Aadhaar-as-a-Service (AaaS): Powering India’s Next Wave of Digital Identity Innovation

<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/marketing-cms/m2p-blog/2025/07/frm-blog-banner-04.webp" alt="M2P’s Advanced fraud risk management system for secure and trusted digital financial services." title="" id="lt7ml42w2" width="100%" height="253">Digital transformation has propelled financial services into a new era, offering speed, convenience, and global reach. But this progress brings a parallel surge in financial fraud, threatening the very foundation of trust and stability that underpins the industry.Understanding the Magnitude:&nbsp;<ul class="list-node" id="te5m7z0bz"><li>Illicit fund flows through the global financial system could reach an astonishing USD 4.5 to <a class="link" href="https://secretariat-intl.com/wp-content/uploads/2025/04/Secretariat-Global-Financial-and-Economic-Crime-Outlook-2025.pdf" target="">USD 6 trillion</a> by 2030</li></ul><ul class="list-node" id="kf4imf2r9"><li>AI-driven and deepfake fraud are set to drive a <a class="link" href="https://secretariat-intl.com/wp-content/uploads/2025/04/Secretariat-Global-Financial-and-Economic-Crime-Outlook-2025.pdf" target="">55–60%</a> increase in financial crime incidents by the end of 2025</li></ul><ul class="list-node" id="k9zhbrxoj"><li>Cyber-related fraud alone is expected to surpass <a class="link" href="https://secretariat-intl.com/wp-content/uploads/2025/04/Secretariat-Global-Financial-and-Economic-Crime-Outlook-2025.pdf" target="">USD 100 billion</a> by 2030</li></ul>To safeguard the future of finance, Fraud Risk Management (FRM) emerges as a strategic imperative, not just to combat fraud, but to redefine how we build trust in a digital world.Let’s explore the evolving fraud landscape and how FRM can lead us forward.<h2 class="heading-node" id="5dog23nkj" style="text-align: left">The Fraud Landscape: Key Threats Facing the Global Financial Ecosystem&nbsp;</h2>Financial fraud is evolving rapidly, with attackers leveraging sophisticated tactics and technologies. Among the most pressing threats are:&nbsp;<h3 class="heading-node" id="cxubxvksj" style="text-align: left">1. Identity Theft&nbsp;</h3>Fraudsters steal personal information, such as government IDs, bank credentials, or biometric data, to open accounts, make unauthorized transactions, or impersonate customers. The proliferation of large-scale data breaches and dark web marketplaces has made sensitive data more accessible to criminals than ever before.<h3 class="heading-node" id="1d6oulgjq" style="text-align: left">2. Payment Fraud&nbsp;</h3>Unauthorized transactions often stem from stolen credit/debit card details, hijacked payment accounts, or compromised digital wallets. Payment fraud can occur through card-not-present (CNP) transactions, card skimming, or account hacking.<h3 class="heading-node" id="lc8zuhxck" style="text-align: left">3. Account Takeover&nbsp;</h3>Cybercriminals gain unauthorized access to user accounts, often via phishing, credential stuffing, or social engineering. Once accounts are accessed, they can transfer funds, change account details, or commit further fraud.<h3 class="heading-node" id="plj4wyaqa" style="text-align: left">4. Investment Fraud&nbsp;</h3>Scammers present fake investment opportunities, often promising high, guaranteed returns to trick individuals or businesses into sending money. Ponzi schemes, pump-and-dump scams, and fraudulent ICOs are common examples.<h3 class="heading-node" id="bqw4rmmd0" style="text-align: left">5. Loan and Credit Fraud&nbsp;</h3>Fraudsters use fake or stolen information to obtain loans or credit, harming victims' credit and causing financial losses. This includes synthetic identity fraud and mortgage fraud, where applicants misrepresent income or property details to secure loans.<h3 class="heading-node" id="6cdw50btg" style="text-align: left">6. ACH Fraud&nbsp;</h3>Transactions on the Automated Clearing House (ACH) network are compromised by attackers using business email compromise (BEC) or forged payment instructions to divert funds from direct debits and credits.<h3 class="heading-node" id="ulv75dd2y" style="text-align: left">7. Phishing Scams&nbsp;</h3>Deceptive emails, texts, or calls trick individuals into revealing sensitive information, such as login credentials or payment details. Phishing remains one of the most common entry points for fraud.<h3 class="heading-node" id="cygf1e0dt" style="text-align: left">8. Synthetic Identity Fraud&nbsp;</h3>Fraudsters create entirely new identities using a mix of real and fake information, opening accounts and building credit before defaulting on loans or maxing out credit cards.<h3 class="heading-node" id="kak8m7yz1" style="text-align: left">9. Friendly Fraud&nbsp;</h3>Legitimate customers falsely dispute valid transactions, resulting in chargebacks and losses for merchants and financial institutions.<h3 class="heading-node" id="m70nsw8le" style="text-align: left">10. Internal Fraud&nbsp;</h3>Fraud committed by employees, including misappropriating funds, unauthorized transactions, manipulating records, or abusing access to confidential information, results in financial and reputational damage to organizations.This diverse and evolving threat landscape demands a unified, technology-driven response.&nbsp;<h2 class="heading-node" id="pecoaqt3a" style="text-align: left">A Vision for Global Financial Security: How M2P’s FRM Leads the Way&nbsp;</h2>M2P’s Fraud Risk Management (FRM) system is a comprehensive, cloud-native framework purpose-built to secure the global financial ecosystem. By seamlessly integrating advanced AI, regulatory intelligence, and user-centric design, M2P’s FRM empowers banks, fintechs, and NBFCs to stay ahead of threats, adapt faster, and protect customers with confidence.Here’s how M2P’s FRM is redefining fraud management in the digital era.<h3 class="heading-node" id="220oaozjd" style="text-align: left">1. Risk Management Expertise&nbsp;</h3>M2P embeds risk management expertise into every layer of its FRM solution. Designed to empower cross-functional teams, it equips stakeholders with intuitive, data-driven tools to proactively identify, assess, and mitigate risk long before escalation. From onboarding to servicing, every interaction is guided by embedded fraud resilience.<h3 class="heading-node" id="ifsxjisfn" style="text-align: left">2. Advanced Fraud Detection and Prevention&nbsp;</h3>M2P’s <a class="link" href="https://m2pfintech.com/blog/all-you-need-to-know-about-building-a-robust-fraud-and-risk-management-frm-system/" target="">FRM</a> combines robust rule engines with machine learning models to deliver real-time fraud detection and adaptive prevention strategies.<ul class="list-node" id="tdzusqjck"><li>Data Analysis and Anomaly Detection: Our platform continuously monitors transaction streams, using statistical models and machine learning to flag deviations from expected patterns, such as sudden large transfers or unusual spending spikes.</li></ul><ul class="list-node" id="w9oq99knz"><li>Behavioral Analytics: By tracking user behaviors like device usage, login locations, and transaction timing, the FRM system quickly identifies account takeovers and credential theft—critical in a world where <a class="link" href="https://coinlaw.io/online-banking-usage-statistics/" target="">3.6 billion</a> people use mobile banking.</li></ul><ul class="list-node" id="uk5nd1bkj"><li>Continuous Monitoring: Provides 24/7 surveillance of transactions and accounts, shrinking the window for fraudsters to act.</li></ul><h3 class="heading-node" id="w8n2jodle" style="text-align: left">3. Regulatory and Legal Compliance&nbsp;</h3>M2P simplifies regulatory complexity with baked-in compliance architecture that supports global and local frameworks like GDPR, PCI DSS, and AML/<a class="link" href="https://m2pfintech.com/kyc-suite/" target="">KYC</a>.<ul class="list-node" id="fwtxrmd4w"><li>eKYC &amp; AML Screening: Real-time identity verification and sanctions list screening to ensure compliance without friction.</li></ul><ul class="list-node" id="dwcqma5ki"><li>Automated Reporting &amp; Audit Trails: Every user action and transaction is logged, making it easier to meet audit requirements and manage incident traceability.</li></ul><h3 class="heading-node" id="irxjwq90n" style="text-align: left">4. Cybersecurity Measures&nbsp;</h3>M2P’s FRM training and tools address cyber threats that lead to fraud, such as phishing, malware, and ransomware. The integrated features ensure compliance and fortify institutions against cyber threats that often serve as gateways to financial fraud.<ul class="list-node" id="4jny8o2rw"><li>Multi-factor Authentication (MFA): Enforces layered security, making unauthorized access significantly harder.</li></ul><ul class="list-node" id="w2lxdvs95"><li>Threat Intelligence Integration: Delivers real-time updates on emerging cyber risks, enabling dynamic response to new attack vectors.</li></ul><h3 class="heading-node" id="os57yguml" style="text-align: left">5. Enhancing Operational Resilience&nbsp;</h3>Powerful fraud prevention isn’t just about detection—it starts with building resilient operations. By enforcing segregation of duties, intelligent access controls, and structured incident response protocols, the FRM system helps financial institutions reduce insider fraud and respond swiftly when threats arise. This resilience is essential for maintaining trust, minimizing disruption, and ensuring operational continuity amid evolving risks.<h3 class="heading-node" id="0gaqn2566" style="text-align: left">6. Custom Fraud Detection System&nbsp;</h3>A one-size-fits-all approach doesn’t work against dynamic fraud. Advanced FRM solutions offer the flexibility to design custom risk models that evolve with changing fraud tactics. By integrating data from multiple sources and leveraging machine learning, these systems continuously refine detection capabilities. This unified approach provides a comprehensive view of risk, enabling institutions to respond quickly to new fraud tactics and maintain a strong, adaptive defense against even the most sophisticated schemes.<h3 class="heading-node" id="720dugepn" style="text-align: left">7. Ethical Considerations&nbsp;</h3>Beyond compliance, our FRM system embeds ethical standards and responsible risk management into organizational culture. By promoting transparency, accountability, and whistleblower mechanisms, it deters insider threats and conflicts of interest. This ethical foundation not only reduces internal fraud risk but also builds stakeholder trust and aligns business practices with global standards of integrity, supporting sustainable growth and reputation.<h2 class="heading-node" id="b7cg2ouvx" style="text-align: left">A Future-Ready Approach to Fraud Risk Management&nbsp;</h2>The financial landscape is shifting, and so are the tactics of fraudsters. It’s not just about reacting to fraud—it’s about anticipating it, preventing it, and building trust in a digital-first world.By blending expertise, technology, and collaboration, FRM systems position institutions to lead the global fight against fraud, ensuring that innovation and inclusion go hand in hand with security.Don’t let fraud outpace your innovation.<a class="link" href="https://m2pfintech.com/contact-us/?activeKey=1" target="">Schedule a personalized demo</a> and discover how you can stay steps ahead of financial crime!&nbsp;<a class="link fui-Link ___1idfs5o f3rmtva f1ewtqcl fyind8e f1k6fduh f1w7gpdv fk6fouc fjoy568 figsok6 f1hu3pq6 f11qmguv f19f4twv f1tyq0we f1g0x7ka fhxju0i f1qch9an f1cnd47f fqv5qza f1vmzxwi f1o700av f13mvf36 f1cmlufx f9n3di6 f1ids18y f1tx3yz7 f1deo86v f1eh06m1 f1iescvh ftqa4ok f2hkw1w fhgqx19 f1olyrje f1p93eir f1h8hb77 f1x7u7e9 f10aw75t fsle3fq f17ae5zn" href="https://m2pfintech.com/newsletter/" target="_blank" rel="noreferrer noopener">Subscribe</a>&nbsp;to our newsletter and get the latest fintech news, views, and insights directly to your inbox.Follow us on&nbsp;<a class="link fui-Link ___1idfs5o f3rmtva f1ewtqcl fyind8e f1k6fduh f1w7gpdv fk6fouc fjoy568 figsok6 f1hu3pq6 f11qmguv f19f4twv f1tyq0we f1g0x7ka fhxju0i f1qch9an f1cnd47f fqv5qza f1vmzxwi f1o700av f13mvf36 f1cmlufx f9n3di6 f1ids18y f1tx3yz7 f1deo86v f1eh06m1 f1iescvh ftqa4ok f2hkw1w fhgqx19 f1olyrje f1p93eir f1h8hb77 f1x7u7e9 f10aw75t fsle3fq f17ae5zn" href="https://www.linkedin.com/company/m2pfintech/mycompany/" target="_blank" rel="noreferrer noopener">LinkedIn</a>&nbsp;and&nbsp;<a class="link fui-Link ___1idfs5o f3rmtva f1ewtqcl fyind8e f1k6fduh f1w7gpdv fk6fouc fjoy568 figsok6 f1hu3pq6 f11qmguv f19f4twv f1tyq0we f1g0x7ka fhxju0i f1qch9an f1cnd47f fqv5qza f1vmzxwi f1o700av f13mvf36 f1cmlufx f9n3di6 f1ids18y f1tx3yz7 f1deo86v f1eh06m1 f1iescvh ftqa4ok f2hkw1w fhgqx19 f1olyrje f1p93eir f1h8hb77 f1x7u7e9 f10aw75t fsle3fq f17ae5zn" href="https://twitter.com/m2pfintech" target="_blank" rel="noreferrer noopener">Twitter</a>&nbsp;for insightful fintech bytes curated for curious minds like you.

