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CustomerXPs Positioned Again as Enterprise Solution in 2017 Chartis RiskTech Quadrant® for Enterprise Fraud Technology

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London, 3 July 2017. Leading provider of real-time financial crime, risk and compliance software for the global banking sector CustomerXPs has for the 2nd consecutive year been positioned as an Enterprise Solution in the Chartis RiskTech Quadrant® for Enterprise Fraud Technology in the 2017 Financial Crime Risk Management Report.

Global risk technology research and analysis leader Chartis’ latest report covers the leading vendors of Financial Crime Risk Management (FCRM) systems. The RiskTech Quadrant® measures the vendors’ completeness of offering and market potential.

In this year’s Financial Crime Risk Management Systems Update Report, Chartis conveys how, against a background of more financial crime and shifting regulatory pressures, two trends are increasingly shaping Financial Institutions’ FCRM requirements:

• Greater volumes of regulatory reports, notably Suspicious Activity Reports (SARs).

• More complex relationships, involving correspondent banking, ultimate behavioral owners, and Open Application Programming Interface (API) banking.

The report includes:

• A look at the main emerging trends in FCRM since their last report, and how these are affecting the overall narrative and landscape in this space.

• An analysis of how this is shaping FIs’ technology approaches and requirements, and how vendors of FCRM solutions are responding.

• Brief updates on the main categories of FCRM systems: Anti-Fraud; Anti-Money Laundering (AML); Know Your Customer (KYC); Watchlist Monitoring; and – new to this report – Trader Surveillance.

In Chartis’ view, tackling these issues effectively will take the considered use of technology, people and process – all as budgets continue to tighten and financial crime gets more sophisticated.

The report states that while several technologies are proving useful, platforms/databases, Artificial Intelligence (AI) and entity resolution, are emerging as key elements in the development of effective new FCRM systems.

“CustomerXPs has a clear strategy for providing financial crime risk management technology to banks across the globe,” said Sidhartha Dash, Research Director at Chartis Research. “Their strong real-time fraud management capabilities, coupled with comprehensive cross-channel & cross-product coverage, ensured their position on the RiskTech Quadrant.”

Rivi Varghese, CEO, CustomerXPs added, “Chartis recognizing CustomerXPs once again echoes our continued customer success. Our AI-powered ‘central nervous system’ approach ensures that banks are able to benefit exponentially better with a unified cross-channel, cross-pollinated and real-time enterprise fraud management system that summons the collective wisdom in the short transaction window.”

CustomerXPs has also been recognised in the annual Chartis RiskTech100® rankings consistently since 2015. The rankings are globally acknowledged as the most comprehensive research of the world’s most significant risk and compliance technology companies.

August 2017 Issue

Posted on by Clari5

Clari5 Clients Continue Their Winning Streak

Clari5’s financial institution customers are continuing to receive highly coveted acclaim from global industry bodies for adopting a real-time, cross-channel approach to fighting financial crime.
 

Who is Responsible? Bank or Customer?

RBI’s recent mandate on Zero Customer Liability urges banks to implement a two-way communication for transaction alerts, which allows customers to reply to every transaction alert. Discover how Clari5’s pre-built 2-way response capability can help your bank.

Launched! #StopBankingFraud

New conversation on our Twitter channel with questions, perspectives and ideas around fighting fraud and enhancing customer experience in banks. Join in!
 

Asia’s Growing Financial Crime: Shielding from the Growing Threat

With Money Laundering leading the charge followed by Corruption/Internal Fraud & Card Fraud, the situation may seem bleak but not entirely unsalvageable. While there are several actionable ideas, There are a few that stand out.

Customer Liability in The Age of Digital Banking

Posted on by Clari5

Who is liable for money lost when fraud occurs in a customer’s bank account or card through illegal access/use of ATM or any of the Digital Channels (Internet Banking, Mobile Banking, Payments, E-wallets, etc.)?

The answer depends on the country where the account is being operated.

