J.P. Morgan's strategies against financial fraud

Wednesday 13 March 2024 10:20 CET | Editor: Mirela Ciobanu | Interview

Alan Lin, APAC Head of Payments and Commerce Solutions at J.P. Morgan, shares insights on combatting fraud in payments, emphasising the significance of KYC and KYB practices, and more.

How big is fraud and what are the main types of fraud that are plaguing the financial system?

While fraud is a universal problem, each organisation requires a customised solution. Fraud controls are so important because their strength is in adding layers of customisation, which are essential to help identify bad actors with more precision and minimise issues with legitimate customers. Each control serves as a dial that organisations can fine-tune around their unique needs.

Another key benefit of fraud controls is cost savings. One study showed that companies that have a dedicated program for their most disruptive types of fraud save 27% in response costs, 55% in remediation, and 76% on fines and penalties. Fraud controls are one component of a dedicated program, so organisations should identify their unique vulnerabilities to identify any additional ways to find potential savings.

Often, the main root causes of payment fraud at a majority of organisations originate from actions by an outside Individual (e.g. forged check, stolen card), Business Email Compromise, and Vendor Imposter.

In terms of payment methods, checks continue to be the most vulnerable to payment fraud – according to the 2023 Association for Financial Professionals Payments Fraud and Control Survey, 63% of organisations faced fraud activity via checks - while instances of fraud via digital payment methods have risen since 2021.

According to the same AFP Fraud Survey, underwritten by J.P. Morgan, ~65% of organisations indicated that their organisations were victims of either attempted or actual fraud activity in 2022.

Organisations need to maintain vigilance in combating fraud and establish strong fraud management practices. It is vital that organisations stay ahead of perpetrators so that fraud attacks do not interrupt business operations and ensure financial losses remain at a minimum.


How are banks, such as JP Morgan positioned to prevent these from happening? What technology and expertise do you have in place?

Fraud management is a key priority at J.P. Morgan. We continuously refine our fraud risk management through a strong cybersecurity framework, as well as safeguarding our clients through our products and capabilities such as our Trust & Safety solutions, which allow our clients to leverage JP Morgan’s fraud protection logic as well as establish a comprehensive self-defined fraud protection rules. Continuous internal and external stakeholder education on best practices is also key to the prevention of fraud.

Organisations should work with a payments partner to enable fraud controls. Choosing a best-in-class provider is critical to help you have tailored and efficient controls such as what’s within J.P. Morgan Access. The right partner can also help you implement more sophisticated fraud control techniques.

J.P. Morgan has been successful at leveraging technology for payment validation screening and speeding up processing in other ways by reducing false positives and enabling better queue management. There have been lower levels of fraud and a superior customer experience, with account validation rejection rates improved by 15 to 20 percent.


The first interactions with the customers, be they in the B2C or B2B segment, start at the moment of onboarding. How is the digital onboarding process? What are the risks of onboarding new customers/businesses?

Digital onboarding is a key factor in ensuring a seamless onboarding experience for customers. There has been a rise in adoption at scale in the B2B space, as businesses worldwide continue to undergo their digital transformation process. From the J.P. Morgan perspective, we have seen active usage of eSignatures by our clients globally, which further brings annual cost savings.

It’s imperative that banks maintain a robust risk management and risk controls process relating to digital onboarding given increased risks ranging from cyber and fraud risk to data privacy risk.


How is JP Morgan innovating in the customer digital onboarding space?

At J.P. Morgan we pride ourselves on a high degree of digital process, and we have been innovating and refining our digital onboarding solution for the past few years. We have rolled out several new features such as eSignatures and our Digital Onboarding Portal, to ensure a seamless experience for our clients. This has resulted in the active usage of eSignatures by our clients globally, which further brings annual cost savings for the firm.

As part of the Trust & Safety solutions we offer to clients, J.P. Morgan also offers consumer and business verifications for our clients, which further enables their own onboarding process of their customers.

Digital onboarding is also a critical factor for our enhanced suite of embedded banking solutions, which will be launching first in the United States. With the rise of digital ecosystems players and super apps growing exponentially, a globally scalable banking solution, integrated with ecosystems, will be a huge opportunity. We are in a prime position to provide scalable banking solutions to digital ecosystems with enterprise-grade banking infrastructure.


How banks, payment service providers, and fintechs can streamline data sharing through innovative AI & data solutions to enable both improved UX and compliance?