The Rising Threat of Financial Fraud: Why Robust Risk Management is Essential?

<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/marketing-cms/m2p-blog/2025/06/rewards-product-blog-1000.webp" alt="Drive Customer Loyalty &amp; Engagement: Unlock the Power of M2P’s Rewards Stack for Financial Institutions" title="" id="7lyawrf1p" width="100%" height="253">For years, financial institutions (FIs) have built trusted relationships with customers through solid products, bundled services, and traditional rewards. These models have driven familiarity and retention, and they continue to hold value. However, as customer expectations evolved in tandem with the industry, transactional engagement models began to lose relevance.&nbsp;&nbsp;Did you know?&nbsp;India’s loyalty market is expected to grow by 18.3% CAGR, reaching <a class="link" href="https://www.businesswire.com/news/home/20250213552919/en/India-Loyalty-Programs-Market-Intelligence-2025-Cross-Industry-and-Cross-Brand-Loyalty-Partnerships-Competitive-Landscape-Data-Analytics-for-Personalization---Future-Growth-Dynamics-to-2029---ResearchAndMarkets.com" target="_blank">US$3.58 billion by 2025</a>, driven by digital-first, AI-enhanced loyalty programs via mobile wallets and apps.&nbsp;Yes, today’s users interact across platforms and expect experiences that are fast, personal, and relevant. They want real-time engagement and benefits that reflect their lifestyle. With digital-first players gaining traction, the challenge is no longer just about retention; it keeps them actively engaged.&nbsp;Early adopters in the financial sector are already responding to this shift by evolving from static reward programs to intelligent engagement ecosystems that are&nbsp;<ul class="list-node" id="ly1kjb6vc"><li>Instant and intuitive</li></ul><ul class="list-node" id="x4yedphz8"><li>Contextual and customized</li></ul><ul class="list-node" id="k58urmdd6"><li>Integrated seamlessly across channels</li></ul>This evolution opens the door for FIs to reimagine how they deliver value, beyond products and transactions.&nbsp;That’s where M2P’s Rewards Stack makes a difference, enabling institutions to design personalized engagement experiences that build connections, influence behavior, and deliver long-term value.<h2 class="heading-node" id="rmmy0zg5c" style="text-align: left">Understanding Challenges Behind Rewards Program&nbsp;</h2>Designing a rewards program that truly engages customers isn't just about offering perks. It’s about delivering personalized, high-impact experiences consistently and at scale. Here are some of the key challenges financial institutions often face when implementing or scaling rewards program(s).<ul class="list-node" id="xf5p5t8ci"><li>Low Perceived Value by Users: Customers quickly disengage from programs that feel generic, overly complex, and/or out of reach. If rewards are difficult to earn, irrelevant to their lifestyle, or buried in fine print, users stop paying attention. A program must deliver tangible, lasting value; otherwise, it fades into the background.&nbsp;</li></ul><ul class="list-node" id="lt9jd7yw8"><li>Operational Complexity: Behind every rewards program is a maze of logic, workflows, and integrations. Mapping earnings rules, managing redemption processes, aligning with business objectives, and syncing with core banking systems can become overwhelming—especially for tech teams balancing competing priorities.&nbsp;</li></ul><ul class="list-node" id="ebdodkpxa"><li>Financial Overheads: Legacy rewards systems often come with heavy infrastructure costs, both upfront and ongoing. The need for constant updates, manual configurations, and partner onboarding adds layers of expense that erode ROI, particularly for smaller or mid-sized institutions trying to stay agile.&nbsp;</li></ul><ul class="list-node" id="iquxbj7me"><li>Engagement Fatigue: In a crowded market flooded with offers, customers are desensitized to the usual 'cashback’ and ‘bonus point’ messages. If the program lacks novelty, interactivity, or a sense of progress, users tune out. Keeping engagement fresh requires creativity, agility, and dynamic tooling.&nbsp;</li></ul><ul class="list-node" id="uc4cqohwk"><li>Evolving Expectations: What worked well even a year ago may now feel outdated. Customers expect more than transactional rewards: they look for contextual, real-time experiences that feel intuitive and rewarding. A static program simply can’t keep pace with changing behaviors and preferences.&nbsp;</li></ul><ul class="list-node" id="yd8qkhgnm"><li>Security &amp; Compliance Risks: As rewards programs become more personalized and data-intensive, they inevitably touch sensitive financial and behavioral information. Ensuring end-to-end security, managing consent, and staying compliant with local regulations isn’t just important; it’s mandatory.</li></ul>These challenges make one thing clear: building a modern rewards experience requires more than a one-size-fits-all solution. It calls for agility, intelligence, and customer-first design.<h2 class="heading-node" id="f1pcjxxq0" style="text-align: left">How M2P’s Rewards Stack Elevates Customer Engagement</h2>M2P’s Rewards Stack equips&nbsp;financial institutions (FIs) with a future-ready solution to design dynamic, data-led loyalty programs, engineered for today’s digital-first consumer.&nbsp;Omnichannel Engagement&nbsp;M2P enables unified reward experiences across debit, credit, preloaded cards, UPI, and CASA accounts, ensuring consistent value delivery at every customer touchpoint. From credit card transactions to wallet transfers, each interaction reinforces engagement and drives habitual usage.&nbsp;Modular Design &amp; Seamless Scalability&nbsp;Indian financial institutions, regardless of size, can launch quickly and scale with confidence. The platform’s modular architecture ensures easy configuration of rules, segmentation, and partner offers without needing to rewire existing systems. This agility helps institutions adapt to changing customer behaviors and campaign goals in real time.&nbsp;Intelligence at the Core&nbsp;Backed by real-time data and behavioral insights, institutions can craft personalized reward journeys that evolve with the customer. From automating tier upgrades to nudging milestone-based rewards, M2P empowers institutions to move beyond one-size-fits-all programs and toward relationship-led growth.&nbsp;Measurable Impact, Lower Complexity&nbsp;With streamlined operations, reduced overhead, and built-in governance, institutions can maximize ROI while minimizing manual effort. The result? A smarter, more secure, and more engaging way to reward India’s growing digital consumer base without straining infrastructure or compliance teams.<h2 class="heading-node" id="iil5ltsxj" style="text-align: left">Future of Engagement for Financial Institutions&nbsp;</h2>In a competitive, regulation-heavy, and increasingly digital Indian market, customer attention is both precious and fleeting. To stay relevant, financial institutions must go beyond static loyalty schemes and build reward ecosystems that are intelligent, adaptive, and customer-centric.M2P’s Rewards Stack offers that edge, enabling banks, NBFCs, and fintechs to turn everyday financial interactions into high-impact engagement moments. Whether you're looking to boost product adoption, drive retention, or deepen lifetime value, M2P provides the tools to design for scale, deliver with speed, and evolve with users.As digital journeys become the default and real-time expectations become the norm, now is the time to reimagine how you engage your customers, not just to retain them, but to truly build lasting relationships.Ready to evolve your customer engagement strategy?<a class="link" href="https://m2pfintech.com/contact-us/?utm_source=Blog%20Page&amp;utm_medium=Website&amp;utm_campaign=Rewards%20Blog" target="_blank">Get in touch</a> to explore what M2P’s Rewards Stack can do for you.<h2 class="heading-node" id="7t8t3bamf" style="text-align: left">Frequently Asked Questions&nbsp;</h2>Q1. How is M2P’s Rewards Stack different from traditional rewards platforms?A1. M2P's Rewards Stack is modular, real-time, and API-first, enabling seamless integration across cards, wallets, and digital banking products. This flexibility allows financial institutions to build, scale, and personalize engagement without overhauling existing systems.Q2. Can M2P’s Rewards Stack integrate with existing core banking systems?A2. Yes, M2P's Rewards Stack integrates seamlessly with existing infrastructure via its API-driven architecture, ensuring fast deployment and minimal disruption.Q3. How does a modern rewards engine improve customer retention?A3. By offering personalized, behavior-driven rewards, financial institutions can turn routine transactions into meaningful engagement moments, driving stronger emotional connections and increased satisfaction.Q4. How does M2P ensure data security and regulatory compliance?A4. M2P follows industry-best practices in data encryption, consent management, and regional compliance, securing every touchpoint and ensuring safe, compliant engagement.Q5. Can reward rules, campaigns, and partner offers be customized?A5. Yes, M2P's Rewards Stack provides complete control to define earn-and-burn logic, create targeted campaigns, and integrate with burn partners, allowing tailored rewards for customer segments, behaviors, or specific goals.Q6.&nbsp;How can I set up and manage the earn and burn logic for my rewards program?A6. Our platform is designed with a portal-first approach for the front end, enabling users to easily configure their own earn-and-burn logic. This empowers you to manage your rewards program independently, with minimal reliance on backend support, for greater convenience and efficiency.<a class="link fui-Link ___1idfs5o f3rmtva f1ewtqcl fyind8e f1k6fduh f1w7gpdv fk6fouc fjoy568 figsok6 f1hu3pq6 f11qmguv f19f4twv f1tyq0we f1g0x7ka fhxju0i f1qch9an f1cnd47f fqv5qza f1vmzxwi f1o700av f13mvf36 f1cmlufx f9n3di6 f1ids18y f1tx3yz7 f1deo86v f1eh06m1 f1iescvh ftqa4ok f2hkw1w fhgqx19 f1olyrje f1p93eir f1h8hb77 f1x7u7e9 f10aw75t fsle3fq f17ae5zn" href="https://m2pfintech.com/newsletter/" target="_blank" rel="noreferrer noopener">Subscribe</a>&nbsp;to our newsletter and get the latest fintech news, views, and insights directly to your inbox.Follow us on&nbsp;<a class="link fui-Link ___1idfs5o f3rmtva f1ewtqcl fyind8e f1k6fduh f1w7gpdv fk6fouc fjoy568 figsok6 f1hu3pq6 f11qmguv f19f4twv f1tyq0we f1g0x7ka fhxju0i f1qch9an f1cnd47f fqv5qza f1vmzxwi f1o700av f13mvf36 f1cmlufx f9n3di6 f1ids18y f1tx3yz7 f1deo86v f1eh06m1 f1iescvh ftqa4ok f2hkw1w fhgqx19 f1olyrje f1p93eir f1h8hb77 f1x7u7e9 f10aw75t fsle3fq f17ae5zn" href="https://www.linkedin.com/company/m2pfintech/mycompany/" target="_blank" rel="noreferrer noopener">LinkedIn</a>&nbsp;and&nbsp;<a class="link fui-Link ___1idfs5o f3rmtva f1ewtqcl fyind8e f1k6fduh f1w7gpdv fk6fouc fjoy568 figsok6 f1hu3pq6 f11qmguv f19f4twv f1tyq0we f1g0x7ka fhxju0i f1qch9an f1cnd47f fqv5qza f1vmzxwi f1o700av f13mvf36 f1cmlufx f9n3di6 f1ids18y f1tx3yz7 f1deo86v f1eh06m1 f1iescvh ftqa4ok f2hkw1w fhgqx19 f1olyrje f1p93eir f1h8hb77 f1x7u7e9 f10aw75t fsle3fq f17ae5zn" href="https://twitter.com/m2pfintech" target="_blank" rel="noreferrer noopener">Twitter</a>&nbsp;for insightful fintech bytes curated for curious minds like you.

How Financial Institutions Can Elevate Customer Engagement with M2P’s Rewards Stack

