Fraud Detection and the Role of APIs in Enhancing Business Security: Insights and Future Trends

CXOToday has engaged in an exclusive interview with Mr. Shobhit Goyal, our CEO and Co-Founder at BeFiSc

1. Why should companies use fraud indicators and how does it work with the help of API’s ?

Companies should use fraud indicators because fraud is getting smarter, and manual checks just can’t keep up. Without them, businesses face financial losses, data breaches, and broken trust.

Here’s how fraud indicators work with APIs at Befisc:

• Real-time detection: Our API monitors data instantly, flagging suspicious activity like inconsistent user info, abnormal transactions, and risky locations.
• Seamless integration: No need to build your own system. Just plug in our API, and you’re ready to detect fraud right out of the box.
• Actionable insights: Get instant risk scores to decide whether to approve, decline, or request more info.
• Cost-effective: Stop wasting money on manual checks or fraud recovery. Our API automates the process while keeping customer onboarding smooth.

In short, fraud detection through APIs means faster, smarter, and safer operations for your business.

2. What could be the reason for lending companies shut down?

Lending companies often shut down because they fail to effectively manage risk—particularly fraud and inadequate KYC processes. In the digital age, fraud is rampant, and without proper safeguards, lending companies are highly vulnerable.

Here’s how fraud and weak KYC processes contribute to their downfall:

• Fraudulent borrowers: Without robust fraud detection, companies end up lending to people using fake identities, stolen credentials, or fraudulent documents. This leads to high default rates, as these borrowers have no intention of repaying.
• Weak KYC compliance: Proper KYC (Know Your Customer) is crucial to identifying legitimate customers. Skipping or cutting corners on KYC opens the door to fraudsters, exposing the business to financial risk and legal consequences.
• Regulatory penalties: Inadequate KYC can lead to non-compliance with government regulations, resulting in fines, penalties, or even a forced shutdown. Failing to meet standards like anti-money laundering (AML) can cripple a lending company.
• Loss of trust: When a company is hit by fraud due to poor KYC, it impacts customer and investor trust. Once trust erodes, it becomes harder to raise capital or grow the business, often leading to a shutdown.

In short, neglecting KYC and fraud detection is a recipe for failure in the lending space.

3. What role does AI play in upgrading the security & efficiency of KYC Procedures?

AI plays a massive role in upgrading the security and efficiency of KYC procedures. Here’s how:

• Automated document verification: AI can instantly verify documents like IDs, passports, and utility bills with high accuracy, drastically reducing the manual effort and time taken to onboard customers.
• Fraud detection: AI models analyze patterns in data to detect anomalies and fraudulent activities in real-time. It can spot fake identities, altered documents, or suspicious behavior that traditional methods might miss.
• Improved accuracy: By using machine learning, AI continuously learns from new data, improving its ability to accurately verify identities and reduce false positives or negatives.
• Faster processing: AI-driven KYC systems handle thousands of verifications simultaneously, cutting down onboarding time from days to minutes.
• Risk scoring: AI helps create risk profiles by analyzing historical data, user behavior, and other indicators. This ensures that high-risk customers are flagged for deeper scrutiny, while low-risk users can be onboarded swiftly.
• Cost efficiency: AI reduces the need for large teams to manually check documents, saving companies time and money while improving scalability.

4. What obstacles do Fintech startups encounter with KYC, and how can they navigate these compliance challenges?

Fintech startups face several obstacles when it comes to KYC compliance, including:

• Complex regulations: Navigating the ever-changing regulatory landscape can be tough, especially for startups that lack legal and compliance teams.
• High costs: Implementing and maintaining KYC processes can be expensive, especially for small startups operating on tight budgets.
• Onboarding friction: Lengthy and complex KYC processes can lead to poor customer experience, resulting in drop-offs during onboarding.
• Fraud prevention: Startups often struggle to balance between preventing fraud and ensuring a smooth user experience.

How they can navigate these challenges:

• Use KYC APIs: Leveraging third-party KYC solutions like Befisc helps fintechs stay compliant without building everything from scratch, saving time and money.
• Automate processes: AI-driven tools can automate document verification and fraud detection, reducing manual effort and speeding up onboarding.
• Stay updated on regulations: Regularly monitor regulatory changes and adapt KYC processes accordingly to ensure full compliance.
• Focus on user experience: Implement seamless, user-friendly KYC flows to reduce drop-offs and enhance customer retention.

5. How do you see the future of the B2B Fintech industry evolving in India?

The B2B fintech industry in India is on the brink of massive growth, and here’s why:

• Digital boom: More businesses are going online, and they need fintech solutions for payments, lending, and managing their finances. The push for digital transformation, especially after COVID, is making this happen faster.
• Support from the government: Initiatives like Digital India and UPI are paving the way for fintech companies, especially in areas like KYC, fraud detection, and digital lending.
• AI and automation: AI is going to continue shaking things up—automating financial processes, improving fraud detection, and providing smarter data-driven decisions. This will make businesses faster and more efficient.
• Global expansion: Indian businesses are going global, and the need for better, cheaper cross-border payment solutions is going to open up huge opportunities for fintech startups.
• Embedded finance: Fintech tools will be baked into other platforms, allowing businesses to offer things like payments and KYC directly, without needing to build it themselves.

The future is all about innovation, compliance, and scalability. Fintechs that can nail fraud detection and make processes seamless will come out on top. Befisc is already pushing in that direction.

6. What were the key learnings and impacts of the Global Fintech Fest (GFF) on the fintech industry?

The Global Fintech Fest (GFF) had a profound impact on the fintech industry, and we walked away with several key learnings:

1. India’s Fintech Leadership: GFF positioned India as a major player on the global fintech stage. The sheer scale of the event, with 50,000 attendees, and the participation of Prime Minister Narendra Modi, highlighted the importance of fintech in India’s economic strategy. It reinforced how Indian fintech innovations are shaping the global narrative.
2. New Fintech Innovations: The unveiling of game-changing products like UPI Circle, Bharat BillPay (BBPS), Google Pay’s eRupi Service, and PhonePe’s PG Bolt showcased the rapid evolution of digital payments and services. These innovations signal the next phase of fintech, particularly in driving financial inclusion and transforming how businesses and consumers interact with digital financial platforms.
3. Networking and Collaboration: For Befisc, GFF was a golden opportunity to connect with industry peers, particularly in the KYC and fraud detection space. The conversations we had highlighted the growing need for collaboration to tackle challenges like identity fraud and security in the digital age. The event reinforced that as fintech grows, so does the need for shared knowledge and partnerships.
4. Customer Engagement: With 300-400 people visiting our booth on the first day alone, it became clear that fintech solutions addressing compliance, fraud, and security are more in demand than ever. Businesses are seeking solutions that can scale with their growth while maintaining the highest security standards.

In short, GFF underscored India’s growing fintech dominance, the importance of innovative solutions, and the industry’s need to collaborate and scale together to meet future demands.

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