FRAUDFORWARD

Where we’ve been and what’s next: Understanding fraud prevention in banking

24 min
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What’s up fraud fighters, and welcome to Fraud Forward!

This episode is just me and you, and honestly, that felt right. Fraud Forward has always been about real conversations, but every once in a while, I think it matters to pause, zoom out, and talk peer to peer about where we’ve been, what I’ve been building, and where this work is going next. No guests. No panel. No polished back-and-forth. Just a real check-in on fraud prevention in banking and the decisions that are shaping what comes next.

This episode matters because the questions in front of us are getting bigger, not smaller. We are no longer just talking about fraud trends in isolation. We are talking about AI in banking, payment authorization, customer dispute resolution in banks, real-time decisioning, and the governance problems sitting underneath all of it. If you work in fraud, risk, payments, compliance, or digital banking, you already know this is not a future-state conversation. It is here now.

And that is really the core of this episode. Fraud prevention in banking is no longer just about identifying bad activity after the fact. It is about whether institutions can make better decisions earlier, with better context, better governance, and better alignment across teams. That is the shift. That is what I have been hearing in conference hallways, seeing in operator conversations, and building toward behind the scenes.

I also wanted to make this episode personal because that matters too. I have sat in the practitioner seat. I know what it feels like to defend fraud losses in a boardroom, to get asked how your institution compares to peers, to explain why a rule fired, and to carry the pressure of making the right call with incomplete information. So when I talk about AI agents in banking, banking fraud detection, or responsible AI in banking, I am not talking from a distance. I am talking from the perspective of somebody who knows what it feels like when the operational reality hits the fraud desk first.

Here is what that shift means in practice:

  • We need to stop treating fraud as only a detection problem and start treating it as a governance and decisioning problem.
  • We need better ways to evaluate customer authorization fraud, disputes, and real-time transaction risk before losses harden.
  • We need clearer operator-level benchmarking so banks and credit unions can advocate for resources with facts, not guesswork.
  • We need stronger collaboration across fraud, compliance, product, operations, and leadership because no one team can solve this alone.

What you’ll hear in this episode:

  • A look back at the biggest themes from recent Fraud Forward conversations, including AI, KYC, payment fraud, and systems-level risk.
  • What I have been building behind the scenes to support fraud fighters with clearer signals, faster context, and more practical guidance.
  • Why benchmarking has become one of the most important gaps to solve for community banks and credit unions.
  • What I am seeing across conferences, operator conversations, and industry events right now.
  • My take on why scams, chargebacks, first-party fraud, and regulation are all colliding in ways the industry can no longer ignore.

You should listen to this episode if you:

  • Work in fraud prevention in banking and need a clearer view of where the industry is heading
  • Want a peer-level perspective on AI in banking, governance, and transaction risk
  • Are trying to connect fraud operations to executive conversations about budget, staffing, and strategy
  • Need stronger language and better framing around customer dispute resolution in banks and customer authorization fraud
  • Care about building fraud programs that are more proactive, more defensible, and more useful to the institution

If you liked this episode, be sure to subscribe and review the podcast on iTunes, Spotify, YouTube, or wherever you listen to podcasts. It really helps with getting the word out.

Fraud prevention in banking is shifting from detection to decisioning

Banking is not just about spotting the bad transactions anymore. It is about how we make the call in real time, how we govern that call, and whether the right teams are actually looking at the right signals before it becomes a loss.

Because let’s be honest, a lot of what banks are dealing with right now does not fit neatly into the old model. AI agents in banking are starting to influence decisions. Payment authorization is getting more complicated. Disputes are getting messier because customer intent, manipulation, and first-party behavior are all running together. And somehow fraud teams are still expected to work these cases like it all starts and ends with one suspicious transaction. We know better than that.

That is why the real problem is not just banking fraud detection. It is whether the institution has the governance, the context, and the internal alignment to make the right decision sooner instead of cleaning it up later.

  • Fraud is no longer just a detection problem. It is a governance and decisioning problem.
  • AI in banking is forcing institutions to rethink how decisions are made and documented.
  • Banking transactions need stronger context, not just faster alerts.
  • Responsible AI in banking depends on whether institutions are ready to govern what those systems influence.