<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2023/06/FRM-Blog-Banner-2-1-2.webp" alt="M2P Fintech" title="" width="100%" height="383"><ul class="list-node" id="bbuv8bhp5"><li>Over 95,000 UPI fraud cases were reported in 2022-23.</li><li>More than 42% of Indians experienced financial crimes.</li><li>95% of Indian firms experienced new types of cyber frauds.</li></ul>Cyber frauds are surging every day.&nbsp; You may have experienced it, or you would have come across a cyber fraud victim. Living in an era of the highest technological sophistication and still falling prey to cyber frauds sounds like an irony.&nbsp;The global digital payments market is expected to grow at 15.5% and reach $111 billion in 2023 and hit $198 billion by 2027. Payment modes such as UPI, credit/debit cards, digital wallets, and other contactless modes have gained a lot of prominence due to their speed, convenience, and security. Despite phenomenal advances, cyber frauds in the form of phishing, spamming, SIM swapping, account takeover frauds, etc., increase by the minute. Hackers are evolving with technology and adopting sophisticated strategies to infiltrate banking infrastructure and commit cybercrime.&nbsp;This is why organizations need a robust Fraud and Risk Management (FRM) system to defend against data theft, breaches, and other forms of cybercrimes. Before getting into the details, let's first understand what is fraud and risk management.<h2 class="heading-node" id="k1k07wioo">What is Fraud and Risk Management?&nbsp;</h2>Fraud Risk Management is a systematic approach to reduce frauds, especially transaction related. It encompasses identifying, managing, and mitigating breaches in addition to preventing frauds and risks. Businesses that include financial institutions, ecommerce companies, healthcare providers, government agencies, and insurance companies, use FRM systems to combat risks associated with digital transactions.In this blog, we'll discuss how to design an FRM system and best practices to follow while designing. Before diving into it, let us go through the usual cyber frauds because knowing how hackers function can help you create an FRM system capable enough to handle those frauds.Here we go!&nbsp;<h2 class="heading-node" id="nm6kjndnr">Types of Cyber Fraud&nbsp;</h2><img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2023/06/Design-request-for-FRM-blog_2_V2-1.webp" alt="M2P Fintech" title="" width="100%" height="223"><h3 class="heading-node" id="u16fnp09p">Account Takeover (ATO) Frauds &nbsp;</h3>Account takeover fraud occurs when hackers gain unauthorized access to a victim's online account and take control, often without their knowledge or consent.&nbsp;&nbsp;<h3 class="heading-node" id="29imu321k">Phishing&nbsp;</h3>Phishing is an attacking method used in ATO where the hacker sends an email to a user posing as a genuine entity. The user gets tricked by believing the email to be legitimate and discloses their private information.&nbsp;<h3 class="heading-node" id="mdhb5jdk8">Brute-force Attack&nbsp;</h3>Hackers try a combination of username/password on multiple accounts till they crack into a user’s account.&nbsp;<h3 class="heading-node" id="1qp070zis">SIM Swap and Device-related Fraud&nbsp;</h3>SIM swap is a technique used by fraudsters to get control of a user’s phone number. By controlling the phone number, hackers can take advantage of two-factor authentication to access the user's devices, their bank accounts, social media accounts, and more.&nbsp;<h2 class="heading-node" id="m1sj54yqb">Authentication Protocols to the Rescue</h2>Most organizations have some sort of strategy to defend themselves from frauds. Some organizations use a proper FRM system, some follow stringent security protocols such as 3-D Secure Authentication (3DS) and Two-Factor Authentication (2FA) as an additional security layer. But the deployment of these security protocols depends on the marketplace. Many markets (such as the United States) do not use 3DS because they prefer customer convenience over security. This may lead to frauds unless strong controls are in place. On the other hand, in markets such as India where there is a mandate for 2FA, fraudsters still persuade gullible customers to share OTPs. Not taking requisite measures can give fraudsters access to stolen card credentials. They try their luck at different merchants to see if they can go through and bypass risk controls.&nbsp;The best way to battle cyber frauds is to design a risk engine capable of not only identifying existing frauds but also new ones.&nbsp;<h2 class="heading-node" id="drco1veje">How can you Design a Robust FRM to Tackle Fraud?</h2><ul class="list-node" id="08lc91nt7"><li>Accessing requisite data</li><li>Introducing the right balance between frictionless flows and challenges</li><li>Interfacing FRM with external systems</li><li>Embracing advanced risk checks</li><li>Adopting a combination of rules and models</li></ul><h3 class="heading-node" id="akzmswrji">Accessing Requisite Data&nbsp;</h3>In this data-driven world where frauds are mutating in novel ways like the Corona virus, we need requisite data to develop an efficient and holistic FRM system.&nbsp;<h4 class="heading-node" id="ph9lh45q3">Types of data we need for fraud management&nbsp;</h4><h5 class="heading-node" id="7t9bcfucg">Transaction data&nbsp;</h5>All financial data related to digital transactions, including credit card transactions, bank transfers, wire transfers, etc. This data must include the transaction amount, date, time, location, and other details. This data is used to build a historical profile of the customer.&nbsp;<h5 class="heading-node" id="8p7zx77jg">User data&nbsp;</h5>User information such as name, address, phone number, email address, employment, income, credit history, etc.&nbsp;<h5 class="heading-node" id="sohlvxzkd">Device data&nbsp;</h5>Device type, operating system, browser type, and other technical details.&nbsp;<h5 class="heading-node" id="1749otx7p">Geolocation data&nbsp;</h5>Location of the transaction - IP address, GPS coordinates, and other data that can be used to determine the user's location.&nbsp;<h5 class="heading-node" id="0s8b81av5">Behavioral data&nbsp;&nbsp;</h5>Browsing history, search history, and other online activities that may be relevant to the transaction.&nbsp;<h5 class="heading-node" id="vbouas7eo">External data</h5>Information from external sources, such as credit bureaus, public records, and other third-party sources that can provide additional insights into the user's risk profile.&nbsp; Now that you have all the requisite data for building an FRM system, what next?&nbsp;<h4 class="heading-node" id="zt4bvsebg">Customer profiling&nbsp;</h4>Customer profiling is a process in which a business or organization collects and analyzes information about their customers and analyzes their behavior, preferences, and potential risks.Comprehensive customer profiling enables business &amp; risk teams to design the most appropriate models &amp; rules to mitigate fraudulent transactions.&nbsp;&nbsp;<h3 class="heading-node" id="k0o72ows2">Introducing the Right Balance between Frictionless Flows and Challenges&nbsp;</h3><img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2023/06/Design-request-for-FRM-blog_3_V3_2000X1000.webp" alt="M2P Fintech" title="" width="100%" height="383">A natural question arises when developing an FRM system,Why not increase the number of authentication steps to increase security and prevent cybercrime?Yes, the authentication journey can be made more complex but will definitely impact the user experience.What will the user feel if they are subjected to strenuous procedures just to make a normal digital transaction?On the other hand, if the number of authentication steps are fewer/none, the probability of a hacker breaking into the system tends to go high. That is why, while designing a risk engine, it is important to strike a balance between frictionless user experience and introducing a challenge. Having a configurable, customizable challenge experience is critical to identifying different fraud strategies.&nbsp;&nbsp;<h3 class="heading-node" id="rbhucvi5z">Interfacing FRM with External Systems</h3>To enhance the security capabilities with the ever-evolving frauds, you need to interface the FRM engine with external systems such as whitelists, hotlists, spam lists, disposable lists, etc. By regularly pulling data from these systems, you can keep the FRM updated in real time.Let’s take a scenario.A user lost his credit card. He immediately alerts the card issuer to block the card. The issuer hotlists the lost credit card, meaning the card is permanently blocked. Now, when a hacker tries to make a transaction using the lost card credentials, an FRM system can classify it as fraudulent if it is interfaced with hotlists.&nbsp;Integrating hotlist information into the Fraud Risk Management (FRM) system can significantly enhance an organization's ability to identify and manage potential risks. These risks may include money laundering, fraud, terrorist financing, etc. By leveraging this integration, organizations can proactively mitigate these risks and ensure compliance with relevant regulations.&nbsp;<h3 class="heading-node" id="dwd2niduz">Embracing Advanced Risk Checks</h3>Behavioral biometrics distinguishes genuine users from criminals by analyzing users’ physical and cognitive digital behavior. By assessing user behaviors such as mouse movements, typing cadence, swipe patterns, device orientation, etc., and comparing it with the historical user profile, the behavior can be classified as either good or bad.For example, genuine users practice different paces and navigation patterns, whereas cybercriminals rely on copy, paste, and automated programs. Genuine users use the autofill feature to fill in personal details, whereas criminals enter the data manually.&nbsp;<h3 class="heading-node" id="t9lliq7kr">Adopting Rules and Models</h3>When building an FRM system, many organizations solely rely on Machine Learning (ML) models for fraud detection. ML models help the FRM system scale, adapt, and visualize emerging threats and frauds.Does that mean you should stop following a rule-based approach?After all, why should anyone still follow the rules when there are efficient ML models that can learn by themselves?Though the ML-based approach facilitates real-time processing and can automatically detect anomalies and unique frauds, it takes time to set up and train the models. Moreover, an ML-based approach can get tricky and complicated, whereas rules are good for certain edge cases where a rule must be deployed quickly to arrest a threat.That is why it is important to design a risk engine that combines rules and models.After building a risk engine based on the above steps, it is important to test the engine periodically in real-time and get feedback on its performance. That is the job of a fraud/risk analyst. Then, they improve the system by fine-tuning the rules and models.&nbsp;<h2 class="heading-node" id="ju5uswrou">M2P Fraud and Risk Monitoring System</h2>M2P’s Fraud Risk Monitoring system leverages all the best practices in designing a risk engine. It evaluates the risk associated with various use cases (transaction, onboarding, login, and other non-payment scenarios) across all channels, including cards (authentication &amp; authorization), BNPL, core banking, payment gateway, UPI, etc.