The evolving approach to financial crime & risk management

Journey to effective fraud prevention

As customers increase their demands, for a quicker and seamless journey, organisations need to complete their compliance, regulations and identification checks on customers in less and less time.

What’s more, fraud is continually evolving as criminals develop new approaches to committing fraud and infiltrating new channels. It’s never been more important for financial services providers to implement an effective fraud prevention and detection strategy to help mitigate risk, prevent losses, keep their customers happy and stay ahead of the fraud evolution. So how can this be achieved?

Founded in 1952 in the West Midlands, Secure Trust Bank is a growing challenger bank that offers a range of personal and business banking and finance products including; savings accounts, loans and mortgages. The bank’s strategy is to continue growing the business through professional and responsible lending across existing and new lending divisions.

Its main focus for growth is; business finance through its asset finance, commercial finance and real estate finance divisions, consumer finance through its motor finance and retail finance divisions and mortgages through its intermediary mortgage division.

...organisations are needing to complete their compliance, regulations and identification checks on customers in less and less time."

The power of collaborative data sharing

Gareth Bentley, Financial Crime Manager at Secure Trust Bank discusses their approach to fighting financial crime and adapting their approach to fraud prevention to keep one step ahead of the criminals.

Whilst some organisations may find difficulty in maximising the intelligence of their own data in combination with additional data sources, SIRA provides Secure Trust Bank with a sophisticated rules based decision engine and workflow management tool that allows them to create a fully integrated and bespoke anti-fraud system. Gareth said: "…“SIRA gives us the flexibility to manage and match applications to our own local data but also interrogate and screen against data in the National SIRA syndicate."

By integrating intelligence from National SIRA, Secure Trust Bank has the additional ability to screen its applications against over 200 million customer records held in the National SIRA database. The syndicated database is contributed to by over 130 organisations from the banking and finance sector, leading insurers, retail providers and telecommunications companies – promoting the significance of collaborative data sharing. Not only does this give Secure Trust Bank the ability to interrogate information from other finance services providers but cross reference with other sectors to help give a full and informed view of applications and make better decisions, based on its appetite for risk.

The syndicated database is contributed to by over 130 organisations.

We have discovered that the machine learning, risk scoring and prioritisation capabilities of Precision could help reduce our losses to fraud by as much as 60%, whilst at the same time reducing the number of investigations by 50%.

Using data to stay one step ahead of the fraudster

It is widely known that perpetrators of fraud do not necessarily stick to one particular industry to commit their crimes. Cifas recently reported that 32% of offender submitting false insurance claims had also committed fraud in other sectors, across a range of products.

Additionally, with the increase in identity and verification checks and more robust up front validations check, fraudsters are deploying more sophisticated tactics, across different industries, to circumvent the application process and reap more lucrative rewards.

Cifas recently reported that 32% of offenders submitting false insurance claims had also committed fraud in other sectors, across a range of products.

In addition to its local data, and intelligence from National SIRA, Secure Trust Bank has integrated third-party data sources and additional validation checks to enrich its data further.

Gareth continues: "…“By integrating other data from additional sources such as Cifas and assimilating identification and verification, money laundering and account checks we are able to undertake a complete review of all applications, but at the same time interrogate multiple data sources and intelligence."

Any applications that have matched against those records flagged as fraud in National SIRA or have matched to suspicious information from the third-party data are presented in Secure Trust Bank’s local SIRA workflow system, in a single point view, making it much easier for investigators to interrogate and consider the referrals.

...by integrating other data from additional sources such as Cifas and assimilating identification and verification, money laundering and account checks we are able to undertake a complete review of all applications, but at the same time interrogate multiple data sources and intelligence."

Secure Trust Bank utilises both Real-Time and Batch processing of its customer applications. Real-Time gives the capability to instantly access the very latest and most dynamic information available from the National SIRA database and third-party data sources, to help identify and deal with any posed risks earlier in the application cycle, and at the same time provide a frictionless journey for its genuine customers. Via Batch processing, its fraud team can deploy a more nuanced and considered approach to investigations.

Gareth continues: "…“SIRA rules have been effective in finding fraud and we continue to make use of these referrals and matches provided by the National SIRA syndicate and additional integrated data sources."

Adopting a multi-layered approach to fraud prevention

In recent months Synectics Solutions has been working closely with Secure Trust Bank to consider the possibilities that predictive insights will bring to enhance their fraud prevention and detection strategies.

As fraudsters advance, it’s vital that organisations stay ahead. By integrating Precision, an enhanced suite of predictive techniques and data science algorithms, Secure Trust Bank will have the ability to predict the future behaviour of its customers, based on past experience, prioritise risky applications, reduce the number of investigations its team has to process and more importantly, reduce losses to fraud.

In a recent survey of Synectics Solutions clients, 77% said that predictive analytics are very important in the fight against fraud and financial crime, and having recently undergone a proof of concept with Precision, Gareth and the team have seen promising results.

Gareth said: "…“We have discovered that the machine learning, risk scoring and prioritisation capabilities of Precision could help reduce our losses to fraud by as much as 60%, whilst at the same time reducing the number of investigations by 50%."

"…“In addition, we also uncovered an organised fraud case, involving over 40 individuals, worth over Ôš££61K using Precision – just in the proof of concept stage."

"…“Essentially, Precision has proved to us that it is able to target and prioritise fraud more effectively and help us to improve the journey for genuine customers by fast tracking their applications, based on their behaviours. We’re excited to implement the solution fully into our current risk mitigation strategies."

...in a recent survey of Synectics Solutions clients, 77% said that predictive analytics are very important in the fight against fraud and financial crime."

The importance of evolution

Secure Trust Bank understands the importance of continually evaluating its approach to fraud prevention and detection. The fraudsters are continually evolving and it is paramount that businesses don’t stand still and let them win. Certainly the availability of data via online platforms and data breaches, combined with the move to seamless, instant, digital apply channels has created a real opportunity for fraudsters to exploit any weaknesses in an institution’s defences. The biggest challenge for banks then becomes, how do they incorporate adequate, enhanced, and speedy fraud checks that meet both business and counter-financial crime needs?

The answer, at a high level, is the same as it’s always been, a multi layered approach, as Secure Trust Bank is deploying with advanced technologies and software from SIRA, Precision and the integration of various data sources.

There is no silver bullet to tackling fraud and financial crime, but through enhancing current practices with increased data sources and better technology we can look to mitigate these threats in a way that meets both current and future business needs.

...the fraudsters are continually evolving and it is paramount that businesses don’t stand still and let them win."