What I’ve been building and why it matters to fraud fighters

A big part of this episode is about the work happening behind the scenes and why it matters operationally. I wanted to share that because I think fraud fighters deserve more than polished messaging. You deserve to know whether the people building products and frameworks actually understand what it feels like to sit in your seat.

That is why this episode centers on practical clarity. Whether it was the NACHA webinar and blog focused on fraud monitoring updates, the internal work happening with banking product teams, or the Five Minutes of Fraud and Monday Fraud Fix formats, the goal has stayed the same: less noise, more signal.

The point is not to create more content for the sake of content. The point is to help fraud, compliance, and risk teams make faster, more informed decisions in environments where speed and clarity matter.

  • AI governance in financial services has to be translated into operational language, not just policy language.
  • Banking compliance and AI discussions are only useful when they connect directly to real workflows and real controls.
  • Fraud fighters need concise, signal-rich context they can actually use in meetings, investigations, and strategy conversations.
  • Building trust infrastructure in banking starts with listening to the people doing the work every day.

Why benchmarking is a missing layer in banking risk management

For years, fraud fighters have been asked to answer a question that sounds simple but is actually really hard. How do we compare to our peers? And the truth is, most of the time, we have not had a solid answer. Not because we were not asking the right questions, but because we did not have a credible, operator-built source of truth to point to. And that becomes a real problem when you are trying to justify a new analyst, explain fraud losses to leadership, or make the case for technology your team actually needs.

That is why benchmarking is not just a reporting exercise. It is part of banking risk management. Because if you do not know how your fraud losses, your staffing model, or your tools compare to institutions like yours, then you are walking into strategic conversations without the context you need. And that is a tough place to be when you are the one expected to have the answer.

That is exactly why I spent time in this episode talking about what this benchmarking effort is meant to solve. Not sponsored fluff. Not solution-driven bias. Real data built for operator decisions, because that is what fraud teams actually need.

  • Community banks and credit unions need peer-based fraud benchmarking they can use in real strategic conversations.
  • Better benchmarking supports staffing, technology investment, and risk assessment decisions.
  • Fraud prevention in banking gets stronger when institutions can compare losses, controls, and program maturity with context.
  • Operator-built benchmarking creates better decision support than vendor-shaped narratives.

Scams, chargebacks, and first-party fraud are colliding

Fraud teams used to be able to lean on one pretty simple question: did the customer authorize it? But today, that question by itself is not enough.

A scam victim may send the payment because they truly believe the fraudster is legitimate. A customer may dispute a transaction they knowingly made. Someone may file a chargeback on a purchase that was completely valid. On paper, those situations can look really similar. But they do not mean the same thing, and that is where things start to get messy.

And that matters for customer dispute resolution in banks, because the old frameworks were built for a world where the lines felt a lot clearer. Today, they are not. Fraud, abuse, manipulation, and customer intent are all running together. So if institutions want to make better decisions, they need stronger ways to step back, look at the full context, and understand what actually happened.

  • Customer authorization fraud is creating new gray areas for fraud and dispute teams.
  • Banks need to move beyond simple confirmation models and into behavioral and contextual analysis.
  • Banking fraud detection must account for scams happening with the customer, not just to the customer.
  • Transaction governance for banks has to evolve to handle intent, manipulation, and abuse more accurately.

Regulation still lags the operational reality

Fraud has changed fast. But a lot of the frameworks around liability, prevention, and accountability still have not caught up. And that is a real problem. Financial institutions are still being treated like the last stop for financial responsibility, even when the scam started somewhere else, picked up speed across other channels, and only touched the bank at the very end.

That puts fraud teams in a really tough spot. Expectations keep climbing. Loss tolerance keeps shrinking. But control over the full fraud chain is still limited. And honestly, that is one of the clearest reasons why fraud prevention in banking cannot be talked about in a silo anymore. It has to be part of a bigger conversation around AI, compliance, dispute resolution, and who is actually responsible across the full ecosystem.

Because the real issue is not whether fraud is shared. We already know it is. The real issue is whether the industry is finally ready to align responsibility with the point where prevention could have actually happened.

