Building the anti-fraud network
At its core, fraud is malicious deception. What makes it dangerous is how good it’s become at hiding in plain sight. Every victim of fraud shares a common vulnerability: they couldn’t see through the deception until it was too late. But in the modern world of digital transactions, even sophisticated fraudsters have their own vulnerability. They will invariably leave a data trail – somewhere. The challenge is plumbing the right data to illuminate patterns of fraudulent activity before it strikes and for that, we all need to work together.
Why small business lending is particularly vulnerable
Small business lending is an especially attractive target for fraudsters. It’s a perfect storm of complexity – overlapping businesses and personal identities, multiple identities/ owners, multiple locations, transaction histories, credit reporting, and less than ideal bookkeeping. A good environment for hiding illicit intent.
And as fraud becomes more coordinated, networked and tech-enabled, it’s no longer about spotting a suspicious borrower. It’s about uncovering fraud rings operating across multiple entities and channels.
The challenge is especially acute for smaller banks and credit unions. Where the underwriting due diligence it takes to both manage risk and combat fraud can drain time and resources away from delivering the service your legitimate small business customers want. Add to that the evolving nature of multi-channel distribution – loans coming in from different channels, multiple products and departments (onboarding, servicing, retail) – and the threat grows even more opaque.
Veterans in a 20 year battle against small business lending fraud
At Rapid Finance, we should know. In our over two decades of small business lending we’ve learned a lot about fraud.
One of the most valuable things we’ve learned is that lending fraud follows patterns. Patterns designed to fool people. But they become evident with the right data analytics. With a combination of the right algorithms and access to multiple layers of data, fraudsters can be exposed on a level previously unrealized. Before they cost us one more second – or one more dollar. That’s the idea behind a unique system we’ve been developing and using in our business for years. And it’s been quite effective. We call it Lynx.
We initially designed Lynx to layer and analyze our voluminous data compiled from years of processing small business loans with real-time application inputs to identify risky patterns early. Because we knew the subtle ins-and-outs of small business lending. The shift from manual fraud reviews to data-driven behavioral modeling and real-time pattern detection made a dramatic impact on underwriting accuracy and speed. That was a pretty good start.
Then COVID 19 hit and we were able to take Lynx to another level. We opened it up to the Small Business Administration to aid in administering EIDL loans. In the process, we were able to fold in even more data, 3rd party data, into the system. The results got even better.
Building a Network of Trust
That’s when we realized the true power of Lynx. It was already a very powerful weapon against fraud in our small business lending. But we realized that the more diverse the data and broader the collaboration, the stronger its ability to find fraud patterns. And with it - its power as a fraud detection and prevention enabler grew. To realize the true potential of Lynx as a bulwark against the growing sophistication of fraud rings, we now seek to grow a trusted network of lenders who work together, through Lynx, to both protect their own business and our entire industry.
With its API, Lynx is easy to implement into almost any lender's workflow. Lynx is now evolving into what it was always meant to be. A shared intelligence platform that grows smarter every time another lender joins.
Lynx’s layers of fraud detection are configurable to your individual business needs.
- It can seamlessly integrate with your own institution’s historical data.
- It can be configured to subscribe to any and all 3rd party data streams your institution wants to use
- With the power of the Trust Network, it will help surface connections that would be invisible in isolation.
- It’s customizable to your risk appetite and your regulatory needs.
And whats more, Lynx comes with the power of Rapid Finance’s long historical small business loan data. And it’s designed to use only non-sensitive metadata, protecting privacy and preserving your competitive edge.
Ultimately, Lynx is not just about saying “no” to fraud. It is about saying “yes” to valuable customers faster and with greater confidence. With Lynx Lenders can:
- Reduce manual review burden, freeing up resources
- Accelerate funding decisions to good businesses, enabling faster access to capital
- Improve conversion by removing unnecessary friction
- Prevent losses by confidently identifying risk early
- Grow your lending footprint by boosting operational efficiency and scaling service
Join the Trust Circle. Build the Future
We believe that the fight against fraud is a collective one. And Lynx is built to support a trusted, industry-wide defense network – one where community lenders, fintechs and regional banks can stand should-to-shoulder with the same firepower fraudsters are using to work together. In real-time
We’ve seen what happens when organizations share intelligence. The system gets smarter. The fraud rings shrink. And everyone wins – except the criminals. If you are ready to build a stronger future for small business lending, lets talk.
Request a demo of Lynx and see how it fits into your fight against fraud by reaching out to enterprisesales@rapidfinance.com