How can banks prevent fraud during client onboarding?

The rise of digital banking has introduced a new type of fraud that evolves alongside the technology being used to combat it. Fraudsters exploit weak identity checks and social engineering to gain access to systems before traditional fraud monitoring tools can detect them. In 2023, digital payment fraud schemes were projected to cause losses of $485.6 billion worldwide. As financial institutions continue to place greater and greater importance on curating a client onboarding experience that is simple, pairing it with strong fraud prevention strategies has become more and more essential. 

Artificial intelligence

Financial institutions are using AI-powered systems to detect anomalies during onboarding by flagging suspicious behaviours, irregular patterns, and inconsistencies in real-time. Machine learning models that are trained on vast datasets are increasingly accurate in identifying fraudulent users before they can infiltrate systems. However, fraudsters are also using AI for their own benefits. By using AI generated content such as deepfake videos or voice cloning, criminals are able to replicate real individuals to bypass biometric systems and identity verification checks.

Behavioural Biometrics and Analytics

Traditional onboarding procedures that rely on static checks like uploading identity documents or facial scans can no longer be depended on to prevent fraud. Leading institutions are integrating behavioural biometrics into their onboarding processes by assessing how users interact with their devices, creating a unique user profile of an individual’s mouse movements, typing patterns, and touchscreen behaviours. Using machine learning tools, subtle deviations in behaviour can be detected and potential imposters can be identified.  Combined with data analytics, this provides an additional security layer that strengthens the onboarding journey against identity fraud and account takeovers.

Regulation

The EU’s digital payments regulations are setting a new baseline for onboarding security. The law requires fraud checks, sanctions screening, and greater transparency in data handling. Financial institutions operating within the EU must demonstrate technical readiness and compliance with evolving legal frameworks.

Looking Ahead

As cybercriminals become more sophisticated, client onboarding must become smarter. Financial institutions that integrate AI, behavioural biometrics, and real-time analytics into their onboarding processes will be better equipped for fraud prevention. By maintaining transparency and compliance whilst embracing technological innovations, financial institutions can create a secure client onboarding experience that promotes customer satisfaction.

To discuss the newest technology, innovations and challenges facing client onboarding and digital identity for financial institutions, connect with solution providers and network with industry experts, book your place to attend the 3rd Client Onboarding And Digital Identity Summit For Financial Institutions, taking place on September 24-25, 2025, in Prague, Czechia.

For more information, click here or email us at info@innovatrix.eu for the event agenda. Visit our LinkedIn to stay up to date on our latest speaker announcements and event news.

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