Fintech Herald is an online publication that covers the latest news and trends in the rapidly evolving world of financial technology. From mobile payments and digital banking, Fintech Herald provides insightful analysis and expert commentary on the technologies and innovations that are transforming the financial industry.The website publishes news, press releases, opinion and advertorials on various financial organizations, products and services which are commissioned from various Companies, Organizations, PR agencies, Bloggers etc. These commissioned articles are commercial in nature. This is not to be considered as financial advice and should be considered only for information purposes. It does not reflect the views or opinion of our website and is not to be considered an endorsement or a recommendation. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third-party websites, affiliate sales networks, and to our advertising partners websites. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish advertised or sponsored articles or links, you may consider all articles or links hosted on our site as a commercial article placement. We will not be responsible for any loss you may suffer as a result of any omission or inaccuracy on the website.

Preventing fraudulent claims with digital warranty management: How can advanced technological innovation combat fraud and provide customers with a seamless digital experience

by Uma
iStock 1330010441

Preventing fraudulent claims with digital warranty management: How can advanced technological innovation combat fraud and provide customers with a seamless digital experience

By Dr Ruby Pillai, Co-founder and CEO of iWarranty

Up to 10% of warranty expenses are believed to result from warranty fraud. Although most companies have improved their digital user experience, many struggle to effectively enhance fraud control without impairing customer experience. 

In 2023, the fintech industry is expected to witness notable trends in fraud prevention, with digital warranty management emerging as a prominent solution to mitigate this revenue loss.

By digitising and automating warranty management processes, manufacturers can achieve greater connectivity with their customers, transparency, operational efficiency, cost savings, and improved customer experience by empowering their customers with a seamless post-sale warranty experience. All in all, simple, seamless and effortless claim processing from anywhere, anytime!

The state of fraud in traditional warranty management

Traditional warranty management has numerous flaws. From inefficient product tracking to limited visibility into warranty claims, lack of data collection and connectivity with customers, the conventional warranty claim process is susceptible to abuse and fraud. 

According to Accenture, U.S. car manufacturers spend a staggering $8.5 billion on warranty claims annually, with a significant portion of that going towards administration costs. Approximately 10% to 15% of these warranty payments result from fraudulent or invalid claims, highlighting the need for a more efficient and reliable warranty management system – a single source of truth.

Conventional warranty management limits fraud visibility by:

  • Lack of customer connectivity
  • Poor verification methods
  • Lack of product tracking
  • Relying on manual data entry prone to errors and inconsistencies
  • Lacking real-time visibility into product and warranty information, making it challenging to identify which of the claims are legit
  • Limiting the ability to cross-verify and analyse data from multiple sources, leading to difficulties in identifying patterns and trends of fraud
  • Having poor communication between the customer service department and customers, not gathering adequate information and lack of consistent ways of capturing data is hindering the ability to identify and detect potentially fraudulent behaviour 

The role of digital warranty management in fraud prevention

The digitalisation of the warranty system is crucial to cutting down on costs associated with fraudulent activities as availability, accessibility and transparency of data make it impossible for scammers to slide through the earlier cracks present due to manual procedures. Here’s how the process works: 

  • Digital warranty management consolidates all of the relevant product data into one place, from manufacturing to assembly, through distribution channels to end users, and a single product identification mechanism is embedded into the product. A fully encrypted unique identity is issued against each product record through a digital token and keeping the information fully secure with multiple verifications, with seamless interconnections in place, to ensure smooth and efficient communication between different data sets while preventing fraudulent claims.
  • As soon as a claim is registered, it is automatically checked against the product and warranty data, making it impossible for fraudulent claims to pass through to the warranty team. All manual verification is eliminated through the process.
  • All the claims, including the fraudulent ones, and their proceedings are updated in the data to show what percentage of claims were fake, where each claim stands in terms of processing, what products have been repaired or replaced, and the common defects found through claims. 

Implementation of digital warranty management for fraud prevention

Digital warranty management systems can be introduced into a company in two ways: developing an in-house warranty management system or licensing third-party software. Choosing between these two options depends on your company’s requirements, budget availability, speed of delivery requirement and future goals.

In-House warranty management system development

Developing an in-house digital warranty management system could be the right choice if you are looking to incorporate existing advanced digital systems present in your products with warranty management, for instance, IoT. Similarly, it could be beneficial if you anticipate you’ll need massive customisation in your warranty system over time, however, this seldom happens.

On the other hand, developing your own digital warranty management system could prove to be costly as you’ll need a dedicated team to build, upgrade and maintain it. In addition to this, you’ll require a significant amount of time to develop it during which you’ll be stuck with conventional paper-based warranty management. 

Third-Party digital warranty management system 

By having a third-party digital warranty management system, you won’t have to worry about having a separate software development and management team or your business working on something that isn’t your primary scope of work. 

In addition to this, third-party software has multiple built-in functionalities, such as warranty data and insights and fraud prevention, as a bonus. Furthermore, the software is already developed, tested and ready to be onboarded, saving significant time in development and mitigating potential errors or roadblocks that may arise when building an in-house digital warranty management system.

Given that most digital warranty solution providers offer customisation and upgradation options, the software is capable of adapting to business growth. Last but not least, it will be lighter on your pocket in comparison to developing a warranty management tool from scratch. 

Keeping the pros and cons of both in-house warranty management software development and getting a third-party solution in view, it is safe to say that the decision depends on what your business requires, how quickly you want to implement it and what’s your budget. 

 

Recent Post