The key to managing fraud risk within challenger banks

According to recent figures from Synectics Solutions, current account fraud has increased by 16% for the first half of 2017 compared to the same period for the previous year. Furthermore, online fraud, specifically in the financial services industry, is on the rise each year.

The ever growing threat of fraud will inevitably bring an increased workload for investigators within banks and financial providers – but how do they manage to continue to detect and stop the most serious cases of fraud quickly and efficiently, whilst at the same time providing a frictionless boarding journey for good customers?

CASE STUDY: LEADING CHALLENGER BANK

UK’s first bank built exclusively for mobile devices.

Our client specialise in offering current accounts and mortgages for customers who see the value in having 24/7, online access to their finances, at their fingertips. They aim to provide a personalised and uncomplicated solution to banking and lending for their customers. Part of their uniqueness is the speed at which they are able to board their customers, which they do, in a matter of minutes, completely online. Inevitably, this would seem an attractive offer to those customers who want to take the fuss out of opening a bank account – having to visit a branch, fill in endless forms and wait days for approval.

"Current account fraud has increased by 16% for the first half of 2017 compared to the same period for the previous year.”

Additionally, the faceless and speedy online application may also be more appealing for fraudsters - not having to interact with a customer adviser or being able to falsifying their identity more easily. However, move to online only banking is hugely positive for both the providers and their customers.

The challenger banks are using online payments and a more tailored, individual service as the first steps to understanding more about their customers’ behaviours and desires.

Additionally, with customers’ increasing preference for communicating through tablets, smartphones and other mobile devices, financial services providers, both start-ups and more established provider, must continue to offer up new ways for them to interact with their accounts and keep up with the demands the fast-paced consumer expects.

INCREASING FRAUD INVESTIGATIONS DESPITE LIMITED RESOURCES

As we progress further into the digital age, the rise of challenger banks are somewhat disrupting the financial services industry. Not restricted by legacy systems or dated processes, they have the flexibility of integrating new systems in a simple and efficient manner. Additionally they can keep up with the demands of their customers, whilst at the same time, ensure they remain compliant and are addressing the increasing amount of fraudulent activity we are seeing in the industry.

However, they can often struggle to obtain the levels of funding to hire and train the right people to carry our complex fraud investigations, particularly with the ever-evolving landscape of fraud and financial crime, as criminals continually adapt and scale their approach, and find new ways to perpetrate fraudulent activity.

"As we progress further into the digital age, the rise of challenger banks are somewhat disrupting the financial services industry.”

Furthermore, with the rise of current account fraud, smaller teams may find it difficult to keep up with an increase in applications requiring investigations, the management of their workflows and the amount of data sources available to them. So, how is our client addressing these challenges?

A spokesperson at the bank discusses the fraud defence tactics they have implemented to ensure they are able to identify and stop fraudsters quicker and give their genuine customers a quick boarding process with only a small team of investigators.

"It’s vital that our fraud prevention controls and processes provide a frictionless application experience for individuals wanting to join us on our journey, whilst still enabling us to pinpoint suspicious application activity in a timely manner.”

"It’s vital that our fraud prevention controls and processes provide a frictionless application experience for individuals wanting to join us on our journey, whilst still enabling us to pinpoint suspicious application activity in a timely manner.”

MANAGING RISK EFFECTIVELY

In 2016 our client opted to utilise SIRA Real-Time, provided by Synectics Solutions as part of their fraud prevention strategy. SIRA is a fully integrated rules based decision engine that provides, Tier 1 banks, insurers, retail organisations and telecommunications companies the ability to leverage avast repository of shared intelligence that helps organisations to rapidly and effectively increase and speed up their fraud detection rates, reduce losses and increase their efficiencies.

...by equipping investigators with reliable and timely data and insights, they will be empowered to spot new trends and emerging threats quicker.”

SIRA’s sophisticated rule matching configuration and workflows allow organisations to prioritise their investigations based on their appetite for risk, thus increasing their capacity of examining genuine fraud cases; rather than spending valuable time working, what may turn out to be false positives.

By using SIRA Real-Time, our client can balance the need to progress customer applications quickly while also properly managing risk and understanding who they’re really dealing with. The solution allows them to make faster, safer decisions at any point in their customer authentication or verification process.

Deployed as Software-as-a-Service, the SIRA solution immediately removes the issues of hosting, data capacity and costly installations that challenger banks may see as an obstacle to deploying a comprehensive fraud prevention and detection solution.

”“Because the speed at which we board genuine customers and their journey is so important to us, we opted for a real-time fraud screening solution. This allows us to quickly and effectively determine the application fraud risks associated with applicants, thus ensuring that low risk applications, where no fraud indicators have triggered, are able to progress straight through the customer on boarding process. As a result, the customer is able to become part of our family in a matter of minutes.

On the flip side, where fraud risk concerns are highlighted, the ability to view all the key fraud risk information within the SIRA workflow, coupled with the flexibility to customise our fraud referral criteria and undertake fraudulent application data link analysis across the network of members, enables them to spot any suspicious applications and react to any emerging fraud trends with minimal inconvenience to genuine applicants.”

EMPOWERING INVESTIGATORS TO UTILISE VAST AMOUNTS OF INTELLIGENCE TO ENRICH THEIR KNOWLEDGE

The SIRA Real-Time solution allows our client to leverage intelligence from a wide variety of sources (including bureau data, industry fraud data, such as Cifas and SIRA and their own local application data), to allow their investigators to make more informed decisions, earlier in the application process and more frequently, which frees up important resources that they can assign to consider higher priority cases.

The process of fraud prevention and detection can’t rely on technology alone. However, by equipping investigators with reliable and timely data and insights, they will be empowered to spot new trends and emerging threats quicker and more accurately to make their future investigations more efficient.

The knowledge gained during their investigations can then be fed back into shared database, such as SIRA, enabling them and other organisations to stay one step ahead of the fraudsters.

FURTHER INFORMATION

For more information about Synectics Solutions and how the SIRA fraud solution can increase your organisation’s ability to prevent and detect fraud call 01782 664000 or email info@synectics-solutions.com