Best Built-In Fraud Monitoring Features to Fight Fraud

With the number of ways to shop, bank, and transact online, it is no surprise that the need for fraud detection exists. Identity theft and online fraud increases have led to credit monitoring and other monitoring and detection to lower the risk for consumers and businesses.

The theft of personal information impacts an individual's credit score, but it goes further than that. Payment fraud and other fraudulent transaction types increase costs to the fintech company and the whole financial ecosystem.

Fintech companies need measures to protect themselves and their customers from the impacts of financial crime. Fraudulent activity can go undetected when sophisticated individuals are left unchecked.

Fraud monitoring in an API allows clients to monitor transactions to detect signs of fraud. These technologies quickly scan data, flag suspicious activity, and notify the company. Fraud prevention is essential to any business; staying informed about potential risks can help you take necessary precautions. Fraud monitoring tools in real-time can successfully combat fraudsters before they cause damage. Alerts triggered in response to these tools keep you notified on a timely basis of any suspicious behavior.

Fraud monitoring is a method of identifying fraudulent transactions. In Open Banking, APIs are great for adding a layer of security to your authorizations. This can help stop fraud and get the best return on your investments.

An API enables you to connect your business to another, allowing for a smooth integration that entirely streamlines the customer experience. Historically, APIs were all about connecting your internal software products.

eCommerce fraud is common, but it is also preventable. In this post, you will learn more about how fraud protection through Sila's API can help you reduce fraud with concrete examples of how it benefits your business.

How Do Fraud Monitoring Systems Work?

The financial services industry is among the sectors most vulnerable to fraud. The problem significantly impacts businesses and customers in terms of losses and damages. 

Fraud loss is as common in a financial institution as in a fintech company. 

Fraud prevention is a big issue; one way to beat it is by accessing as much customer data as possible. There are four key points where you want to gather user data:

  • The onboarding process is the first impressions of your product that new users receive.
  • The login process is when users enter their credentials to access your services.
  • The transaction process is when the customer purchases goods or service.
  • During customer experience activities, such as deposits and withdrawals.

Once you have this information, you can accept, reject, or automatically review a transaction. You can also set different security levels for certain users if their transactions are risky.

Some behaviors that can be deemed risky or suspicious include:

  • Accounts are created with known temporary or free email addresses.
  • Logins from an existing user from a new device in a new country. Analyzing the login proves that their login information has been compromised.
  • Transactions using a reported stolen credit card. This might result in expensive chargeback fees for you.

As you can imagine, these applications need to process a lot of data for these examples to work fast. In addition, you might also have to send large amounts of historical data so that a spam filter can analyze it with machine learning, also known as artificial intelligence (AI).

How Data Analysis Can Detect Anomalies

One of the techniques used to identify fraudulent activity is detecting when things don't seem right. Anomaly detection is one of the analytical approaches used in data science

Analytics look at data by splitting the values into two groups: normal distribution and those that are uniquely different. Given the high number of transactions, it's essential to consider the outliers that differ from the general trend and may turn out fraudulent payments.

There are a vast number of variables that can be used for fraud detection. They include transaction data, such as images and videos, and unstructured text, which indicate fraud patterns.

Anomaly detection tools can identify whether transactions were typical, any inconsistencies with the customer's information and whether the client used the app as expected.

Some people might find that an anomaly approach is straightforward. For example, if a transaction looks suspicious, you can receive a simple binary answer from the system. This may be helpful in some cases. For instance, the system might ask for a second verification form if the transaction looks suspicious. It can be used as a tool for catching fraud before it happens.

One way to catch fraud is with APIs and data points. The system will know best how to investigate the findings.

How Does the API Monitor Fraud Prevention?

When fraud prevention is the goal, risk-based monitoring is the path to that end.

Fraud alerts are a crucial component in any sophisticated fraud monitoring strategy. AI-powered fraud detection detects hundreds of individual data points to assess a potential threat. It then summarizes the information to determine how much of a threat they are considered to be.

Once we have the information from our fraud analysis, each factor will be combined to give us a risk score. These are then used to tell us which alerts need to be activated or what other actions should take place.

Typically, users with a high-risk rating will be blocked from registering with your service. Low-risk users are allowed to sign up, and medium-risk users may have to verify themselves further.

Platforms with adjustable rules allow us to change them as we see fit. The client determines how they want to handle each rule, and typically, those who have malicious intent will move to another source and attempt there.

What Are the Best Features of Monitoring Fraud?

Fraud monitoring is like a blockade between you and a potential fraudster. The blockade, which is actually integrated into the API, monitors for cases of fraud and notifies you when it finds one.

Companies can customize their fraud prevention settings to best suit their needs. This way, important info reaches the relevant staff members at the appropriate time, and there is minimal disruption from false alerts.

For fintech startups, the API offers the following benefits:


Extracting data instantly is a crucial process for many companies. With so many projects and time spent developing your fintech business, you can't possibly review all the data manually. APIs offer easy access for customers to their info. Our software can provide valuable insight into the information you need. By using APIs, your company's internal systems can communicate directly. They act as a mediator and are faster than the alternative. The speed of API use also means a better scope for large-scale projects. It takes a short time to process our security systems regardless of the amount of data that needs to be processed.


Staying up-to-date with emerging fraud detection technologies can be complicated, but we've made it easier by providing you with the technology you need right out of the box. You don't have to develop an entire system from scratch. Need to make a new application? Just find the correct API and add it to your code.


When the APIs are integrated, you'll automatically send and receive data to make your work more efficient. The best thing about APIs is that they work immediately with any app you create. With automated updates and security patches, you don't have to worry about these tasks anymore. You can now spend your time on what matters most: growing your business.

Ease of Use

APIs come with their documentation. This document helps developers code between two systems with a common language. Apart from the engine's help and documentation, the code is so self-explanatory that they can use it without any programming knowledge. Not only are they able to manage fraud prevention more quickly and efficiently, but their work also helps your whole team.


Fraud can plague any size business, but some might need to look more closely at specific parts of their business than others. That's why APIs let developers decide what data points and tools they want to use for their particular needs. You can use them to set up a modular fraud detection software that works how you want it to.


APIs offer flexibility by being a perfect fit if you need to customize your data fields. With Sila, our team will provide safe and reliable contracts that are easy to manage.

Fraud Monitoring with the Sila API

There are many reasons for the strict regulation of payment processing and fintech. Still, fraud security is one of the significant factors in this-using any outsourced agent results in an increased chance of fraud.

There are several ways to prevent money laundering or fraud, such as ACH transfers and other electronic payments. Sila offers a PCI and NACHA-compliant partner and an FDIC-insured bank for transactions of up to $25,000.

Sila's API empowers developers to make their ideas into successful financial applications. Our API offers compliance integration as part of your overall fraud prevention solution, which fits your business budget and allows you to continue operating.