&nbsp;Our FRM system combines many sources of data and performs customer profiling by interfacing with external system. We deploy advanced risk checks such as behavioral biometrics to classify genuine users and follow a holistic approach that combines rules and models.&nbsp;<h3 class="heading-node" id="0yp3vmls5">Why M2P FRM?&nbsp;</h3><h4 class="heading-node" id="nlv820xtf">Effective Rule and Data Management&nbsp;</h4>Our FRM lets the user upload historical data, review rule performance, and deploy it after fine tuning the rules. Depending on the implementation of risk rules, the users can run the system in a listening mode (without uploading any historical data). In this case, the source system receives the risk score but does not make business decisions. Users can turn off the listening mode once the risk rules have been finalized.&nbsp;If users do not have any pre-defined rule set, our system provides a standard rule set covering all mandatory and a few optional/ conditional parameters.&nbsp;<h4 class="heading-node" id="eyi1c6dvd">Customizable Case Management Modules&nbsp;</h4>The case management section allows the issuer to flag a certain type of transaction as a case (based on a case definition) and conduct further analysis to determine if the transaction was genuine/fraudulent. The case management flow can be customized as per business &amp; risk preference.&nbsp;Our Case Management module can help you:&nbsp;<ul class="list-node" id="tmaa6nywo"><li>Set case definition (automatic rule) to flag certain transactions as cases&nbsp;</li><li>Prioritize cases as high/medium/low&nbsp;</li><li>Assign cases to be investigated by analyst&nbsp;</li><li>Automate case investigation via IVR/SMS/WhatsApp&nbsp;</li><li>Assign and reassign cases based on category, ageing, priority, etc.&nbsp;</li></ul><h4 class="heading-node" id="kt5dbo5zy">Comprehensive Reports and Dashboard section&nbsp;</h4>From fetching detailed transaction report, rule performance report to case management report till managing overall FRM system performance, filtering the dashboard by score, transaction outcome, genuine vs. fraudulent transactions, etc., our FRM gives a comprehensive reports and dashboard section to the users.&nbsp;<h4 class="heading-node" id="dxbq3wuqi">Seamless Feedback &nbsp;</h4>Our FRM eases the life of the fraud analysts. Whenever the analysts come with feedback, it is easy for them to incorporate into our risk engine.&nbsp;At M2P, we have had the privilege of collaborating with a diverse range of clients, and built lasting relationships with banks, NBFCs, and neobanks. Our team consists of seasoned professionals who possess a deep understanding of market trends and industry standards. With this knowledge, we craft innovative solutions that effectively combat cyber fraud and provide our clients with the protection they need.Do you want to protect your customers from cyber frauds?&nbsp;Reach out to us at <a class="link" href="mailto:business@m2pfintech.com">business@m2pfintech.com</a>!&nbsp;This blog was co-written by <a class="link" href="https://www.linkedin.com/in/madhusudhanramakrishnan/">Madhusudhan Ramakrishnan</a>, Associate Vice President – Product Management, M2P.&nbsp;<a class="link" href="https://m2pfintech.com/newsletter/">Subscribe</a> to our newsletter and get the latest fintech news, views, and insights, directly to your inbox.&nbsp;Follow us on <a class="link" href="https://www.linkedin.com/company/m2pfintech/mycompany/">LinkedIn</a> and <a class="link" href="https://twitter.com/m2pfintech">Twitter</a> for insightful fintech tales curated for curious minds like you.&nbsp;

Building a Robust Fraud and Risk Management (FRM) System

<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2023/06/2000X1000.webp" alt="M2P Fintech" title="" width="100%" height="358">Identity theft among pensioners is a rising pandemic that needs to be eradicated. Impersonating senior citizens by stealing or faking their life certificates with a motive to swindle their income is nefarious. The crime not only pushes pensioners into poverty but also piles lawsuits and losses onto pension disbursing authorities.&nbsp;<h2 class="heading-node" id="lkzhcveaf" style="text-align: justify">Pensioner Plight&nbsp;</h2>In India, there are over one crore pensioners, including those from the central government and defense forces. To receive pension, a retiree must submit their life certificates annually to the Pension Disbursing Authority (PDA). Banks, post offices, and other financial institutions serve as PDAs, that disburse pensions after authenticating the life certificates of pensioners.&nbsp; The mere process of physically receiving a life certificate and delivering it to the PDA is a significant effort for elderly pensioners, as the process is slow and tedious. You can only imagine the plight of pensioners who are sick, bedridden, or even living abroad. Accessing and moving the physical life certificate for pensioner verification is a grueling task for seniors.&nbsp;<h2 class="heading-node" id="rm4quf8we" style="text-align: justify">Launch of Jeevan Pramaan&nbsp;</h2>To make life certificate issuance convenient, the Indian government launched a digital service called Jeevan Pramaan in 2014. However, the service mandates senior citizens to have digital literacy. They also had to follow rigid steps and download multiple software. Seniors who are not tech-savvy face significant pressure in the process.&nbsp; This got us thinking about how we can help. We wanted to address the issues associated with the verification and distribution of digital life certificates.&nbsp;<h2 class="heading-node" id="gloui3z7e" style="text-align: justify">Our Solution: Digital Life Certificates&nbsp;</h2>We introduced the Digital Life Certificate (DLC) solution to streamline pensioner verification by making the process, quick, convenient, and seamless. Our DLC platform provides a flexible and convenient solution that can be accessed from the comfort of the pensioner's own home.&nbsp; And the best thing was our process saved significant time and effort for both the pensioner and the disbursing organization. We also customize the solution to suit specific requirements.&nbsp;<h2 class="heading-node" id="1srmxvygg" style="text-align: justify">Key Highlights of the DLC Solution&nbsp;</h2><ol class="list-node" id="09ttsi9if"><li>Multi-browser compatible web platform for generating DLC&nbsp;</li><li>Custom rule-based business engine&nbsp;</li><li>Active/Passive liveness detection&nbsp;</li><li>AI/ML-based Optical Character Recognition (OCR) techniques&nbsp;</li><li>Aadhaar OTP-based e-KYC or Digilocker&nbsp;</li><li>Integration with SMS gateway and email to push notifications to pensioners&nbsp;</li></ol><h2 class="heading-node" id="whd3zkfr1" style="text-align: justify">Pensioner Identity Verification Process Flow&nbsp;</h2>The pensioner’s identity verification process can take place in three ways&nbsp; A. Agent-assisted – The pensioner gets on a call with an agent to get the Digital Life Certificate. Both the call recording and the live picture will be saved.&nbsp; B. Self-assisted – The pensioner records himself during the process. He/she will answer the questions displayed on the screen and captures a live photo.&nbsp;&nbsp; C. Selfie-based – The selfie-based flow is customizable, where the customer can record himself by capturing an Officially Valid Document (OVD) or answering security questions displayed on the screen, and the selfie is captured.&nbsp;&nbsp; Irrespective of the process flows, the recordings will be sent to the auditor for review to verify the pensioner.&nbsp; Among these, the self-assisted process flow is more commonly used.&nbsp;<h2 class="heading-node" id="oj4ndy737" style="text-align: justify">How can Pensioners Secure Digital Life Certificates in a Self-assisted Process Flow?&nbsp;</h2>Our web-based DLC solution provides a hassle-free and convenient way for pensioners to obtain their digital life certificates in three simple steps.&nbsp; Step 1: The pensioner accesses the DLC platform via the link provided, input their data, and completes OTP-based mobile verification.&nbsp; Step 2: The pensioner then proceeds to complete Digi Locker-based Aadhaar verification using their Aadhaar number.&nbsp; Step 3: Liveness check is done using Active Liveness Detection, which involves performing gestures or reading out an OTP/statement suggested by the application.&nbsp; Step 4: The pensioner is directed to the DLC process summary. The DLC will be available in a pdf form, and upon receiving the DLC, a confirmatory message is sent to the pensioner’s mobile/email.&nbsp;<h2 class="heading-node" id="7n4jb2vwr" style="text-align: justify">Live Use Cases - Digital Life Certificates&nbsp;</h2>Odisha is the first state in India to provide a Digital Life Certificate (DLC) facility through Video KYC. We collaborated with the Odisha government and National Insurance Company Limited (NIC) in West Bengal to deliver digital life certificates to their beneficiaries/pensioners.&nbsp;&nbsp; Telangana, Uttar Pradesh, Tamil Nadu, and Andhra Pradesh are a few other states in India that have implemented our OTP-based digital-KYC solutions.&nbsp;&nbsp; So far, we have issued digital life certificates to over 5 lakh pensioners across the country through our web-based platform.&nbsp;&nbsp; Thanks to the in-hand availability of cutting-edge technologies and the three well-organized robust process flows, our platform is readily accessible to pensioners.&nbsp; Do you want to streamline pension verification?&nbsp; Write to us at <a class="link" href="mailto:business@m2pfintech.com">business@m2pfintech.com</a>.&nbsp;<a class="link fui-Link ___1qmgydl f3rmtva f1ewtqcl fyind8e f1k6fduh f1w7gpdv fk6fouc fjoy568 figsok6 f1hu3pq6 f11qmguv f19f4twv f1tyq0we f1g0x7ka fhxju0i f1qch9an f1cnd47f fqv5qza f1vmzxwi f1o700av f13mvf36 f1cmlufx f9n3di6 f1ids18y f1tx3yz7 f1deo86v f1eh06m1 f1iescvh ftqa4ok f2hkw1w fhgqx19 f1olyrje f1p93eir f1h8hb77 f1x7u7e9 f10aw75t fsle3fq" href="https://m2pfintech.com/newsletter/" target="_blank" rel="noreferrer noopener">Subscribe</a>&nbsp;to our newsletter and get the latest fintech news, views, and insights, directly to your inbox. 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Streamlining Pension Verification: A Step-by-Step Guide to Digital Life Certificates

