woman uses her credit card safely online
woman uses her credit card safely online

Digital Solutions for Fraud Management in the Philippines

Bank fraud in the Philippines has been an ever-growing issue, with huge consequences to both banks and customers. Accepting loan applications and lending money are easy to, but getting paid back is difficult – especially with the increase of fraudulent activities in the Philippines. The increase of fraudulent applications also makes credit-invisible customers more prone to rejections, even if they have high potential and ability to pay. This is why fraud management solutions are becoming more crucial in any financial institution. Not only do these tool help banks detect and prevent fraud, they also improve financial inclusion and provide banks with an improved method of assessing applications.

Banks without proper fraud management systems in place suffer not only in financial losses, but also in customer trust, loyalty, and credibility. As banks in the Philippines open new digital channels, fraudsters may manipulate their own declared personal data in order to be eligible for loans.

Fortunately, the digitalization of banking services also ushers in new technological solutions that efficiently detect suspicious behavior and help banks reduce losses from defaults. Here’s how digital transformation in banking fights common types of banking fraud in the Philippines.

man shops online while keeping safe from fraud

Using Alternative Data for Fraud Management

Alternative credit data considers customer details beyond conventional credit bureau data, which makes it a key factor in determining the trustworthiness of an application. It provides a broader perspective of a borrower’s credit behavior to deliver a comprehensive view of a customer’s honesty when filing for loan applications. Alternative data for fraud management includes information such as an applicant’s geo-locations, chosen contact person, and possible links with previously identified fraudsters.

Many banks in the Philippines have adopted telco data-based fraud authentication and verification tools to reduce fraudulent credit card and loan applications. The fraud detection and management solutions help distinguish between legitimate and fraudulent transactions by evaluating alternative data such as the social interactions of their customers.

This comprehensive visibility into consumer risk allows financial institutions to deliver smart and optimized credit solutions. It also helps prevent these types of frauds from occurring:

Credit Card Fraud

This type of fraud is commonplace in the Philippines, but banks have largely eliminated credit card fraud with the shift to European MasterCard Visa (EMV) chip technology. EMV is ultimately safer for card transactions than magnetic stripes as the chip holds data encryption, thus creating unique transaction codes that cannot be reused.

Aside from the total shift of banks and credit card issuers to EMV, financial institutions can also rely on machine learning algorithms for credit card fraud management. Advanced algorithms can separate acceptable and potentially fraudulent applications, placing positive ones in the express lane and rejecting applications from customers with suspicious activities.

Identity Fraud

Financial institutions traditionally rely on credit agencies for identity verification. There is a downside to this approach: if personal information is stolen, it’s easy for bad actors to open new fraudulent accounts. This means banks can no longer depend on outdated approaches when verifying the identities of customers.

Banks can improve their fraud management process by combining traditional identity verification methods with objective alternative data sources such as borrowers’ location, contact numbers, and association with blacklisted customers.

credit cards with a security lock on top

Fight Against Identity Fraud with FinScore

FinScore offers powerful fraud detection tools based on alternative data, including telco data, to upgrade your fraud management processes. For instance, our Geo-Location Fraud Flag matches a customer’s declared living address versus various geo-locations detected by their mobile operator. This provides valuable insight regarding the truthfulness of a customer when providing contact details.

Other fraud management solutions from FinScore include the Social Circle Fraud flag which identifies links between a customer and previously identified fraudsters, as well as the Contact Person Fraud Flag, which also assesses a customer’s truthfulness during loan applications. It compares the applicant’s Contact Person details with their most often called or texted numbers.

FinScore also has a new fraud detection solution called FindSocial that can boost the fraud management efforts of any business — anytime, anywhere. FindSocial is a social media media lookup and scoring tool that aggregates near real-time social media data points from live, open source databases with just one click. Powered by our proprietary cutting-edge AI and machine learning technology, you can make smarter business decisions in a snap and supercharge your social presence insights.

For more information on how you can leverage these digital solutions for fraud management, don’t hesitate to contact FinScore today.


    FinScore is a financial technology company in the Philippines that offers a powerful credit scoring platform and fraud detection tools based on alternative data, including telco-based data. 

    As the pioneer in lending and scoring of the unbanked, we continuously provide fintech services that empower financial institutions, banks, and credit bureaus with flexible platforms to help them make insightful and reliable credit decisions. Contact us today to learn more about our products and solutions for financial institutions.