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Jasbir Anand discusses how some of the current weaknesses in payment systems are exploited by fraudsters, and why institutions need an Enterprise Fraud Management strategy.
The more sophisticated customers have started to almost do the reverse of what a fraud rule does. In the past, people would write conditions to try and recognize fraud. So, this is a high risk purchase, in a high risk country. Our most effective customers have started to almost write rules for the opposite of that, which is to try and recognize good behavior. So, identify customers that travel frequently. Identify customers that usually have high risk purchases, and filter those customer transactions out, again in an effort to reduce the overall false positive rate.
I think, with the implementation of chip and PIN technology now, there's going to be a greater requirement to start to decision higher risk transactions while still allowing customers to transact. And, as many examples of really effective strategies that our customers have deployed. For example, they can start to leverage location-based information from an online transaction. Compare that to a credit card or debit card transaction. And, identify if the probability of that customer being in those locations is even viable.
So, the flexibility of the solution allows you to implement rules and conditions that are not limited to the analytics that are delivered with the solution, but in fact allow our customers to be ingenious and create new and effective strategies to stop fraud and mitigate risk, while still keeping the customer as the central focus. Yes. What it means is that you are actually making decisions for that customer based on all of their transactions across all the channels as opposed to simply looking at their behavior across the debit card channel or the credit card channel or online channel, independently.
So, that's a step towards an enterprise fraud decision solution that allows you to, not only recognize the behaviors of the customer across the channels, but then also identify anomalous transactions very effectively, by realizing if the behavior is simply a movement across one channel, or is a net new transaction. So, for example, a customer pays their bills at the branch, and then starts to use online banking. If you only looked at it from the perspective of online banking, it would look like net new high risk behavior. But, understanding that it's normal behavior that's transitioned from the branch to the online channel, allows us to identify it as normal customer behavior and prevent false positives from being created.
Mobile banking is a new transaction channel. If the customer has ? in place, he can leverage that same solution, add the mobile banking transactions to the solution and start to protect that channel from fraud. ACI Analytics are behavior-based analytics, that store information forever. We store information in something called the profile. A profile is simply a statistical representation of behavior. So, for example, the average amount taken out in an ATM could be a profile-based variable. We can store that variable over a month, a week, or a year, and use that variable to compare against the current transaction.
Now, maintaining behavior-based profiles allows us to quickly identify transactions that are anomalous to profiles. A rule, for example may say, if the transaction amount is $500 and this is the first time that you've used an ATM, that's high risk. A profile variable would compare that high risk transaction to known past behaviors. So, if this customer has a propensity of normally taking out $500 at new ATMs, it's not as high risk as if a customer always uses the same ATMs and generally only takes out $200. So, by comparing via a combination of both rules and behavior-based analytics, we provide the best of both worlds or the best capability to really focus in and zero in on the transactions that are most suspicious.
The secure business line is releasing capability solutions. Capability solutions are really a combination of products that are geared towards solving a particular business problem.
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