<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2023/05/FRS-Banner.webp" alt="Facial Recognition System - M2P" title="" width="100%" height="531">Facial recognition technology today goes beyond just unlocking your smartphone. 7 out of 10 governments worldwide use the technology on a large scale for surveillance, security, and pandemic control. &nbsp;Businesses are deploying facial recognition technology for <a class="link" href="https://m2pfintech.com/blog/transform-digital-onboarding-with-vkyc/">VKYC</a>, payment authorization, access control, and customer experience, to name a few. Use cases range across industries like financial services, educational institutions, transport services, legal enforcement, and private businesses, among several others. Valued at $6.28 billion, the facial recognition market is expected to grow at 16% CAGR to reach $11.35 billion by 2027. With increased security and convenience as the two potential benefits, this <a class="link" href="https://m2pfintech.com/kyc-suite/">digital identification technology</a> has been increasingly deployed over the past decade.Before heading further into the world of facial recognition, let’s take a quick glimpse into how identity verification happens conventionally.<h2 class="heading-node" id="fxvravy6t" style="text-align: justify">Traditional Identity Verification</h2><ul class="list-node" id="6khqeq0yj"><li>People had to only rely on physical identification documents such as IDs, passports, and driving licenses to verify their identity.</li><li>Legal entities had to depend on eyewitnesses or labor-intensive manual identification techniques to identify suspects.</li><li>Security at airports, government buildings, and other high-security facilities was mostly based on manual checks. Even today, metal detectors and X-ray scanners are used for verification.</li></ul><h2 class="heading-node" id="mcouj92e1" style="text-align: justify">Shift to Modern Facial Recognition Technology</h2>The ability of <a class="link" href="https://m2pfintech.com/blog/5-reasons-why-banks-need-behavioral-biometrics/">behavioral biometrics</a> and modern facial recognition technology to authenticate IDs has been revolutionary. Irrespective of whether you use it in transportation, aviation, commerce, or as a security solution, the technology delivers key advantages in speed, accuracy, and convenience. Further, facial recognition works well in integration with a wide range of other technologies, especially security software. It is easy to incorporate into existing security systems at a low cost, enabling a win-win situation for organizations that seek a frictionless solution. A few notable implementations are listed below.<ul class="list-node" id="agfv0czy0"><li>Law enforcement agencies can use facial recognition technology to quickly identify suspects by matching their faces with the existing database.</li><li>Some countries like China have started using facial recognition technology for border control, to verify the identity of travelers entering and leaving the country.</li><li>In the airline industry, facial recognition is already employed to offer speedy, accurate identification verification at every stage of the passenger journey, including check-in, luggage drop, security screening, retail transactions, and boarding lineups.</li></ul><h2 class="heading-node" id="kcgq6zfnu" style="text-align: justify">M2P Facial Recognition System (FRS)</h2>Facial recognition/detection, <a class="link" href="https://m2pfintech.com/blog/unmask-the-power-of-face-liveness-detection-integrating-google-ml-kit-into-your-flutter-app/">liveness check</a>, and matching are components of our facial technology. To streamline citizen authentication across several services, we've developed a cloud-based FRS solution that can be integrated with current government databases and applications. Using state-of-the-art AI algorithms for biometric identification, we comply with international standards for privacy and protection, to make it easy for citizens to access government services in a secure and expedited manner. We work with the private firms and governments in Andhra Pradesh, Telangana, and Orissa on the following projects.<ul class="list-node" id="tfypywqbe"><li>Group face attendance solution for marking attendance in schools (for 14 lakh students)</li><li>Online counseling for degree colleges for intermediate pass-out students in Telangana</li><li>Pension services through our <a class="link" href="https://m2pfintech.com/blog/transform-digital-onboarding-with-vkyc/">video KYC</a> solution in Orissa</li><li>Driving license and vehicle registration without a personal visit to the Telangana RTA department</li><li>Face-based attendance application to ambulance drivers to mark their shift-wise attendance for private firms.</li></ul><h3 class="heading-node" id="hxw5gf5nw" style="text-align: justify">Key Benefits</h3><ul class="list-node" id="z1lxv8y56"><li>Contactless: Our <a class="link" href="https://m2pfintech.com/blog/how-is-ai-changing-the-financial-industry-top-6-use-cases-in-fintech-and-banking/">AI</a> &amp; ML-enabled advanced facial attendance system is based on contactless technology, which means it can be used to identify individuals without requiring physical contact. It can even mark attendance within a safe distance of 6 feet. Being contactless by nature, it ensures system functionality at crucial times.</li><li>Flexibility: Facial attendance solution offers a greater amount of flexibility since it can be operated at edge level without any internet connectivity. It can capture single attendance and group attendance based on custom requirements.</li><li>Instantaneous: Facial recognition is instant and can provide results in real-time, meaning that the system can identify a person as soon as their face is captured by a camera.</li><li>Fool-Proof: Our FRS solution has the potential to complete the verifications with the best of accuracy and reliability making it the fool-proof solution for identity verification.</li><li>Saves cost and effort: FRS is a potential cost-saving solution that reduces the need for human personnel to manually identify individuals which in turn prevents errors and biases in identification.</li></ul><h3 class="heading-node" id="y6a4ohx41" style="text-align: justify">Use Cases of Facial Recognition</h3>We rolled out our advanced Facial recognition solution involving Facial technology, Geo-fencing, and De-duplication modules to different government and financial institutions across the Telangana state. Below are the use cases where FRS plays a major role. Subsidy Management System: FRS integrations enable seamless monitoring of subsidies for government entities where all the beneficiaries need to be authenticated to prevent misuse. The distribution of subsidies can be managed centrally, making it easier to track and monitor the use of funds. FRS can capture and store data on beneficiaries, including their personal information, income, and eligibility for the subsidy. By doing so, it ensures that only those who meet the criteria receive the subsidy, and that there is no duplication of benefits. The facial system can identify any irregularities in the distribution of funds, such as multiple claims by the same beneficiary or claims by ineligible beneficiaries. Citizen Identification: FRS aids in the rapid identification of citizens, decreasing the time and resources required for manual identification processes. This customer identity check is highly accurate, reducing the risk of errors in identifying individuals. FRS can improve security by adding an extra layer of identification and verification. Customer Onboarding: FRS can be used for customer onboarding across industries like banking, insurance, and several others. It can streamline the <a class="link" href="https://m2pfintech.com/blog/crack-the-kyc-jigsaw-ease-onboarding-compliance/">KYC </a>and onboarding process by verifying the identity of customers remotely, which saves time and reduces costs. The application helps mitigate any risks associated with using FRS for customer onboarding. Attendance Marking: Using FRS technology, attendance marking can be done in a matter of minutes for a group of 50 students, as opposed to traditional methods of manual marking which can take much longer. This is because FRS technology can identify and mark attendance for multiple individuals simultaneously, without the need for physical contact or manual input. It helps to detect up to 8 faces in a single frame, it takes only 2 to 3 seconds per attendee. Let's discuss the attendance marking use case in detail.<h3 class="heading-node" id="w387kl1am" style="text-align: justify">How Does Facial Recognition Technology Enable Attendance Marking?</h3>Step 1: Onboarding process and integration&nbsp; First, the FRS application must be onboarded and integrated with the existing system.<ul class="list-node" id="lhqnxh1si"><li>Attendee/attendees are registered in the portal or the mobile app</li><li>Data is integrated to the system using department level <a class="link" href="https://m2pfintech.com/blog/api-the-power-that-drives-new-age-banking-ecosystems/">APIs</a></li><li>Attendee details can be customized based on entity requirement</li></ul>Step 2: Registration process The next step is registration where participants can choose to sign up with or without an Aadhar number based on the availability. With Aadhaar<ul class="list-node" id="9k21lkoqb"><li>Register attendee with Aadhaar in FRS system</li><li>Perform Aadhaar-based e-KYC</li><li>Aadhaar details of the attendee are fetched</li><li>Perform liveness check by capturing live photo</li><li>Face match between photo from Aadhaar and live photo</li><li>Enrolment completed</li></ul>Without Aadhaar<ul class="list-node" id="0xiwzzeyh"><li>Register attendee in AI FRS system</li><li>Details of individual are fetched</li><li>Capture live photo of attendee</li><li>Perform liveness check</li><li>Enrolment completed</li></ul>Step 3: Attendance Marking Once the registration is complete, attendance of a single person or a group can be captured.<ul class="list-node" id="vl0je38d2"><li>Open application and capture selfie/photo</li><li>Attendance recorded to edge level</li><li>Attendance marking is done in 2 ways</li><li>1:N - To capture the attendance of 1 person in less than a second</li><li>N:N - To capture the attendance of up to a 50-member group in less than 2 minutes</li></ul>Step 4: Reports and Live Dashboards Monitoring With the integrated dashboard, you can easily monitor all the reports generated by this solution. Soon after the completion of the capture and authentication processes, the reports are instantly generated. With the help of this software, it is possible to continuously monitor and keep an eye on the live monitoring dashboard of the FRS system.<h3 class="heading-node" id="t62u8gnhl" style="text-align: justify">Proven Impact of FRS in Attendance Marking</h3><ul class="list-node" id="h78758cmv"><li>Lead time taken to enroll an attendee is less than 5 seconds.</li><li>Liveness check accuracy is 100%</li><li>Face matching accuracy is 100%</li><li>False acceptance ratio is less than 0.1%</li><li>False rejection ratio is less than 0.1%</li></ul>Apart from the results listed above, our facial recognition system provides the benefits below.<ul class="list-node" id="j47pegcmu"><li>Marks attendance offline</li><li>Syncs data automatically when connectivity is restored (after network outage)</li><li>Contactless capture within 5 feet distance</li><li>Live monitoring with MIS reports</li><li>Geo location binding</li></ul>Our facial recognition system is a versatile solution that can be easily and quickly integrated into any system without any hassle.<h2 class="heading-node" id="f1n8tolnx" style="text-align: justify">Future of Facial Recognition</h2>Face recognition technology is the future of identity verification. It holds a wide scope for potential innovation in security, marketing, healthcare, retail, and entertainment. We can expect to see a significant improvement in the accuracy of face recognition systems for more reliable identification in complex and challenging situations. Want to know more about facial recognition solutions? Write to us at <a class="link" href="mailto:business@m2pfintech.com">business@m2pfintech.com</a>. Make your identity verification and authentication a breeze!