  • Financial institutions are still absorbing losses tied to scams that begin outside the bank.
  • AI and compliance for banks must be part of a broader conversation about shared responsibility.
  • Payment authorization frameworks and customer reimbursement models are under pressure.
  • Fraud teams are being asked to solve systemic problems without controlling all of the levers.

This episode is really about momentum. It is about where the conversation has been, what is finally getting clearer, and what still needs to be built. The industry does not need more vague awareness. It needs better signals, stronger collaboration, and more honest operator-level conversations about what fraud teams are actually facing. That is where this show is headed, and that is the standard I want Fraud Forward to keep pushing toward.

Episode transcript
Hailey Windham
Hailey Windham
00:01
What is up, fraud fighters? Today's episode is just me and you. This is the first solo episode since we made the move to Fraud Forward. And honestly, it just felt right, you know, to pause for a second and talk mano a mano. You know, no guests, no back and forth, just a real check-in of where we've been, what I've been up to, and where we're going next. So let's get into it. Since January, we've had some incredible conversations on the podcast. And what I love about the lineup is that we're not just talking in theory. It's real operators talking about what's actually breaking. And of course we kicked things off with the first Fraud Forward episode with Jen Lamont, Karen Boyer, and Angela Diaz, where we got real about fraud trends and what to actually do about them. Then we've had, you know, Kyle Caldwell from The Clearing House come on, where we were breaking down fraud across the payment life cycle because fraud doesn't start at the rail and it definitely doesn't end there. And of course we had Frank McKenna come on. We talked about fraud not being a solo problem, but more of a systems problem. Steve Linderman was on, where we talked about KYC, that it really isn't broken, but we just keep asking it to do something it was never supposed to do. And I'll be honest, some of these topics used to intimidate me as a community banker, right? But that's what this show is about. It's stepping into conversations that we have to be having, especially when it comes to agentic banking, AI making decisions, and now AI actually moving money. That episode with Hens Demar, that one really should wake everyone up because we're not asking if this is happening anymore. We're asking if we're ready for it. And across every single one of these conversations, one theme that kept showing up is that we don't have a fraud detection problem. We have a governance and decisioning problem. And that shift, that's Fraud Forward. So now I wanna talk about what we've been building.
Hailey Windham
Hailey Windham
02:14
You know, behind the scenes. So like what I've been up to since joining Sardine. And, you know, for me, joining Sardine, it wasn't about, you know, really a job change, but it was like we both had this non-negotiable mission alignment. From day one, you know, we agreed, if I'm going to do this, I need to be able to advocate for community banks and credit unions. You know, I want to be in the room with product and I want to tell them what I experienced as a practitioner, all the shortcomings of solutions that I'd used in the past, and I need to be able to bring the real voice of fraud fighters into what's getting built. And Sardine has fully embraced that, truly. So here's what that looked like. We did a NACHA webinar with FIS where, this one's important because there was a lot of noise in the industry around the NACHA fraud monitoring updates. And what we focused on was simple. Let's remove the confusion. Let's remove the fear. Let's talk about what it actually means operationally, because this isn't like a brand new obligation. It's just a maturity check. It's about understanding your originators, monitoring behavior changes, moving beyond batch reviews into real signal-based monitoring. And it didn't stop there. Your girl also put out a pretty awesome blog, if I do say so myself, where I broke it down even further because this is one of those moments where clarity matters more than ever. I've also been spending a lot of time internally with the banking team, and I'll just say this, the talent that's coming in right now is real. Like, we're talking people who understand fraud, people who've sat in the seat, people who know what it feels like to defend decisions to leadership and regulators. And that matters because that perspective is getting built directly into this product. Now let's talk about the, of course, Five Minutes of Fraud with Hailey. If you've missed those, you truly are missing out. It happens on Friday afternoons usually, but it's where I give about a five-and-a-half-minute, I know I try to keep it under five minutes, but you guys, I just get so excited, clearly like as I'm doing right now. But it's where I really am able to...
Hailey Windham
Hailey Windham
04:37
