CEO & Co-Founder, BeyondID
Chairman of the Board
Arun Shrestha has 20+ years of building and leading enterprise software and services companies and is committed to building a world class identity services organization. Prior to co-founding BeyondID, Arun held executive positions at Oracle, Sun Microsystems, SeeBeyond and most recently Okta, where he was responsible for building a world class services and customer success organization.
As cybersecurity experts, we spend a lot of time discussing how to stop bad actors in digital banking, but here’s something else to consider: sometimes, the biggest security risk isn’t them—it’s us, the targets. Could you be getting in your own way when it comes to fraud prevention success? It’s more likely than you may think.
When it comes to managing your bank’s fraud prevention strategy, mistakes will cost you, and even the smallest missteps can lead to:
- Financial and operational losses,
- Regulatory fines and penalties, and
- Damaged customer/member trust and loyalty.
So…are you sabotaging your fraud prevention strategy? Here are four common ways financial services organizations are unknowingly compromising their own cybersecurity posture.
4 Ways You Might Be Undermining Your Fraud Prevention Strategy
- Categorizing Fraud Prevention as an IT Issue
- Investing in “Silver Bullet” Fraud Prevention Solutions
- Attempting DIY Implementations
- Neglecting to Adopt a Proactive Fraud Prevention Strategy
Let’s dive in.
1. Categorizing Fraud Prevention as an IT Issue
IT leaders are more often than not the ones on the hook to keep their banking organizations out of breach headlines…but fraud prevention isn’t just an IT issue. There is a general lack of consensus when it comes to identifying who is actually responsible for a breach when it happens. According to a 2024 global Trend Micro survey of IT leaders, 42% point to the CEO, 34% to the CIO, 26% to the CISO, 20% to the CFO, 16% to the COO, and 14% to the CMO. In reality, fraud prevention concerns banking leaders across the organization — from operations to marketing, to human resources and beyond.
Leaders across departments share the responsibility to advocate for fraud prevention resources, and IT needs all the support they can get in the boardroom. From technology resources to qualified staff, IT security teams are generally understaffed and underfunded. This is especially true for small banking organizations, where – according to James Walker’s 2024 Community and Mid-Size Banks Cybersecurity Survey – nearly half of regional banks and credit unions lack incident response teams with clearly assigned roles and responsibilities, and 37% fail to encrypt sensitive information. As malicious activities evolve, threats require attention from specialized security professionals and access to modern cybersecurity technology resources.
2. Investing in “Silver Bullet” Fraud Prevention Solutions
There is no “silver bullet” solution for fraud prevention. No single technology, product, or solution can eliminate the risk of fraud to your business and members/customers. Cybersecurity technologies like Okta, CyberArk, SailPoint, Lexis Nexis, Plaid, and Socure are the building blocks of a strong fraud prevention plan – not the final solution. A strong security perimeter is built through the integration of multiple identity solutions and strategies.
Fraud prevention solutions are designed to work in conjunction with many other solution components as a part of a comprehensive digital identity strategy. Businesses that chase the latest security trend without a strategy risk fragmented and ineffective protection. Given the complexity of the identity ecosystem—where vendors specialize in visibility, posture, governance, and threat detection—organizations need a unified approach to strengthen security and prevent fraud effectively.
How can you build a strong defense against fraud?
- Layer multiple security controls (e.g., MFA, biometric authentication, and behavioral analytics).
- Implement Identity-First Zero Trust architecture to verify every user and device, every time.
- Ensure interoperability between cybersecurity tools to create a seamless, secure experience.
3. Attempting DIY Implementations
Setting up an identity solution internally can seem like a quick, cost-effective fix for smaller financial organizations operating under fraud prevention resource constraints, but the hidden risks and long-term costs can be far greater than you realize. Without the right expertise, resources, and strategic planning, attempting to carry out digital transformations in-house can put your entire organization in jeopardy.
The reality is that attempting DIY implementations is a high-risk gamble. Partnering with fraud prevention experts like managed identity solutions providers (MISPs) is the best way to ensure a secure, scalable, and cost-effective digital transformation.
4. Neglecting to Adopt a Proactive Fraud Prevention Strategy
Trusting that the procedures you currently have in place will be enough is a critical mistake. Unfortunately, it’s also an easy one to make. For example, 99% of community banks feel prepared for cyberattacks, but that confidence may be misplaced. Only 71% hold third-party vendors accountable for legal or regulatory liabilities, despite vendors contributing to nearly 30% of breaches last year (Jones Walker, 2024).
Cyber threats evolve constantly—your fraud prevention defenses need to be proactive to keep up. In 2025, the rapid pace of change in both attack and defense landscapes is now further accelerated by AI. Organizations with a proactive incident response plan recover 77% faster from cyberattacks (CISA).
Here are some examples of proactive vs reactive fraud prevention solutions:
Proactive Solutions
- Conducting regular security perimeter audits to map vulnerabilities before they can be exploited
- Implementing AI-powered threat detection systems that can identify unusual patterns before breaches occur
- Establishing a comprehensive third-party vendor assessment program with continuous monitoring
- Creating cross-functional security response teams trained through regular tabletop exercises
- Developing an evolving security architecture that integrates emerging technologies based on threat intelligence
Reactive Solutions
- Deploying one-off IAM management tools only after access issues are discovered
- Patching security holes individually as they’re identified
- Implementing DIY security measures with isolated tools
- Adding security controls only after compliance audits identify gaps
- Responding to incidents without a structured plan
Everyone, everywhere will be hacked at some point. Fraud prevention isn’t just about stopping bad actors—it’s about making sure you’re not making their job easier. Treating fraud as only an IT issue, chasing “silver bullet” solutions, DIY-ing complex implementations, or relying on outdated, reactive security measures can all weaken your defenses and put your organization at risk.
The question isn’t just are you sabotaging your fraud prevention strategy?—it’s what are you going to do about it? The strongest organizations recognize their blind spots, take a proactive approach, and build a fraud prevention strategy that evolves with the threats they face. It’s time to stop standing in your own way and start securing what matters most.
