The threat of cyber fraud is genuine and common today. Millions of people worldwide are victims of cybercrime daily. That number will only increase as humans become more dependent on digital technology for information exchange.
Adopting Internet of Things (IoT) technology can complicate cyber fraud, but it can also be part of the solution. IoT’s versatility can contribute to fraud detection programs. Here’s how it can be implemented to make the most of cybersecurity.
“IoT’s versatility can contribute to fraud detection programs.”
IoT and Cybersecurity
Like all emerging digital technologies, IoT has numerous advantages and disadvantages. Devices connected to IoT networks can be vulnerable to malware attacks depending on their level of security — compromising the entire system.
In addition, the connections between devices can also be vulnerable to cyberattacks if strong encryptions do not protect them. As the name suggests, all data in IoT networks pass through the internet. Hackers can use that traffic to hijack the system.
Because of this, cybersecurity for IoT networks must be very comprehensive. End-to-end security frameworks are a must to protect connected devices and the connections themselves.
Multi-factor authentications, firewall layers, and data encryptions are all essential to protecting the IoT network. However, connecting multiple devices and functions can also fortify other security mechanisms.
AI in Fraud Detection Programs
Artificial intelligence (AI) and machine learning programs are the greatest weapons in the fight against digital fraud. Software can detect unlawful and high-risk online activities by monitoring user behaviors and calculating the probability of whether transactions are fraudulent.
AI and machine learning programs can analyze online activities and predict if they’re from hackers attempting to commit fraud based on the user’s behavior. They perform real-time calculations, simultaneously protecting sensitive information while identifying possible theft.
One of the main reasons organizations become victims of fraud is that most typical prevention methods are exclusive between different parts of the organization. The individual departments are responsible for monitoring their own data — no standard exists for the entire company.
This approach has worked in the past, but cyber attackers use more sophisticated programs to find and exploit vulnerabilities. One part of the organization might have more holes in its cybersecurity than another, leading to a data breach.
This can be especially damaging to financial institutions. As online banking becomes the preferred method for people to manage their finances, the opportunities for data breaches become more widespread. A siloed approach to cybersecurity is inadequate to protect every customer’s data.
How IoT Can Help
IoT can enhance the capabilities of fraud detection programs by fostering an interconnectedness between them. Being connected to multiple devices and data streams at once gives AI and machine learning programs more data to pull from, which can lead to more comprehensive analysis.
In addition, IoT can enable multiple fraud detection programs to work together, creating a network that builds off each other for more comprehensive security. Machine learning programs can even be designed with this type of cooperation in mind using “hive mind” methods.
Connecting an organization’s fraud detection programs can give them an edge against cyber attackers. IoT allows programs to become aware of each other to cover potential vulnerabilities — making it much harder for hackers to penetrate the organization’s cybersecurity.
The applications for IoT can also extend to more legal situations, such as violations of the False Claims Act, or FCA. Fraud that occurs through digital devices can be detected through the network, allowing legal institutions and government agencies to act.
Enabling a Decentralized Database
In addition to tightening cybersecurity, IoT enables financial information to be stored on decentralized databases. These use multiple servers controlled by several nodes and users. Changes made to the database are spread throughout the system because they are connected through the IoT network.
Decentralized databases offer numerous advantages over traditional centralized ones, which store all data on a single server. This makes data easier to manage but also more vulnerable to cyberattacks. Hackers who can penetrate the security can access all of a customer’s data.
On the other hand, a decentralized database consists of multiple servers, each armed with its own cybersecurity measures. Hackers who penetrate one server will not have access to all the customers’ data. Furthermore, copies can be stored on other servers to ensure it is not lost after it is stolen.
Another advantage of decentralized databases is that they can minimize the damage from malware attacks. Malware that has successfully infiltrated one of the servers can be cut off from the rest of the network — trapping and preventing it from causing further destruction.
IoT Can Help Fight Fraud
IoT is a revolutionary technology that has a wide range of applications. Connecting digital devices and programs can minimize the vulnerabilities hackers can take advantage of — dramatically lowering the fraud rate for financial institutions and boosting a company’s reputation in the eyes of consumers.