Just have that real talk real fast. You know, what's happening, why it matters, and what you should be thinking about. No overproduction, although that intro and outro is fire, if I do say so myself. No filler, but it's just signal. We also just launched the Monday Fraud Fix newsletter. Same idea, but different format. You know, this isn't about content. It's about signal, just like I mentioned before. It's talking about what made me pause this week, what's worth your time, what fraud fighters are actually seeing right now. Of course, we also do a shout-out for Featured Fraud Fighter. That is a segment that is so important to me. And the reason why is because I know how busy you are. Truly, as a fraud practitioner, I've sat in those seats. I know what it's like to truly wish like, hey, can somebody just summarize this for me? And yeah, we have AI and we can, you know, plug it into the LLMs, but come on, they do not have the personality that I do. Don't you want it coming from me? So that's the whole purpose behind it. And you know, if I can help you connect one dot faster, it's worth it. Moving on, talking obviously about conferences and community. I've been out with, you know, a lot of you lately talking ICBA Live, Carolinas Credit Union League, where I had a, you know, presentation on fraud risk assessments and how to build one. Really diving into the math of that, which I think is honestly something that needs to be spoken about more because too often we're just kind of handed a blank template and say, you know, go forth and do your risk assessment. Yeah, but like, is it my opinion? Because I've got some opinions if you want them, but if we need to back it up with facts, how do we figure in that math? How do we do it accurately where we can back up the statements that we're making? So that was one that was obviously near and dear to me and I'll be able to present that a couple more times this year. So I'm really excited about that. And then we've got some more conferences coming up. Fraud Fight Club is like, I think it's like less than 10 days away now. We have a Safeguard coming up, which is at the beginning of May. I'll also be at the IAFCI in Connecticut.
Hailey Windham
Hailey Windham
06:51
Right after Safeguard, where I'll be presenting on fraud trends with Karen Boyer. So if you're gonna be there, I am so glad and I can't wait to connect with you. But you know, there's one thing that like literally everywhere I go, I'm hearing the same thing. We are all trying to solve the same problems, but we're doing it in silos. And that's the gap. And it's one that I care deeply about fixing. And I think that we're getting there. We as an industry truly are embracing the power of collaboration and what can be done when we combine our knowledge and our information and our insights. So this was a great tee-up, if I do say so myself in my outline of what I wanna talk about next. Speaking about collaboration and insights and learning from your peers of what's going on, I wanna talk about what's coming because I can't tell you how excited I am for this. This is one of those things that I pitched to Sardine originally when we were talking about the possibility of a role for me here. And one of those things was I want to do some benchmarking. It's something that's needed. It's something that I, as a practitioner, I struggled with because, you know, I've sat in a boardroom and I've been asked, how do we compare to our peers? And what was I supposed to say? Like, I can phone a friend and I can find out from like three credit unions that are in our area. But if you're wanting like industry standard, where do we sit with our fraud losses? I didn't have that. I needed to be able to provide that information. And then the only way to do that was seriously like a phone tree. So, hey, I know this is kind of weird, but could you tell me what your fraud losses are? And hey, let's be granular with it. Like what are your check fraud losses specifically? What tools and systems do you have in place to help prevent that? Because those are things that we can also use again in that risk assessment. So all of it kind of ties back in together. But so you guys already know that this is a problem, right? But this is information that's missing because we don't really know how we compare to our peers, right? That's the point I was trying to make, is that we don't really know how we compare. But this benchmarking survey is built specifically for credit unions, community banks, real fraud programs.
Hailey Windham
Hailey Windham
09:09
That are really under like five billion, if I'm being honest. And it's not sponsored fluff. How many times have we gotten a benchmarking report that it's basically the results that the solution provider needed it to be in order to say that that's why you should buy their product? That's not what we need. Also, because how do you have benchmarking if you didn't ask me to participate in it? And I know you didn't ask ABC and DEF Credit Union. So like, where are you getting these numbers from? So that's not what this is. This instead, and it's not even solution-driven bias. That's the other beauty. We'll have these other solution providers that'll say, hey, we work with check fraud or we work with this or that. And so they're gonna give you stats that are specific to those things and not really something that's tangible that you can take back to your organization to really have an educated response for how are we comparing to our peers. What more do we need to do? How do we need to allocate resources? What percentage of budget goes to technology, goes to