Finance leaders today face mounting challenges: driving growth, reducing costs, and enhancing operational efficiency with increasingly constrained budgets. One often-overlooked yet critical strategy in achieving these goals is robust fraud prevention. During Sift’s recent webinar, “Finance and the Future of Risk,” I was joined by leaders from Deloitte and Texas Roadhouse to discuss how finance teams can harness fraud prevention as a catalyst for growth. Here are our standout insights for finance professionals.
The Broad Impact of Fraud on Financial Health
Fraud impacts far more than just direct revenue losses. It complicates financial reporting, increases bad debt, and drives inefficiencies, creating a ripple effect across operational profit, expense efficiency, and overall company valuation.
Understanding the full impact of fraud on a company’s investments is crucial for finance leaders. Different forms of fraud can cause significant financial risk and reputational damage. For instance, account takeover (ATO) fraud not only leads to direct financial losses, but also erodes customer trust and brand reputation.
Our discussion emphasized the importance of a comprehensive fraud prevention strategy that addresses various types of fraud, from payment fraud to ATO, to safeguard the company’s health. By implementing the right fraud prevention measures, finance leaders can mitigate these risks and ensure a more stable and predictable financial picture.
Why Fraud Prevention Drives Growth and Retention
One of the primary takeaways from our discussion was the direct correlation between robust fraud prevention measures and accelerated, predictable growth. AI-powered risk decisioning plays a pivotal role in this equation by improving operational efficiency and enhancing customer retention. By accurately identifying and mitigating fraudulent activities, businesses can create a safer environment for their customers, leading to increased trust and loyalty. In turn, this translates to higher customer lifetime value and more stable revenue streams.
As Andrew Myers, Advisory Manager – Analytics & Technology at Deloitte, explained: “Friction is a big part of customer retention. It’s really important to consider where you’re introducing friction because it may affect your customer using your products or your platforms again.”
By reducing false positives, businesses can create smoother customer experiences, which directly impacts customer retention. As Ashley Johnson, Director of Cash & Treasury Management at Texas Roadhouse aptly put it, “Preventing fraud is brand protection. By preventing that fraud or preventing that chargeback from even occurring on their account, you’re also protecting your brand, and the reputation, which then in result, allows for that customer loyalty to continue.”
Turning Risk into Revenue
Fraud prevention isn’t just about stopping fraud. It’s about turning potential risks into revenue opportunities. Effective fraud prevention strategies can stop hidden leakage and significantly cut down on fraud response spend. By proactively addressing fraud, businesses can avoid the substantial costs associated with chargebacks, legal fees, and reputational damage, allowing finance teams to allocate resources more efficiently and invest in growth initiatives.
Johnson shared how Sift is helping Texas Roadhouse stay true to their mission statement of “Legendary Food, Legendary Service” by reducing chargebacks and lowering friction:
“It’s preventing friction on the service level (which is buying our food), preventing friction on online purchases, but also preventing fraud for the guests, so that they will come back and dine with us again. In the end game, are they going to come back and dine with you again?” With this approach, Texas Roadhouse has achieved the lowest number of card-not-present chargebacks since 2023.
Breaking Down Silos to Combat Fraud
Fraud prevention is a cross-functional effort that requires the involvement of multiple departments within a company. It’s not just one person or team who’s responsible for this—everyone plays a part in the solution. The breadth of supporting the customer and combating fraud means that nearly every department is involved.
By fostering collaboration and breaking down silos, companies can create a more effective and comprehensive fraud prevention strategy. This not only helps in mitigating risks, but also enhances overall operations and customer satisfaction. As Johnson put it: “One of our strongest partners in the treasury team is IT. And you wouldn’t think that we go together, but we do. It’s relying on their education and their information as well as what we can get from the finance side to help break those silos down so that we are attacking fraud to the best of our abilities.”
A cross-functional strategy ensures that data and insights flow seamlessly between finance, IT, and operations. Myers noted the importance of sharing “fraud truth” data: “If you see a bad transaction, was there an account opening that happened 2 weeks before from the same device, and tying those together. So now, when you’re detecting bad transaction openings or bad account openings, you know what accounts had bad transactions further downstream. Sharing that fraud truth data across your different risk points is really important.”
What to Look for in an Enterprise Fraud Solution
Selecting the right fraud prevention solution is a critical decision for any finance team. Insights shared during the webinar underscored key attributes finance leaders should prioritize when evaluating enterprise fraud solutions.
Key factors to consider:
- AI and Automation: AI-powered systems are vital for real-time fraud detection, handling large data volumes, and adapting to new fraud tactics.
- Time-to-Value and ROI: Look for solutions with quick implementation timelines and measurable outcomes.
- Integration and Scalability: Platforms should integrate seamlessly with existing systems and scale to meet future needs.
Fraud prevention is no longer a cost center—it’s a strategic imperative that drives growth, improves efficiency, and enhances customer retention. Finance leaders who adopt AI-powered solutions and a proactive fraud prevention mindset can turn risk into revenue while safeguarding their company’s future.
For more information on how Sift can help your business achieve faster, more predictable growth through effective fraud prevention, request a demo.
