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Fraud Protection for Banks: Why You Don’t Need to Deploy On-Premise Fraud Detection Tools Anymore

Alex McConnell
Alex McConnell
3 Minute read
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Article Contents

    It might seem like ‘the cloud’ has well and truly established itself as the de facto deployment choice of fraud protection for banks. However, the market for cloud computing is still expected to grow – a lot – in the coming years (from $371.4 billion in 2020 to $832.1 billion in 2025).

    How can this much growth still be possible for a fairly mature market? One explanation is many highly regulated or security-conscious industries have held back from fully embracing cloud deployment for their core systems. But the standards of fraud protection for banks are changing, albeit gradually.

    We believe risk management leaders within banking who are on the market for fraud protection tools are advised to evaluate all deployment models with an open mind by assessing which aligns most strongly with organizational infrastructure strategy and which is best-placed to deliver cost-effective business benefits.

    Why have banks historically deployed their fraud protection tools on-premise?

    Security is still a top concern for organizations considering cloud deployment, with three out of four enterprises agreeing. It’s unsurprising that banks have erred on the side of caution when trusting transactional and customer data to infrastructure outside their own walls, with the level of regulation inherent to the industry. For this reason, on-premise fraud protection tools have remained the standard of fraud protection for banks.

    Also, while cloud adoption has grown over the past decade, many banks originally deployed their fraud detection products over ten years ago. At that time, cloud wasn’t a viable type of deployment of fraud protection for banks, from both a security and latency perspective.

    Additionally, banks have wanted to keep their fraud detection tools as close to their critical applications as possible to keep their most critical systems running smoothly – all of which would have been on-premise, going back to the 2010s or earlier.

    Why should banks consider cloud of vendor-hosted fraud detection?

    There are many benefits of vendor-hosted or cloud-based fraud protection for banks. These include:

    • Lower total cost of ownership (TCO)
    • Ease of scalability
    • More efficient maintenance and upgrades
    • Speed of deployment

    Most banks recognize these benefits and are moving many core applications ‘off-premise’ gradually, gaining confidence to migrate more systems over time. There’s also much more expertise about fraud protection for banks available than before to ensure cloud-based projects are well executed with less risk.

    It seems natural that, as core banking systems are moved into the cloud or the hands of vendors, so too can fraud protection tools; keeping these tools on-premise no longer delivers latency benefits and can be more costly up-front when considering in-house staff, software licenses and maintaining or adding capacity to physical servers.

    Weighing up fraud detection deployment options

    The four most common deployment options for fraud protection for banks are on-premise, private cloud, public cloud, and vendor-hosted.


    Managing everything in-house is the most expensive option initially, requiring hardware, specialist skills within organizations and dedicated resources to maintain. Scaling on-premise solutions later can also add complexity and cost. Deploying on-premise also takes the longest despite shortened internal due diligence processes. However, fees for ongoing services are typically less than that of vendor-hosted services.

    Private and public cloud

    The main difference between these options of fraud protection for banks is that, while the bank manages the solution, the infrastructure is controlled either by the bank (private cloud) or a third party (public cloud). In terms of implementation cost, ongoing cost and time taken to deploy, both cloud options tend to sit between on-premise and vendor-hosted. Scaling up the infrastructure is also easier and cheaper in the cloud than on-premise.


    The upfront implementation cost and duration is typically much lower for vendor-hosted solutions, with all the hardware, expertise and software ready to go and easily scalable. This does mean a potentially higher ongoing cost in the form of the subscription fee, however.

    What’s the best deployment option for fraud protection for banks?

    Although it made the most sense to stick to on-premise deployment of fraud protection tools in past years, today banks should be more open-minded about other options. Banks should weigh up each option considering total cost of ownership, scalability, maintenance and upgrades, and speed of deployment, and choose the option that performs best in the areas most vital to their strategy.

    Thankfully most vendors can offer a range of deployment or integration options, depending on the existing tech stack and infrastructure.

    Fraud detection tools with Netacea

    Netacea offers a range of innovative online fraud prevention solutions that can be used by businesses of all kinds to detect and mitigate even the most sophisticated threats, including carding fraud, credential stuffing and web scraping. Our fraud prevention services are powered by AI and are designed to secure you against brute force attacks, reducing the risk of fraud.

    Online fraud is rising rapidly, with bad bots evolving faster than security teams can handle – Netacea’s fraud protection tools are designed to provide timely, efficient and effective fraud detection. Banks simply can’t afford to risk the privacy and security of customers, which is why so many already trust Netacea’s fraud protection tools.

    Block Bots Effortlessly with Netacea

    Book a demo and see how Netacea autonomously prevents sophisticated automated attacks.

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