capacity, goes to solutions, goes to education? And so being able to do that, I think it's really important because that is the difference with this benchmarking survey. It's operator-built data for operator decisions. And this is something that I've literally wanted for years. I've cultivated the questions from the last at least seven years of things that I needed answered in a fraud report or something that I wish I could tell my C-suite, hey, this is what we're doing. And so anyways, we're finally doing it. More to come on when that will be released, but it is very soon and I am just honestly beside myself because it is one of those things that when it finally comes through and you're able to see the results, I think it's gonna help so many fraud programs not only advocate for, we need resources because here's another credit union that's a billion and a half in assets and they have 10 employees dedicated to fraud. We have two. All I'm asking for is a new analyst. Like that's a result that you need in order to help advocate for what's missing in your program. Same thing with solutions. Hey, this credit union has this, this, and this. We don't even have the bare minimum of what they have.
Hailey Windham
Hailey Windham
11:33
Maybe we can look to see this is something that we can do better. Also, it's looking to see, our losses comparatively, we're doing really good. So maybe there's something that we can fix and we can share with another department, a business unit owner. So this is not like the results are not to say, hey, C-suite, be afraid because we're coming after your budget. That's not it at all. This is showing how we can be more proactive and how we can really perform well comparatively to our peers. So that is, I think that's enough teasing it up. Again, I'm just a big cheerleader for it because it's something that I needed in my fraud fight and something that I think that you guys will find valuable as well. Okay, the next thing that I wanna talk about that's coming up is, guys, I don't know if you noticed or not, but like this is episode 96. We are four away from the 100th episode and this one's gonna be special. We're bringing together voices from across the industry for a live town hall conversation. That's right, it will be live and it's gonna be on LinkedIn, obviously, or maybe YouTube and then we'll link it on LinkedIn anyways. More information to come on that. But what I think is important to call out is that it's not just one perspective. We're talking about different roles, different experiences, different opinions, because that's what it takes to actually move this conversation forward. I really think that you guys are gonna be so impressed with who I have coming on. Some we've met before and some we're just getting to know. You guys, I think truly magic is gonna be created in episode 100. So stay tuned. Obviously we're like four or five weeks away. It's either gonna be, I'll be honest, because I'm traveling that first week of May. So if it's not May 6th, it's gonna be May 13th. But just tentatively put that on your calendars. More to come soon, but trust me, you will want to be there. Okay. Now, it wouldn't be a solo episode if I didn't do the daily fraud news with Hailey, right? This is our headline section, I guess, or like our news media section, so pretend this is our newsroom, right? Because I actually want to talk about a couple of articles that I saw, and I will definitely link them in the show notes. But...
Hailey Windham
Hailey Windham
13:59
Let's get into a story that I think perfectly captures where we're at right now in fraud. And it's not about a new scam, it's not about a new tool, it's about a shift. There's a recent article from CU Today, it's a credit union newsletter that comes out, talking about how scams, chargebacks, and first-party fraud are all starting to blur together. And we know this is not something that we're just seeing, right? We're all living in this. You know, for years, fraud strategies were built on one core assumption. If something looks suspicious, all we got to do is call a customer, right? Because that's it. It's a simple fix. Just call a customer, ask them, hey, did you participate? Okay, great. We'll let it go through. But that's not, it's not that simple anymore, right? So that assumption doesn't work because today's customer might be a scam victim who believes the fraudster is legitimate, confused about what actually happened, or if we're being honest about the day in which we live today, sometimes they're intentionally gaming the system. I know, we don't want to say that out loud, but it happens. And this is where things get messy, right? Because now we're dealing with what the article calls consumer-engaged fraud, which basically means the customer's involved in the transaction. But the intent behind it, that's where everything breaks down. Think about it, you know, a scam victim authorizes a payment, a customer disputes a transaction they actually made, someone files a chargeback knowing full well it was legitimate. From an operational standpoint, those can look identical, right? And that's the real risk here because our systems, and honestly, a lot of processors, come on, we're speaking truth on this podcast, were built for a world where the customer was in control. But now, the customer might be the victim, the risk, or somewhere in between. And here's the part that should make every fraud team pause. If we keep relying on customer confirmation as our source of truth, we're going to keep missing scams, paying out bad claims, and reinforcing behaviors that are actually increasing fraud losses. So what does this mean for us? It means we have to shift from, did the customer authorize this, to what actually happened here. That means behavioral analytics, transaction context,
