Document fraud is a growing threat to financial services businesses. As technology evolves, fraudsters develop more advanced techniques to manipulate and falsify documents. To combat this, organisations are constantly seeking better ways to detect and prevent fraud, ensuring their operations are protected.

Traditionally, financial services businesses have relied on manual fraud detection, which depends on human expertise and careful review. However, with the rise of advanced technology, automated document fraud detection has emerged as a more efficient and accurate alternative.

This blog explores the differences between manual and automated document fraud detection, as well as their benefits and limitations. By understanding how they compare, businesses can choose the most effective solution (or combination of solutions) to meet their specific needs.

Manual Document Fraud Detection

Manual document fraud detection involves trained professionals thoroughly examining documents to identify potential signs of tampering or forgery. These experts deeply understand document features, typical layouts, and standard fraud indicators. They scrutinise various aspects of the document, including its content and visual appearance, such as fonts, to verify its authenticity.

Understanding the strengths and limitations of manual document fraud detection helps determine its role and suitability as part of a modern fraud detection strategy.   

The Benefits of Manual Document Fraud Detection

Manual document fraud detection leverages a human expert’s deep experience, contextual understanding, and adaptive skills to identify attempts at deception.

Expertise and Experience 

Many human experts bring years of experience and specialised knowledge, enabling them to detect subtle anomalies and inconsistencies that may escape automated systems.

Contextual Awareness 

A human reviewer will deeply understand the document’s context, including the purpose, origin, and intended use. Contextual awareness can be crucial in identifying fraud attempts that may not be apparent through an automated analysis alone.

Adaptability

Human experts can quickly adapt to new fraud techniques and document formats, enabling fraud detection methods to remain effective even as fraudsters evolve their tactics.

Limitations of Manual Document Fraud Detection

Adopting a purely manual approach to document fraud detection has several limitations. These include time, subjectivity, resource limitations, and scalability factors.

Time-Consuming 

Manually reviewing documents is labour-intensive and time-consuming, especially with large volumes. Many lenders report that manual document verification can take up to 20 minutes. The time it takes to perform manual processing can lead to delays or rushed document checks, increasing the risk of fraud. These delays negatively impact the customer experience and can hinder a company’s competitive advantage. 

Subjectivity 

Human judgment can be subjective, leading to inconsistencies in detection accuracy. Fatigue, bias, and varying levels of expertise among reviewers can also affect the reliability of manual detection.

Resourcing and Scalability Challenges 

Manual document fraud detection can be challenging to scale, particularly for organisations with an increasing number of documents to process. These challenges are magnified when the business experiences peak times, as it can be difficult to mobilise more personnel on short notice to meet spikes in demand.

Automated Document Fraud Detection

Automated document fraud detection leverages advanced technologies to analyse documents and identify potential fraud indicators. 

These systems can process large volumes of data quickly and accurately, flagging suspicious documents for further review. 

Modern systems such as Fortiro use artificial intelligence (AI) and a library of document fraud indicators to automate previously manual checks.

As with manual document fraud detection, automating such processes has benefits and limitations. 

Benefits of Automated Document Fraud Detection

Automation overcomes the limitations of manual fraud detection, delivering speed, consistency, scalability, and cost savings.

Efficiency and Speed 

Automated systems can process large volumes of documents in a fraction of the time it would take for manual review. This speed enables faster decision-making (a faster ‘time to yes’ for end customers) and reduces operational bottlenecks. With Fortiro, over 100 document fraud indicators are checked within 30 seconds.

Accuracy and Consistency 

An automated system that uses machine learning and pre-defined rules can detect patterns and anomalies that human reviewers may miss, improving accuracy and consistency in document fraud detection.

Scalability 

Automated solutions can quickly scale to accommodate growing document volumes, making them ideal for organisations with increasing processing needs. Lenders can make faster decisions at scale without increasing fraud risks.

Cost-Effectiveness 

While implementing automated systems may involve initial investment costs, they lead to long-term cost savings by reducing labour expenses, freeing up resources and by generating additional fraud savings.

Limitations of Automated Document Fraud Detection

Automated fraud detection has limitations, especially when data quality is poor. Systems lack the deep contextual understanding of humans, and in-house developed systems may not be kept up-to-date to keep up with the latest fraud trends and techniques. 

Dependence on Data Quality 

The accuracy of automated systems relies more on document quality than humans do. Incomplete or low-quality documents can lead to false positives or false negatives.

Lack of Contextual Understanding 

Automated systems may struggle with nuanced fraud attempts that require a deep understanding of the document’s context. 

Potential for Evasion 

Fraudsters constantly develop new techniques to evade detection. To stay ahead of these evolving threats, automated systems must be continuously updated and refined. Without dedicated technical resources, in-house-built automated solutions may struggle to keep up with fraudsters.

Fortiro: Automating Fraud Detection, While Empowering Expert Investigation

Fortiro automates financial document reviews and fraud checks, improving fraud detection by scanning every document for fraud indicators in real-time.

Over many years, Fortiro has brought together experts from finance, technology, data science, and forensics to create an industry-leading solution that automates income and expense verification, alongside fraud checks.

Fortiro’s approach to fraud detection enables its clients to use their resources more effectively by focusing them on documents flagged as suspicious. Fortiro’s document forensic tools then help speed up the investigation of fraudulent cases, allowing businesses to scale to achieve growth and reduce fraud losses by staying ahead of evolving fraud practices.

The Role of Humans in Automated Fraud Detection

Once fraud detection automation has been implemented, humans still need to play an important role in the investigation phase of the process.

Fortiro will identify fraudulent documents and trigger relevant alerts fully automatically. Those alerts can be configured based on risk appetite, policy requirements, and organisational preferences to effectively “find the needle in the haystack.”

Humans should then review these cases to make a final decision. They no longer have to review every document because that part is now automated, freeing them to focus only on the high-risk documents that the solution has identified.

To learn more about document fraud detection, download our eBook ‘How Fraudsters Are Faking Documents in Australia and New Zealand’ by clicking here or on the image below.