How has Facial Recognition revolutionized Identity Verification and Authentication?

<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2023/01/AUA-2.webp" alt="M2P Fintech" title="" id="qrx9wqz1i" width="100%" height="60">Identity fraud is on the rise globally. To avert the dangers of this risk, businesses across industries need to be vigilant and conduct thorough identity verification, with no scope for errors or misrepresentation. If the identities of people involved viz., employees, customers, vendors, and other stakeholders, are not verified properly, businesses could suffer from security breaches, financial losses, regulatory penalties, and reputational damage. In India, Aadhaar serves as a trusted tool to weed out duplicate and fake identities.&nbsp; The Aadhaar card is a unique and potent document that enables cost-effective, smooth, and secure onboarding. But accessing and verifying the validity of Aadhaar cards from the UIDAI (Unique Identification Authority of India) server is not an easy task. Their security policies and other stringent protocols limit access to the UIDAI database. This is where AUA/KUA comes in as a robust and foolproof solution for accessing the Aadhaar database effortlessly and verifying identities swiftly. So, what is AUA and KUA?&nbsp; Let us break it down for you.<h1 class="heading-node" id="xckr8aasp" style="text-align: justify">What is AUA?</h1>Acronym for Authentication User Agency, AUA is a license given to a regulated entity authorized by UIDAI. The license enables businesses to use OTP and biometric-based Aadhaar authentication to verify the identities of the customer, employee, or any stakeholder. The verification response is not too elaborate. Only a ‘Yes’ or ‘No’ response is documented. The AUA license is versatile enough to benefit government institutions that disburse benefits and financial institutes that onboard customers or employees. It is important to note that AUAs are liable for the authentication process and the security and integrity of Aadhaar data.<h2 class="heading-node" id="5fvsbrq9w" style="text-align: justify">How AUA helps verify identity?</h2>When an authentication request is raised, AUA passes the request to the Authentication Server Agency (ASA) who then passes the request to the CIDR database of UIDAI. The OTP/biometric data provided by AUA is matched here on a real-time basis. The response (Yes / No) is pushed back to AUA from UIDAI via the ASA. To verify an identity, AUAs liaise with multiple Authentication Services Agencies (ASAs), which are entities that maintain secure leased line access with the UIDAI database.<h3 class="heading-node" id="bvp0bkfrz" style="text-align: justify">AUA and Sub AUA</h3>Sometimes the AUA sends authentication requests from other entities named "Sub AUAs," which is responsible for offering authentication services to customers on behalf of the AUA. The UIDAI directly authorizes the AUAs to use the Aadhaar system, while an AUA authorizes sub-AUAs to perform the authentication using the AUA route by sub-licensing it to Sub-AUA. The Sub-AUA will not have to maintain the entire infrastructure and compliance as per UIDAI compliance. AUA will handle those. Following the Aadhaar authentication, KYC authentication of customers is performed using KUA.<h2 class="heading-node" id="srsgv4yra" style="text-align: justify">What is KUA?</h2>Acronym for KYC User Agency, the KUA fetches the KYC details from the UIDAI server. The KYC checks are carried out in the UIDAI server by collecting Aadhaar Number and OTP / Biometrics (Fingerprint / Iris / Face). The response will contain data of customers viz., name, gender, date of birth, address, and photograph. The KYC request is sent from KUA through (KYC Services Agency) KSA to UIDAI. Businesses across industries must acquire an AUA/KUA license to upgrade their onboarding capabilities. The license ensures an additional layer of protection against fraud. Today, NBFCs are also eligible to apply for AUA/KUA licenses alongside RBI, SEBI, IRDA, and government-regulated businesses.<h2 class="heading-node" id="dk7jf1vai" style="text-align: justify">Why do businesses need AUA/KUA?</h2>AUA/KUA license assures speed, accuracy, and security of identity verification and KYC checks.&nbsp;Here are a few more reasons why your business requires AUA/KUA license.<ul class="list-node" id="gaoxflike"><li>Cuts costs associated with the manual, in-person document verification</li><li>Enables streamlined verification procedures</li><li>Ensures onboarding experience is smooth and seamless</li><li>Protects data using cutting-edge security</li><li>Reduces the danger of identity fraud and other security breaches</li><li>Boosts customer/employee trust, as identity verification and data are safe</li><li>Simplifies and eases user journey as the verification happens in an instant</li></ul><h2 class="heading-node" id="m27a66omw" style="text-align: justify">Challenges in acquiring AUA/KUA license</h2>As we already discussed above, acquiring the AUA/KUA license is not a walk in the park. It is fraught with a lot of challenges that make it a tedious process. Let’s delve into two important challenges here. Regulatory compliance: All businesses must adhere to stringent standards and regulations established by UIDAI to procure the AUA/KUA license. If compliance is compromised, businesses will have to deal with exorbitant fines, legal action, and reputational damage. Infrastructure and cost: Setting up and maintaining the necessary infrastructure and staff to get the AUA/KUA license can be expensive, labor-intensive, and time-consuming. To overcome the challenges in acquiring an AUA/KUA license, you need a <a class="link" href="https://syntizen.com/zen-aua">reliable RegTech partner</a> who can do the heavy lifting, while you focus on your core business. Here are some of the use cases of AUA/KUA.<h2 class="heading-node" id="wciutrwxx" style="text-align: justify">Use cases for AUA/KUA</h2><h3 class="heading-node" id="mgh56n2dr" style="text-align: justify">Streamline Customer Onboarding - BFSI</h3>AUA/KUA helps BFSI players with secure and reliable customer onboarding and KYC process using biometric authentication. The service enables quick execution of KYC processes, reduces the risk of data breach and unauthorized access to sensitive data.<h3 class="heading-node" id="zoldaec1c" style="text-align: justify">Pension Disbursal - Governments</h3>Governmental departments and agencies rely on AUA/KUA services for secure and seamless Aadhaar validation to verify identity and pension eligibility. The process of delivering financial support to senior citizens and disabled beneficiaries is made efficient, secure, and reliable.<h3 class="heading-node" id="nppzy95p3" style="text-align: justify">Online Services - Transport Department</h3>By using AUA/KUA services, government departments like the Transport Department of Telangana have been able to verify the identity of citizens efficiently and deliver online services seamlessly.&nbsp; The need to physically visit the Regional Transport Authority (RTA) offices for services was drastically reduced, making the process highly convenient and efficient for citizens.<h3 class="heading-node" id="esq88bs9h" style="text-align: justify">Contract Employee Authentication - Municipal Corporation</h3>AUA/KUA helps municipal corporations in tracking the attendance of sanitary workers accurately. Using biometric scanners, municipal corporations verify Aadhaar, at least three times in a day to prevent fraud and eliminate ghost workers. Biometric verification ensures the authenticity of workers and the accuracy of records. Municipal corporations deploy AUA/KUA services to maintain trustworthy records.<h3 class="heading-node" id="2z6yrlltv" style="text-align: justify">Employee Identification - Hospitals</h3>Hospitals leverage AUA/KUA services for hassle-free biometric verification of doctors and other healthcare professionals.&nbsp; The process helps hospital administration confirm the validity and availability of physicians and monitor their schedules.<h3 class="heading-node" id="4o77s744u" style="text-align: justify">Student Monitoring - Welfare Hostels</h3>The usage of AUA/KUA services and the installation of biometric scanner devices in welfare hostels have reduced incidences of ghost student records and increased efficiency in fund allocation and utilization. By helping hostel students authenticate themselves every day, the hostels can track their attendance precisely and get rid of ghost student records. The process has helped the administration prevent the misappropriation of funds and ensure resources are used efficiently to support the students.<h3 class="heading-node" id="z2jovtjh0" style="text-align: justify">Scholarship Monitoring - Universities/Colleges</h3>Tracking student attendance is imperative for colleges and universities. To prevent fraudulent activities or misrepresentations in biometrics, institutions can rely on AUA/KUA. It helps verify student identity quickly and accurately using the Aadhaar number. It also helps universities to disburse scholarships to students.<h2 class="heading-node" id="4hrtq082o" style="text-align: justify">AUA/KUA, a necessity for seamless identity verification</h2>AUA/KUA license is a vital investment for any business that requires seamless identity verification. Instead of taking on the complex and expensive task of implementing an in-house identity service, businesses can consider partnering with a reputable digital identity service provider that offers a comprehensive AUA/KUA solution to combat identity fraud. Check out our exclusive AUA/KUA suite that offers the following features.<ul class="list-node" id="mfwgkl508"><li>Cloud and on-premise hosting</li><li>Face authentication-based transactions</li><li>Scalable system (handles 10 million hits/day)</li><li>Live network operations team</li><li>Supports all stacks (Web, Windows &amp; Android)<ul class="list-node" id="pmn5y19a1"><li>UIDAI-approved biometric scanners</li><li>Fraud monitoring systems</li></ul></li><li>Multiple ASA switch (switch transactions to ASA)</li><li>Live dashboard monitoring</li><li>Assured UID compliance</li></ul>Want to know more about our AUA/KUA suite? Write to us at <a class="link" href="mailto:business@m2pfintech.com.&nbsp;">business@m2pfintech.com.&nbsp;</a> &nbsp; &nbsp;<a class="link" href="https://m2pfintech.com/newsletter/">Subscribe</a>&nbsp;to our newsletter and get the latest fintech news, views, and insights, directly to your inbox.Follow us on&nbsp;<a class="link" href="https://www.linkedin.com/company/m2pfintech/mycompany/" target="_blank" rel="noopener">LinkedIn</a>&nbsp;and&nbsp;<a class="link" href="https://twitter.com/m2pfintech" target="_blank" rel="noopener">Twitter</a>&nbsp;for insightful fintech tales curated for curious minds like you.