Hailey Windham
Hailey Windham
16:20
Understanding manipulation versus intent. Because fraud today isn't just happening to the customer, it's increasingly happening with the customer. And if we don't adapt to that shift, credit unions and honestly the entire industry are going to pay the price. Okay, this next one is talking about regulation. This article is titled, Stop Harmful Credit Union Regulation, focused on fraud and it was written by Scott Simpson, who is the president and CEO of America's Credit Unions. And I want to, you know, spend a little bit more time on this one because there's a lot here to unpack. So what the article is saying is at its core, fraud has evolved fast. You know, credit unions are investing heavily to keep up, but regulation isn't evolving at the same pace. And in some cases, it's actually making things harder. We know this. The article walks through that evolution though, you know, from landlines and AOL scams to AI-driven fraud, deepfakes, synthetic identities, large-scale automated attacks. And we all know that's not an exaggeration. So where this, you know, really hits in my take is that I, what I think is getting really interesting is that this isn't just a credit union versus regulation conversation. This is like a who-owns-fraud conversation because right now we're still operating in a model where the financial institution is the last stop and therefore they are the one that absorbs the loss. Even when the scam started on social media, the conversation happened over telecom and the payment moved through a third-party app and that's the disconnect. The article calls out in a really important way that we don't have a modern liability framework and that's the truth. But what we have today is essentially whoever is closest to the money, that's who pays, and not who had the opportunity to prevent this. And those are very different things. When we think about even like check warranties, it's like who was in the best possible position to identify fraud? And that's where UCC guidelines work, but that's where we're missing it here on these APP, authorized push payment frauds, or debit card Reg E things.
Hailey Windham
Hailey Windham
18:44
So what does this mean for fraud teams? Let's bring it back to the fraud fighter, the one who's listening on this call, the one who cares about this issue. Because this is what I see that's what's happening, right? Our expectations are increasing, the loss tolerance is decreasing and control over the full fraud chain is still limited. Which means you're being asked to solve a problem without owning all the levers. And that's not sustainable. The article also talks about trust, and I think that's something that we don't say enough. Credit unions and community banks are still the most trusted players in the system, not because of marketing, but because of experience. Because when something goes wrong, people expect you to help them, and most of the time you do, even when it's not technically your responsibility. But here's where I want to push the conversation forward a little more, because I don't think the answer is less regulation. I think the answer is better alignment of responsibility. We need shared accountability across the fraud chain, incentives for prevention, not just reimbursement, and recognition of proactive controls. Because right now, we reward institutions for cleaning up fraud more than we reward them for preventing it. And that has to change. So if I had to boil this article down into one sentence, fraud has become a shared problem, but we're still treating it like a single-player game. And until that shifts, we're gonna keep seeing rising losses, frustrated fraud teams, and gaps that fraudsters will continue to exploit. And honestly, this ties back to everything we've been talking about on this show, better signals, better decisioning, and most importantly, better collaboration across the ecosystem because fraud doesn't respect silos and neither can we. So in closing, right, if there's one thing I want you to take away from this episode, it's this. Fraud is evolving faster than ever, but we don't have to solve it alone. At Sardine, we're building what we're building and what I'm focused on...
Hailey Windham
Hailey Windham
21:03
Is helping financial institutions move from that reactive detection to real-time informed decisioning. You know, powered by better data, better signals, and shared intelligence across the industry. So if you're a fraud fighter trying to make better decisions, defend your program, or just feel a little alone in this fight, let's connect. Because this next phase of fraud, we're not just reacting to it, we're building what comes next. And so with that, of course, stay vigilant, stay informed, and keep moving fraud forward.
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Host
Hailey Windham
Hailey Windham
Fraud Forward, Sardine