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Fintech transformed by pandemic and the challenges of online fraud: Mikhail Marchenko

Fintech transformed by COVID-19 pandemic and the challenges of online fraud: Mikhail Marchenko
Online fraud has become more prevalent with the advent of COVID-19 pandemic and businesses across the world adopting digital payments.


Fintech transformed by pandemic and the challenges of online fraud: Mikhail Marchenko

Online fraud has become more prevalent with the advent of COVID-19 pandemic and businesses across the world adopting digital modes of payments and transactions. A huge part of online businesses appeared before the pandemic which has just speeded up the growth of online operations and has strengthened such trends.

Mikhail Marchenko, Co-Founder, JuicyScore, in an exclusive interaction with MyBigPlunge gives an insight about how COVID has transformed the fintech sector for good and the challenges that comes with it:

Over the past year, since COVID-19 set in, millions of people and companies across the world have adopted digital modes of payments as well as business. This has also caught the attention of fraudsters and hackers. What observations would you like to share in this regard?

The Covid-19 pandemic has transformed the fintech sector: many companies had to face the fact that going online was an inevitable move towards cost optimization and implementation of new solutions. We at JuicyScore, a company that develops technologies to prevent fraud in online business, have the following take on how the fintech market reacted to the pandemic and what trends will determine its development in 2021.

  • General decline in investments: The volume of investments in the emerging markets has decreased compared to previous years. However, it should be noted that the main drop occurred at the peak of the pandemic – the end of Q1 2020, when the volume of investments fell to the level of what they were in 2017.
  • New regulatory requirements: The tightening of regulation in 2020 in various regions is one of the factors that experts note among a number of reasons that negatively affect the growth of the financial market. Fintech uses a wide stack of technologies to support and develop online business, designed to speed up the processes of interaction with a client, making payments and other financial transactions, at the same time, the importance of user privacy and data protection is growing. In order to stand out in a competitive market, it is necessary to take into account all changes in legal regulations, especially the requirements for the processing of personal data. For example, The Personal Data Protection Bill introduced in Lok Sabha in 2019 that provides for protection of personal data of individuals, and establishes a Data Protection Authority for the same.
  • Security of data storage and processing: Due to the pandemic, a large number of users switched to the online channel to obtain financial services to derive a number of benefits such as reduced operating costs, access to a wider audience etc. However, due to growth of online channels, the availability of personal data also saw a sporadic increase. As a result, this became a breeding ground for hackers and cyber criminals, resulting in growing instances of data breaches. One of the key aspects for businesses today is protecting its stored user data since the cost of a data breach is huge.  The average cost of data breach in 2019 amounted to $3.92 million (according to Security Intelligence Report) Leakage of sensitive user data such as payment card numbers, passwords, financial transaction data, passport soft-copies and other personal documents can lead to a complete loss of customers’ trust and confidence. The year 2020 has shown that fintech companies need solutions that combine both factors – transparency and security – more than ever. The best solution in this situation can be a reasonable reduction in the turnover of personal data and direct user identifiers in combination with the use of alternative sources of information, such as device data, internet connection data and user behavior data.
  • Credit risk evaluation: In 2020, the players who understood the importance of maintaining an adequate balance between credit risk reduction and the speed of new business models adjustment and creation turned out to be more successful. Financial institutions that focused all their efforts on risk-based price alterations, setting new limits, etc., continued to stay afloat and recover from the current circumstances.
  • New ecosystem: The new formats of the fintech market ecosystem turned out to be more competitive in a number of countries in comparison to the captive/internal ecosystem of corporate giants due to a higher development speed, better coverage and greater flexibility/adjusting to the specific needs of the client, as well as the development of partnerships with other companies. Moreover, in 2020 we noticed that small companies left larger companies behind speaking about the speed of development and implementation of new technologies.

There have also been numerous cases wherein online portals and mobile apps have been created to fraud people and businesses with respect to digital payments. Has this been driven by the COVID-19 pandemic due to an increase in online payment transactions? What is your take on this?

The pandemic changed our life for good and many people already got used to the fact that most products can be obtained online. It certainly can be a reason for an increase of toxic online portals and mobile apps. On the other hand, a huge part of online businesses appeared before the pandemic which has just speeded up the growth of online operations and has strengthened such trends. Thus, various patterns of fraud risk behaviour including forged portals and applications are just the consequence of technology development. Apart from that, we have also observed the growth of technical professional fraud and high risky behaviour as well.

What are some of the trends observed in India – globally with respect to digital lending fraud? Please elaborate.

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The Indian financial sector has been facing an increase in fraudulent activities for the past few years. Thus, according to an industry report, loan frauds have amounted to Rs 77,521 crore across public and private sector banks. Such a big number of fraud cases in India can lead to rather harsh consequences and loss of reputation of any financial company. Problems arise due to many reasons, the main ones being cooperation with third-party organizations, extensive use of mobile technologies and online data transfer, and the natural growth of hacker attacks.

Among other focus areas for fintech companies, following are some of the key ones:

  • Security of transactions, risk management technologies
  • Technologies of secure storage and exchange of data, including personal data protection
  • Remote authentication technologies and biometric solutions

How can online fraud be tackled? Please share some key tips

Here are some key tips on tackling online fraud:

  • Use only proven technologies that provide a sustainable effect to your business
  • Protect your online infrastructure by leveraging cutting-edge user verification and protection technologies such as two-factor / three-factor verification, dynamic authentication etc.)
  • Limit the use of your users’ personal data and direct identifiers. Please note that personal data is often not needed for the supporting tasks – an alternative solution based on impersonal sessions or tokens may be a good substitute for personal data processing
  • Identify the existing and future working plans in case your online infrastructure fails or there is a mass fraud attack
  • Expand the stack of modern and cost-effective technologies to prevent fraud

Should there be more specialists or panels engaged to get the increasing digital lending fraud issue under control? What role can governments play to curb this?

What should a risk manager do after resolving all the security issues? Look for more! Every online business should have a team of experts in various fields that will monitor risk metrics 24/7. A company can also engage external experts if necessary. Fraudsters’ technological level is evolving every day and your anti-fraud specialists must be ahead of them. Do not forget to train staff and explain to all your workers about the basics of internet safety, especially when working with mail and messengers and personal/sensitive data.

In order to not wait for the government to solve some problems which usually takes a lot of time, a company has to define what fraud means for their particular business – it can be either customers with multiple accounts, or unpaid loans, hacking of personal accounts, etc. Risk management teams also have to determine the “tolerable” level of fraud for their online business. An important point: in many cases, completely getting rid of all kinds of fraud can be either very expensive or very difficult. And last but not the least, the important thing is to choose the right technology solutions.


JuicyScore is a global leader in anti-fraud and risk management solutions company that is headquartered out of Moscow, Russia, and is currently expanding operations to India. Founded in 2016, JuicyScore came into existence with an aim to help businesses prevent fraudulent activities and reduce the risk of threat. As of today, it offers its services in over 21 countries and has over 80 clients, across the globe, from industries like banking, e-commerce, travel, insurance, etc.

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