The hospitality industry, undoubtedly, is one of the fastest-growing industries and key drivers of country’s economic growth. According to a study by ResearchAndMarket.com, the Indian hospitality industry is expected to reach a value of INR 1,210.87 Bn by the end of 2023, expanding at a compound annual growth rate (CAGR) of ~13% during 2018-2023.
The numbers are a testament to the fact that the offset of Covid-19 and technological advancements coupled with government initiatives have altogether taken the growth trajectory on the recovery path. But the strong upsurge has made fraudsters refocus their efforts in this space and make it more vulnerable to vendor frauds.
Vendor frauds – putting hospitality businesses in a tough spot
Vendor frauds can be committed by anyone in the business ecosystem for illicit personal gains; it can be a vendor, multiple vendors, or employed staff on the accounts payable (AP) of a company. Businesses without robust third-party verification solutions and risk controls are susceptible to vendor frauds and suffer huge losses i.e. reputational risks, loss of loyal customers, and a decline in bottom-line profitability.
An unverified staff, handling payment records, is most likely to misinterpret information in the systems for personal gains and put the company’s finances and credibility in dire straits. This emphasizes the need for the hospitality industry to be proactive in minimizing vulnerabilities and risks with robust identity verification solutions. It may not be traditional for hospitality, but knowing your staff, vendors, and other third parties is as important as knowing your guests.
Most Common Categories of Vendor Fraud
Resorting to technology to enable due diligence
Before onboarding staff or associating business with third parties, businesses must resort to technology to enable 360-degree due diligence and verify all the aspects – be it reference, background checks, financial stability, database, and compliance assessment checks. Tech-driven identity verification and due diligence solutions perfectly fit in the toolkit of a modern hotelier looking to address guest and business safety, reduce friction and stay compliant with data protection systems. Third-party enablers like AuthBridge offer end-to-end digital identification, onboarding, and post-onboarding surveillance to ensure your partners are risk-free throughout the journey.
In terms of accessibility, businesses can leverage identity verification solutions through APIs or on third-parties dedicated platforms, built on plug-and-play models. One should also take this factor into consideration that the solutions should be built on AI-driven technology, highly scalable, tested in more regulated industries like BFSI, and work even in areas with low internet bandwidth.
With optimal use, identity verification solutions can become part of a more powerful data-driven ecosystem, prevent different frauds, and make onboarding seamless for all. Enabling comprehensive due diligence, regular audits, and establishing strong policies/procedures will enable businesses to reduce and detect the risk of vendor fraud. This should be coupled with staff training so that they are capable of recognizing and reporting suspicious vendor behavior and staying in line with the hotel policies and procedures.
In the long-term, the benefits of identity verification solutions can also extend beyond just the hospitality ecosystem to include social benefits like a decrease in crime rates, and illegal activities like trafficking and drugs that target hotels as venues.
Source: Hospitality World
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