Streamline Customer Identification with AUA/KUA

<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2023/01/EDO-suite-Banner-1.webp" alt="M2P Fintech" title="" width="100%" height="529">Does your organization collect or store Aadhaar numbers?&nbsp;&nbsp; Then you are at high risk.&nbsp;&nbsp; With identity thefts, data breaches, and cyber fraudsters on the rise, businesses are vulnerable to financial and reputational damage. While conducting <a class="link" href="https://m2pfintech.com/blog/know-your-customer-kyc-the-need-for-authentication/" target="_blank" rel="noopener">digital KYCs</a> that involve Aadhaar card verification, the risk of data exposure and misuse of customer/employee information by fraudulent entities is even greater. These privacy concerns and security breaches cost businesses billions in losses.&nbsp; Thus, it is imperative for organizations to follow strict security protocols for Aadhaar card verification. Complying with the Aadhaar masking mandates of regulators such as UIDAI, RBI, SEBI, and IRDAI, is vital to protect Aadhaar data.&nbsp;<h2 class="heading-node" id="ah6szvxl9" style="text-align: justify">What is Aadhaar masking?</h2>Aadhaar masking is a critical security directive issued by the UIDAI and regulatory bodies to protect Aadhaar data and prevent identity fraud and data scams. According to this mandate, the first 8 digits of your Aadhaar card number must be replaced by asterisks and appear as “XXXX-XXXX”, while the last 4 digits shall remain as it is. Aadhaar card masking serves as an extra layer of protection to conceal and protect sensitive information.&nbsp;&nbsp;<h2 class="heading-node" id="wnfhl36ra" style="text-align: justify">How Aadhaar masking came into prevalence?&nbsp;</h2>According to the <a class="link" href="https://uidai.gov.in/images/news/Judgement_26-Sep-2018.pdf" target="_blank" rel="noopener">Supreme Court of India’s judgment in 2018</a> on Aadhaar privacy concerns, “No entity, including a requesting entity, which is in possession of the Aadhaar number of an Aadhaar number holder, shall make public any database or record containing the Aadhaar numbers of individuals, unless the Aadhaar numbers have been redacted or blacked out through appropriate means, both in print and electronic form.”&nbsp;&nbsp; The UIDAI stipulated that no entity could save Aadhaar numbers in their database in any form (physical or virtual). However, the entity can and must mask the first 8 digits before storing any physical or virtual copy of the Aadhaar cards.&nbsp; Apart from the above regulators, the <a class="link" href="https://www.lifeinscouncil.org/component/cir_020_29.01.2019.PDF" target="_blank" rel="noopener">IRDAI,</a> <a class="link" href="https://www.rbi.org.in/Scripts/BS_ViewMasDirections.aspx?id=11566" target="_blank" rel="noopener">RBI,</a> <a class="link" href="https://www.sebi.gov.in/legal/circulars/apr-2020/clarification-on-know-your-client-kyc-process-and-use-of-technology-for-kyc_46565.html" target="_blank" rel="noopener">SEBI,</a> and The Ministry of Finance also came out with their mandates to cloak the Aadhaar numbers. &nbsp;<h2 class="heading-node" id="lmvf8p2ze" style="text-align: justify">Why Aadhaar masking?&nbsp;</h2>Following the regulations and judgments, the regulated entities in India must use only masked Aadhaar numbers in their existing databases and can accept only masked Aadhaar cards going forward. This could be the only way to reduce identity theft while ensuring compliance and data safety.&nbsp;<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2023/01/EDO-suite-masking-1.webp" alt="M2P Fintech" title="" width="100%" height="529">Organizations that fail to mask Aadhaar cards will face severe consequences in the form of penalties, reputational damage, additional audits, imprisonment, and/or even complete shutdown. Hence, being agile and staying up to date with regulatory requirements is crucial.&nbsp;&nbsp;<h2 class="heading-node" id="jev9xd6hg" style="text-align: justify">How can businesses optimize and automate Aadhaar masking?&nbsp;</h2>Businesses today find it challenging to address the operational aspects of compliance and data handling. Masking large chunks of Aadhaar card data accurately requires immense manpower, time, and cost. There is also a huge dependency on humans and could be prone to errors.&nbsp; Using a robust Aadhaar masking tool is a great way to optimize the process and drive efficiencies.&nbsp; Our EDO Suite helps businesses automate the task of Aadhaar masking in no time while ensuring accuracy and zero errors.&nbsp;&nbsp;<h2 class="heading-node" id="lnv5j9vro" style="text-align: justify">What is EDO Suite?&nbsp;</h2>Powered by AI and ML, EDO Suite is an efficient Aadhaar masking tool that intelligently detects and masks Aadhaar data instantly. It enables your organization to be 100% compliant with UIDAI and RBI regulations without any hassles.&nbsp;&nbsp; EDO suite’s instant masking feature covers up the first 8 digits, revealing only the last 4 instantaneously. It is capable of analyzing and masking only valid Aadhaar numbers from a group of random numbers.&nbsp;To ensure over 98.3% accuracy, the EDO suite employs the Verhoeff algorithm.&nbsp; A checksum formula for error detection, the Verhoeff algorithm is used to eliminate errors in data entry and validate Aadhaar numbers.&nbsp;&nbsp; EDO can be deployed entirely in-house at a very low cost, with no intervention or reliance on third-party algorithms. Till date, we have processed more than 10 crore Aadhaar numbers in multiple formats.&nbsp;<h2 class="heading-node" id="nb1rdh0io" style="text-align: justify">Key components of EDO&nbsp;</h2><img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2023/01/EDO-suite-masking-2-1.webp" alt="M2P Fintech" title="" width="100%" height="529">EDO Scan&nbsp; A smart tool that can scan the entire computer or server and mask all Aadhaar cards to provide detailed scan reports. This is primarily used for ‘Legacy Data Masking’.&nbsp;&nbsp; EDO Lens&nbsp; A camera SDK that can be integrated into any customer onboarding mobile solution and the Aadhaar number will be masked in real-time while capturing the document.&nbsp; EDO Connect&nbsp; Powerful APIs where an entity can send an Aadhaar image, and EDO Connect will return a masked Aadhaar.&nbsp;<h2 class="heading-node" id="tfbc1m9vh" style="text-align: justify">How does EDO work?&nbsp;</h2>EDO provides two primary services.&nbsp;<ul class="list-node" id="73uyxx4vs"><li>Legacy Data Masking&nbsp;&nbsp;</li><li>New Data Masking&nbsp;</li></ul>Legacy Data Masking&nbsp; Legacy data is consumer data that companies have already collected in the database since the issuance of the Aadhaar cards in 2010. EDO helps in masking those legacy data in a matter of seconds.<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2023/01/EDO-suite-masking-3.webp" alt="M2P Fintech" title="" width="100%" height="529">New Data Masking&nbsp; The new data is the real-time consumer data that is collected and added to the database. New Aadhaar data being added to the database can also be masked before storage.&nbsp;&nbsp;<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2023/01/EDO-suite-masking-4.webp" alt="M2P Fintech" title="" width="100%" height="529"><h2 class="heading-node" id="h237hl4pi" style="text-align: justify">Aadhaar masking made quick, simple, and convenient</h2>EDO caters to a business’s Aadhaar masking needs with simple, transparent pricing, and best-in-class technology. It is well-suited for both on-premise and cloud model.&nbsp;&nbsp; Features and Benefits&nbsp; 1. Supports multi-format masking &nbsp;<ul class="list-node" id="p5pg7p1v9"><li>First eight digits of the Aadhaar with a red strip and ‘XXXX-XXXX' in excel sheets&nbsp;</li><li>Multiple Aadhaar numbers on the same page/image&nbsp;</li><li>Aadhaar numbers in different formats/files&nbsp;&nbsp;&nbsp;</li><li>Only Aadhaar numbers in an image with a foreign object. For e.g., an Aadhaar card with a mouse/pen&nbsp;</li></ul>2. Won't mask non-Aadhaar numbers&nbsp; 3. Seamless masking with multiple options<ul class="list-node" id="trs6hfopa"><li>Full Detection - Scans the entire system&nbsp;</li><li>Choose Folder – Scans only a specific folder&nbsp;&nbsp;&nbsp;&nbsp;</li></ul><ul class="list-node" id="469pjy9v3"><li>Instant Masking - Masks any single image&nbsp;</li><li>Auto Scan - Sets the time for automatic masking of the entire system or a specific folder&nbsp;</li></ul>4. Detects and masks the selected files in order to thoroughly analyze dupes, non-Aadhaar numbers, and formats&nbsp; 5. The detection results are made available as downloadable reports&nbsp; 6. Cancels non-Aadhaar data and provides date, scan IDs, time stamps, and status (canceled/completed)&nbsp; Ready to mask Aadhaar in an instant, the right way?&nbsp;&nbsp; Connect with our expert team at <a class="link" href="mailto:business@m2pfintech.com">business@m2pfintech.com</a>.&nbsp; We’ll be glad to reach out and get you the best-in-class Aadhaar masking solutions right away!&nbsp; <a class="link" href="https://m2pfintech.com/newsletter/" target="_blank" rel="noopener">Subscribe</a>&nbsp;to our newsletter and get the latest fintech news, views, and insights, directly to your inbox. Follow us on&nbsp;<a class="link" href="https://www.linkedin.com/company/m2pfintech/mycompany/" target="_blank" rel="noopener">LinkedIn</a>&nbsp;and&nbsp;<a class="link" href="https://twitter.com/m2pfintech" target="_blank" rel="noopener">Twitter</a>&nbsp;for insightful fintech tales curated for curious minds like you.