There have been multiple initiatives in the payments industry ranging from ISO20022 for data standards, to emerging technologies such as blockchain for information sharing. As digital payment scales, these initiatives will allow players to exchange information at scale in a secure manner. New technologies can be further leveraged to provide opportunities to address potential data frictions.

J.P. Morgan has been recognised for excellence in Accuracy of Operations and Digital Platform Security Capabilities* and ranks number one in the Evident AI Index, an independent benchmark for commercial AI adoption and performance in financial services.


What things should bankers watch for in 2024 to keep the banking experience a safe place?

Fraud prevention tools for payment processing are one trend to watch going into 2024. We have seen some of our largest financial institution clients require their banking partners to have stringent fraud prevention measures in place. At J.P. Morgan, our Payment Control suite of services offers clients a customised approach to help with fraud prevention. Clients can define specific rules to adjust thresholds across customers or bank transfers with multiple parameters and combinations according to their own fraud control criteria.

In ecommerce, network tokenization empowers merchants to better deliver modern payment solutions that meet the increased expectations that come from the digital commerce age. Together with encryption, it can also help bolster against fraud. It works by:

  • Helping protect customer payment data from fraud both within and outside your network;

  • Reducing the risk of card data exposure in the event of a data breach;

  • Minimising the impact of Payment Card Industry (PCI) scope by not storing and transmitting cardholder data.

This is important because:

  • In May 2023, the Census Bureau found that online sales in the US had topped USD 1 trillion**

  • In just two years, the estimated amount of remote payments transacted is expected to reach more than USD 5.6 T***

  • Card-not-present fraud is forecasted to rise to USD 54 bln by 2028****

  • 18% of fraud reduction delivered by Visa network tokens****

  • 4.3% authorisation rate lift*****


How can current AI technology be leveraged to combat fraud?

Technologies continue to evolve and become more sophisticated, and there are vast applications for combating fraud in the banking and financial industry.

We see current applications of AI in identifying suspicious patterns and customer behaviours, which further help to assess risk and mitigate fraud, and can be used to generate synthetic data for more robust training of fraud detection models.

J.P. Morgan spends USD 15 billion annually on technology, in part to keep our systems safe from hackers and fraud with the latest innovations in a wide range of technologies.


* Coalition Greenwich, 2022 US Large Corporate Cash Management Study, Excellence Awards Winner for Accuracy of Operations, Customer Service, Ease of Doing Business, Digital Platform Functionality, Digital Platform Security Capabilities, Innovation, International Product Capability, Real-Time Insights and Analytics on Payments and Receivables, Quality of Advice, Frequency of Contact, and Timely Follow-up.

** US Census Bureau, US Department of Commerce Quarterly Retail E-Commerce Sales, 1st Quarter 2023, May 18, 2023

*** Juniper Research, ‘Online Payment Fraud report’, June 2023 

**** Visa Risk Datamart, Global, FY22 Q1–Q4 Token Fraud Rate vs PAN Fraud Rate by PV for merchants with over 1,000 CNP token transactions per month per country. Merchant’s individual results may vary.

***** VisaNet Oct–Dec 2022. Visa credit and debit card-not-present transactions for tokenized vs non-tokenized credentials in the NA region. Auth rate is defined as approved authorisations divided by total authorisation attempts based upon the first attempt of a unique transaction.


About Alan Lin

Alan Lin is Managing Director and Head of Payments and Commerce Solutions, Asia Pacific for J.P. Morgan Payments business, based in Singapore. He drives the firm’s strategy for payments and receivables, FX, merchant services, and innovated solutions - such as data, ecommerce, digital solutions, fintech partnerships, and more. In his 30-year banking career, Alan has held various global, regional, and country leadership positions in Transaction Banking across Cash Management, Trade, and Securities Services.


About J.P. Morgan

JPMorgan Chase & Co. (NYSE: JPM) is a leading financial services firm based in the United States of America (US), with operations worldwide. JPMorgan Chase had USD 3.9 trillion in assets and USD 317 billion in stockholders’ equity as of September 30, 2023. The Firm is a leader in investment banking, financial services for consumers and small businesses, commercial banking, financial transaction processing, and asset management. Under the J.P. Morgan and Chase brands, the Firm serves millions of customers in the US, and many of the world’s most prominent corporate, institutional, and government clients globally. Information about JPMorgan Chase & Co. is available at

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Keywords: fraud prevention, online banking, tokenization, KYC, digital onboarding, scam
Categories: Banking & Fintech
Companies: J.P. Morgan
Countries: World
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