I’m amazed that so many financial institutions seem to hold fraud at a seemingly low priority. Fraud is often viewed as “the cost of doing business.” What if your view of fraud could be altered so that it became “the profit of doing business”?
With the growth in new payment channels, including online banking and smart phones, banks are challenged with balancing the convenience of new technologies against the increased threat for adding an additional exposure to fraud. According to an article in Bank Info Security, there were 58 data breaches in the banking industry in 2010. And 2011 is expected to bring addition challenges with organized crime rings and corporate account takeovers.
Banks should consider taking a more proactive approach to preventing money and revenue from leaving the bank. By using data and analytics to create a more holistic approach to POS decisioning across all payment channels, you can help your organization have a more precise understanding of customer behavior to avoid unnecessary fraud risks. Today’s advanced analytics have provided organizations with the capability to sift through volumes of data and transactions to help make intelligent real-time decisions about transactions and the steps to be taken. In a world where fraud schemes have filtrated across the enterprise, data and analytics become a key source to stopping fraud before it goes out the door.
After a presentation of SAS Financial Crimes Framework at a recent analyst conference, Andy Bitterer from Gartner, tweeted, “ If you are planning to commit some kind of fraud, you better be quick before some SAS application finds you.”
For banking firms, lost revenue isn’t the only point to consider. What about the loss in reputation? And what of the potential fines for non-compliance? With the explosion of online banking fraud, man-in-the-middle attacks and the increased use of money mules, new proposed updates to the 2005 Authentication regulations are underway which will include new requirements for transaction monitoring and anomaly detection. It is best to get a jump start on these requirements by investing in technology to support these types of attacks before they hijack your business.
Look for fraud technology vendors that support monitoring of 100 percent of transactions across all channels and have the analytics in place to capture the first glimpse of aberrant behavior before the funds are stolen and the fraudster set sights on the next victim. With this type of solution in place, not only does your customer remain confident in the bank’s ability to keep their money secure, but the bank profits from preventing lost revenue.