.
What Industries are Most Affected by Fraud?
Fraud happens across many industries. Three industries that are particularly vulnerable to fraud include:
- Insurance & financial services
- Logistics & manufacturing
Let’s dive more into each of these below.
Insurance & Financial Services
Fraud is a massive issue in the insurance and financial services sectors. On the insurance front, fraud is a $310B annual problem, according to a report from the Coalition Against Insurance Fraud. And in 2022, fraud cost consumers nearly $9B, half of which were investment scams.
As the finance and insurance sectors go more digital, learning how to identify fraud and respond quickly will be critical. Leaders and their engineering teams must be able to analyze unprecedented amounts of information and find malicious activity before it spreads. Otherwise, fraud will continue costing stakeholders billions of dollars every year.
Logistics & Manufacturing
Fraud is also growing in the logistics and manufacturing sectors. More and more businesses in these spaces are adopting the cloud, distributed operations, and modern technology, opening them up to more potential fraudulent activity.
In these spaces, fraud can take many forms – counterfeit goods, cargo theft, fake billing, fake employee accounts, and fake customer orders. It’s impossible for humans to determine what’s real and what’s fraudulent across so many possible attack planes. But with the right cloud tools and data management capabilities, automating fraud detection in logistics and manufacturing becomes much easier.
The energy industry is also struggling to fend off fraud. External bad actors are finding new ways to steal energy and circumvent meter readings, cutting utilities out of significant profits. Internal fraud is also occurring – employees are tampering with invoicing and collections, affecting top-line revenues.
Guarding against fraud in the energy sector means using AI/ML-powered algorithms to discover when energy usage data isn’t aligning with expected supply amounts for specific customer accounts. It also requires using pre-build cloud security solutions that enable leaders to implement nuanced access controls so that only trusted personnel can see or touch-sensitive information.
How ClearScale Enables Fraud Detection on the Cloud
Of course, fraud exists outside of the industries highlighted above. No organization is entirely insulated from fraudulent activity. That’s why it can make sense to partner with a cloud services expert with security consulting services, like ClearScale.
We worked with a family-owned business in the gift card buying niche to address problems with the gift card resale process. Having robust fraud detection was especially valuable for ensuring proper gift card exchanges. Our team developed a Point-of-Sale (PoS) solution that integrated with key hardware and allowed for multi-tenancy on the cloud. We also incorporated certain REST APIs to promote robust cataloging, which was crucial for mitigating fraud risk.
ClearScale also partnered with a company that helps align incentives between property managers and renters through an online reporting platform. We helped our client build a new AWS Landing Zone and implement useful security solutions, like AWS Control Tower, AWS Security Hub, and Amazon GuardDuty. These tools made it easier to detect threats and conduct comprehensive security checks across a massive volume of financial transactions.
In another engagement, one client of ours in the digital form automation sector needed help preparing for a SOC 2 audit. This included bolstering the company’s threat detection capabilities across its AWS accounts. Again, we used Amazon GuardDuty to implement ongoing threat detection and other security tools to make it easier for internal team members to discover vulnerabilities or potential fraud.
These are just a few examples of what we can do on the AWS cloud to improve fraud detection and help organizations with their security and compliance needs. Schedule a call with one of our cloud experts today if you need to upgrade your fraud detection capabilities as soon as possible.