Cyber threats are a major and growing concern across the globe, with breaches leading to various follow-on activities, including payments fraud. This brief article appearing in Forbes highlights one of the ways that companies can better protect sensitive corporate financial information through the use of BCT. The idea, in this case, is to forego traditional bank account update information into corporate systems between parties in transactions by switching to blockchain verification processes, where manual steps and error-prone inputs (and bad actors of course) are bypassed. This piece calls out a video about an SAP pilot using BCT within payment runs.
“Blockchain brings trust to B2B payment processes like creating, updating and exchanging supplier bank account information,” said Torsten Zube, head of blockchain, Innovation Center Network at SAP. “Finance may be under pressure to meet discount deadlines. Outside verification agencies increase potential risk exposure. Fraud can even happen from inside the company. Embedding blockchain into payment process gives employees fast and accurate data sources.”
In a just-released report titled Fighting Payments Fraud: No Rest for the Weary, we pointed out this BCT use case as a likely effective tool for overcoming the authentication and identity issues that are part of the event sequence leading to a fraud payment being approved and released. This is especially important in the prevention stage, certainly as we continue moving in the direction of irrevocable real-time payments, leaving no downtime for organizations to detect after-the-fact situations and prevent the next one. Payments fraud prevention and mitigation requires substantial ongoing investment, particularly for financial institutions, who can suffer multiples of pain beyond financial loss, including reputational risk leading to higher churn, and unwanted regulatory scrutiny/fines. So investing in something effective and digitally oriented is one of the many methods of managing these risks.
‘One of the most overlooked, yet critical things missing from many blockchain conversations is how companies will connect all the information in the chain to current processes…. “The last mile is so much longer than just a mile,” said Zube. “In the network-based business model, organizations need to begin blockchain discussions with their specific use cases, and how they’ll share data from the chain across systems within and outside the company. Link blockchain-enabled data to real world business processes.” ‘
BEC continues to be an effective fraud vector as well, which is more related to training and awareness, but eventually results in a payment approval, so before and after tools must be in place and reviewed in the age of ‘always-on’ tech and very sophisticated fraudsters.