Mask Aadhaar in an Instant, the Right Way

<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2023/01/Medium-2.webp" alt="M2P Fintech" title="" id="il8fa0frb" width="100%" height="763">Businesses record revenues and expenses every day. Ever wondered why it is important to accurately document these transactions?Maintaining accurate financial records is critical to the success of any business. It helps the management make informed accounting decisions and ensures a strong base for growth and operations. Payment reconciliation secures the financial health of a business.In the next few minutes, you will learn what payment reconciliation is all about, why it matters, its benefits, M2P’s Recon360, why it is a game changer, and how it works.Let’s dive in!<h2 class="heading-node" id="c692iadj7">What is Payment Reconciliation? Why does it Matter?</h2>Payment reconciliation is a process that ensures the accuracy of financial records by matching them with bank statements and world-leading interchanges, viz., transaction processing switches and core banking solutions. It is essential for businesses to ensure that every transaction is properly recorded and up-to-date. In today's age of digital payments, businesses are handling multiple payment gateways, interchange reports, settlement vouchers, and bank financial postings across different partners and touchpoints. Thus, it is imperative to keep track of all income and expenses for sound financial health.Businesses must balance their payments on a cycle and time zone-based reconciliation. It is a vital aspect of bookkeeping that ensures the integrity of financial records. This process must be performed regularly for data accuracy and compliance with financial regulations.<h2 class="heading-node" id="kqn6ucejv">Benefits of Payment Reconciliation</h2>Frequent, regular, and automated payment reconciliation offers the following benefits.<ul class="list-node" id="tf6p5m0yi"><li>Identifies and resolves errors in financial records</li><li>Tracks late or unpaid invoices</li><li>Helps maintain accurate financial records</li></ul><h3 class="heading-node" id="imxff9564">Identifies and resolves errors in financial records</h3>Payment reconciliation detects bookkeeping errors and unauthorized payments. By comparing internal and external records, businesses can identify discrepancies early on and quickly resolve issues related to cash flow or security breaches. This prevents fraud and ensures the financial stability and health of a business.<h3 class="heading-node" id="j617aalc8">Tracks late or unpaid invoices</h3>Reconciling payments on a regular basis helps businesses stay on top of late or unpaid invoices. Businesses can identify missed or delayed payments by comparing internal and external records and take action to follow up and collect them. The process not only saves effort and time but also prevents financial stress.<h3 class="heading-node" id="7bbllei6z">Helps maintain accurate financial records&nbsp;</h3>To make data-driven decisions, accurate financial records are a must-have. By reconciling payments regularly, businesses ensure that their financial records are accurate and up-to-date. Reconciliation demonstrates financial stability when there is a need to secure investments or loans. It also supports regulatory compliance and prevents legal repercussions.<h2 class="heading-node" id="nh8rexmnu">How Payment Reconciliation Works?</h2>Payment reconciliation involves matching financial records with those from a bank, internet banking, NEFT, RTGS, and AEPS, for thoroughness and accuracy. By using a bank feed, the finance team can easily compare and verify payments made against accounts, thus maintaining accurate financial records. Payment reconciliation comprises two processes, viz., internal and external.<h3 class="heading-node" id="ln5z8t7hn">Internal Reconciliation</h3>Maintaining accurate records of transactions can be done using internal sources such as accounting software, spreadsheets, and other record maintenance systems. Some businesses keep physical copies of receipts, invoices, and billing paperwork as a means of maintaining records. However, this physical method could be prone to human error and may not be as reliable as digital record-keeping. Choosing the right internal reconciliation method is crucial, as it could involve harmonizing physical and digital records.<h3 class="heading-node" id="evguoznb2">External Reconciliation</h3>External reconciliation relies on transaction data coming in from external sources like bank statements that hold details of incoming and outgoing cash flow. As these statements are digitally generated and contain critical data pertaining to payments, they are reliable for accounting and reconciliation needs.<h3 class="heading-node" id="3xqe1i26g">Matching Internal with External</h3>As an ideal practice, businesses must match and cross-check internal and external records to reconcile the transactions. Entries in internal reconciliation should match those from external reconciliation. If there are discrepancies, businesses must get to the root of it to identify and resolve errors or breaches, if any.<h2 class="heading-node" id="emp5l9908">Types of Payment Reconciliation</h2>Depending on the complexity and transaction type, the payment reconciliation process can differ from one business to another. Here are common types of payment reconciliation companies follow.<h3 class="heading-node" id="cf0nbifgi">Rule-based reconciliation</h3>The rule-based reconciliation process is automated and uses predefined criteria or rules to match transactions between different accounts. These rules are programmed into the system, and the software automatically verifies matches and exceptions based on these rules. This method is highly efficient, saves time, and reduces errors compared to manual reconciliation methods. It can be customized to fit specific business needs, as the rules can be modified and updated as needed. One flexible approach to rule-based reconciliation is relaxed matching. Instead of deploying strict rules, it allows for some level of deviation or tolerance in certain parameters such as date and amount. This approach is less accurate, much faster, and needs less manual intervention. It is often used in high-volume and low-value transactions where speed and efficiency are prioritized over absolute accuracy.<h3 class="heading-node" id="pothdb3so">Card reconciliation</h3>Accountants use the card reconciliation method to compare credit or debit card statements to General Ledger (GL) accounts. It must be ensured that the information on a credit card bill and the information represented on the GL are consistent, as every business transaction is recorded within the GL and vice versa.<h3 class="heading-node" id="30lrzycdj">Cash reconciliation</h3>Cash reconciliation is used to verify the usage of cash from the register. The purpose of cash reconciliation is to ensure that the recorded cash balances and the bank statements match up. The cash reconciliation method enables businesses to detect inconsistencies and pinpoint the areas where the ledger and statement do not match up.<h3 class="heading-node" id="smzbl80w6">Digital wallet reconciliation</h3>The process of digital wallet reconciliation is similar to credit card reconciliation. The only difference is the mode of payment. It is recommended to report payments received via digital wallets separately. That way they can be compared with the necessary merchant reports to ensure that records are accurate and the numbers on statements make sense.<h3 class="heading-node" id="6lm630sk5">Real-time automatic payment reconciliation</h3>Automated payment reconciliation can accelerate month-end accounting close, reduce errors, and improve cash flow control. The ability to handle live transaction data is provided by real-time reconciliation for banks and other financial institutions.<h2 class="heading-node" id="kkee8uxpt">Challenges in Payment Reconciliation</h2>Payment reconciliation is imperative for any business. However, it comes with its own set of challenges. These challenges range from simple errors to more complex issues that can cause significant financial losses.<h3 class="heading-node" id="3d5w4wo5a">Manual processes</h3>Manual processes are prone to errors and time-consuming, thereby slowing down the reconciliation process. When transactions are recorded and reconciled manually, there is a greater risk of incorrect dates, transposed numbers, and other inaccuracies. Manual processes also make it difficult to keep up with the volume of transactions and identify discrepancies.<h3 class="heading-node" id="wr6ruhh5h">Data discrepancies</h3>With multiple payment partners and different types of financial transactions, it can be difficult to ensure that all the data received is consistent and in a similar format. When data from disparate sources are not consistent, it can be difficult to match transactions between different accounts. Inconsistent data that lacks standardization can lead to processing delays, inaccurate reporting, and erroneous reconciling. It can also cause difficulty in achieving compliance and identifying frauds and breaches.<h3 class="heading-node" id="gfcp9fiht">Lack of visibility and control</h3>In today's fast-paced business environment, real-time data visibility and transparency in financial reporting are must-haves. However, several businesses still depend on manual spreadsheet-based processes for reconciliation, which results in inaccuracies, lack of control, and visibility. This negatively impacts credibility, strategic decisions, and long-term success.To resolve the challenges explained above, several businesses are turning to automation and the use of best-in-class account or payment reconciliation software.<h2 class="heading-node" id="k69bej3lp">How can businesses choose the best Payment Reconciliation solution?</h2>Before choosing a reconciling solution, businesses must answer 3 crucial questions.<ol class="list-node" id="l9gin5cmh"><li>Is it platform agnostic?</li><li>Does it track and monitor real-time transactions?</li><li>Does it offer best-in-class data security measures?</li></ol>M2P’s Recon360 offers all this and more!<h2 class="heading-node" id="6f41len3j">RECON360 – Redefining Payment Reconciliation</h2>Recon360 is a complete solution for reconciling payments using automated data matching and instant monitoring of multiple transactions. The solution maintains financial records accurately and can be deployed seamlessly.<h3 class="heading-node" id="m3t0mpf4o">Key Features</h3><ul class="list-node" id="08uahal9i"><li>Automated, flexible, with extended data matching</li><li>Cloud &amp; dataset agnostic</li><li>Seamless deployment</li><li>Data qualification &amp; insight</li><li>Multi behavior system</li><li>Automatic exception management</li><li>Dynamic reporting engine</li><li>Instant regulatory compliance</li></ul>We also offer best-in-class features for business end users, that includes a dynamic reporting engine, dispute resolution, and exception handling to cut operating costs and achieve business goals.Want to make payment reconciliation work for you? Recon360 is the answer!Write to us at <a class="link" href="mailto:business@m2pfintech.com">business@m2pfintech.com</a> to get started!<a class="link" href="https://m2pfintech.com/newsletter/" target="_blank" rel="noopener">Subscribe</a>&nbsp;to our newsletter and get the latest fintech news, views, and insights, directly to your inbox.Follow us on&nbsp;<a class="link" href="https://www.linkedin.com/company/m2pfintech/mycompany/" target="_blank" rel="noopener">LinkedIn</a>&nbsp;and&nbsp;<a class="link" href="https://twitter.com/m2pfintech" target="_blank" rel="noopener">Twitter</a>&nbsp;for insightful fintech tales curated for curious minds like you.