Banks need transaction analysis to fight fraud


With all of the positive changes and innovations happening in payments, there is an unfortunate correlation with challenges and threats.

Innovation strengthens the business and remains at the forefront of progress with the digital consumer. But just behind these consumers are the scammers who represent the challenges and threats. Want instant payments? They have instant fraud.

To fight against fraudsters – to make the exercise of their professions too expensive and too long – it is time for financial institutions (FIs) to adopt the vaccine approach. In other words: the approach may not be 100% effective, but without it businesses don’t stand a chance. And like COVID-19 vaccines, it’s an approach that does the job well enough to protect the most vulnerable.

As Featurespace founder David Excell told PYMNTS Karen Webster, FIs must tackle fraud in all aspects of the transaction in order to achieve maximum protection. This examination is closely linked to the consumer’s journey, before, during and after payment. Along the way, using advanced technologies, FIs can separate behavior from intention, which separates bad guys from good customers. This implies a change in the way FIs look at trading.

“It’s about looking at the transaction within the channel,” he said. “And this is usually where many strategic decisions [from FIs] aim to combat fraud – in a game of debit card transactions or in ACH or my checks. “

But a more modern approach to combating fraud requires banks and other financial service providers to know as much as possible about their consumers. They need a proper insight into how consumers pay for goods and services and how they interact with different businesses. This knowledge can be harnessed to authenticate consumers and even anticipate transactions, while uncovering efforts to mimic “real” behavior and impersonate legitimate consumers.

Dive into the customer journey

Changing the mindset and approach to interactions with consumers requires FIs to fit into the real business journey and collect the best available data that can be used to craft the most robust fraud strategy. Excell noted that collecting data in remote silos within FIs is just a starting point – and it is not an easy task. But it is urgent, given that fraudsters are doing all they can to use the data they may steal in an endless attempt to build synthetic identities and gain access to bank accounts and search them or to commit credit fraud.

“There are always new use cases in fraud,” he said. “And the current environment – relative anonymity in the e-commerce age, device use – has provided solid coverage,” he said.

Knowing and protecting usernames and passwords is not enough, Excell said, because that data can be compromised. Device-related metrics aren’t always perfect lines of defense, either.

“We often work in an imperfect world where we don’t have all of this data,” Excell said. “We can’t see the circumstances surrounding the consumer when they make that purchase, other than the subtle clues we can potentially have around – particularly – life-changing events, like having a new baby or moving to a new home. new home or get married. All of these types of things sort of have a certain intention, a certain behavior, and a certain perception around them.

Observing the details of what consumers are doing when they go online through these very interactions, and when actively working with their FIs, can provide clues that tell FIs who are doing the right thing and who are not, did he declare. Will they always check their balance? Do they look at the last 10 transactions they made to recognize them? This information sheds light on what is individual about online consumers, far beyond the core business of checking and savings accounts.

As Excell said, “You can start to understand, well, what is the information and what is their experience as they go through this digital platform?”

A fraudster can simply register to view the balance or go straight to setting up accounts online. It is the perception of an action – the perception aided by the data – that can help an FI assess the likelihood that malicious intent is in progress. And that can make all the difference.

Artificial intelligence (AI), among other high-tech tools, including behavioral analysis, can observe when consumers open accounts, transfer money, or transfer money to other accounts and beneficiaries, thus creating a sense of context.

“They have to go back and interact with the website, they may need to use the same browser version or the same operation. [system] … All of these types of things, to try and pass themselves off as the real consumer, ”Excell said. “If we are able to detect differences in what the product does versus what the individual would generally do,” the fraud can be stopped in its tracks.

Verification of intent

Excell noted that verifying intent – getting consumers’ reassurance that they actually want to complete a transaction or open an account – might introduce a bit of friction to the process, but it could also boost loyalty.

“Sometimes I can feel like I want the bank to challenge me because then I know they are handling my money safely, and it wouldn’t be so easy for someone else to access it. this account, ”said Excell.

And after seeing that the action that might appear suspicious may indeed be fraud work, it is important that the FI has the ability to take control of the individual, end the online session, or terminate the online session. send a one-time challenge which, in effect, acts as a gateway to verify a person, which is of increasing importance in the age of real-time payments. All of this friction serves to make things more difficult for the fraudster – to use his greed against them or to dissuade them from continuing their efforts.

“Scammers operate like a business,” Excell said. “They have a bottom line, they have costs and… they try to be as profitable as possible. So how do you add the friction and how to make it as difficult as possible to commit fraud? “

High-value transactions are fruit at your fingertips, he noted. It is therefore essential to make these payments difficult to co-opt or access in the first place (splitting them into multiple transactions is one solution). Consumer data can not only prevent fraud, but it is also useful for new product development and innovation – and for sharing results across the financial services ecosystem to standardize and share best practices.

Tackling fraud in the context of the payment process, Excell said, “is about making sure that we protect the consumer’s information, that we protect their money, and at the end of the day, we make sure they have the highest level. level of trust with their financial institution. ”



About the study: A third of consumers who signed up for subscription services in the past year were just there for the free trial. In the 2021 Subscription Commerce Conversion Index, PYMNTS polls 2,022 U.S. consumers and analyzes more than 200 subscription commerce providers to focus on key features that turn “subscription curious” into persistent, long-term subscribers. term.


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