While the customer is responsible for the safe keeping of his/her ATM Card, Pin, Internet Banking and Mobile Banking credentials, different countries have different regulations on ‘limited liability’ of the customer.

When a customer discovers and reports fraud in her account through the use of ATM, Internet Banking or Mobile Banking, she is not liable for the full funds lost.

In the US, the Federal “Regulation E” Consumer Protection Act ensures that customer’s liability is capped at $50 if she contacts the financial institution within 2 days of discovering loss, theft or theft of the access device. The bank is liable for the rest of the money lost.

Many banks take account protection a step further with their banking guarantee and even waive the $50 liability given the fiercely competitive market.

As a result, banks take the entire responsibility for the loss. The UK too has similar consumer protection clauses for electronic banking transactions.

India’s central banking institution, the Reserve Bank of India (RBI) has been working on beefing up customer protection aspects of banking supervision for the past few years.

RBI’s recent communication to Indian banks on limited customer liability is laudable for its bold steps towards better customer service and protection in the Indian banking ecosystem.

It mandates banks to adopt better systems and processes to ensure safety and security of electronic transactions including the robust fraud detection and prevention mechanisms.

Some of the highlights in the communication:

Mandatory By Banks For All Digital Transactions

  • Registration of customers for text alerts and email wherever available, for electronic transactions.
  • Text alerts to customers for all electronic transactions and email alerts to customer registered email.
  • Ability for customer to report unauthorised transactions 24X7 through multiple channels (including website, phone banking, SMS, email, IVR, toll-free helpline, home branch).
  • Enable customers to instantly respond by Reply to text alert for unauthorised transactions.

Zero Liability of Customer

The customer has zero liability for the loss where unauthorised transaction occurs in case of:

  • Contributory fraud/negligence/deficiency on part of bank irrespective of whether the transaction is reported by the customer.
  • Third party breach, where the deficiency lies neither with the bank nor with the customer but lies elsewhere in the system and the customer notifies the bank within 3 working days of receiving the communication from the bank regarding the transaction.

Limited Liability of Customer

The customer has limited liability for the lost funds due to unauthorised transactions in the following cases:

  • Where loss is due to negligence of the customer, such as sharing payment credentials, the customer will bear the entire loss until customer reports the unauthroised transaction to the bank. Any loss occuring after customer reports unauthorised transaction should be borne by the bank.
  • Where the responsibility for the unauthorised electronic banking transaction lies neither with the bank nor with the customer, but lies elsewhere in the system and when there is a delay (of 4 to 7 working days after receiving the communication from the bank) on the part of the customer in notifying the bank of such a transaction, the per transaction liability of the customer shall be limited to the range of INR 5000 to INR 25,000 based on the type of the accounts and the average balance/credit limit.
  • Where the delay in reporting is beyond 7 working days, the customer liability shall be determined as per the bank’s Board approved policy.

Customer Liability – Summary

Time Taken To Report Fraudulent Transaction From Date Of Receiving The Communication Customer’s Liability (in INR)

Within 3 working days

 Zero liability

Within 4 to 7 working days

 The transaction value or the amount mentioned in Table 1, whichever is lower

Beyond 7 working days

 As per the bank’s Board approved policy

Moreover, the bank should credit the amount involved in unauthorised transactions to the customer’s account within 10 working days from the date of reporting by the customer.

These measures will certainly take digital adoption to the next level for the Indian banking sector and the overall economy.

While banks must invest in the enabling technology and processes, the benefits of increased customer confidence in digital adoption far outweigh the enablement costs.

New Department: Financial Crimes Department

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Blogs
If you have ever shopped on Amazon.com or ordered a movie on Netflix, you most likely have experienced “Predictive Analytics”.

The accuracy and the speed of predictions and recommendations are very impressive. Amazon knows that buying one item makes it more likely that you will buy another item or rent one movie makes it more likely that you may rent another, similar, movie. This is done through Cohort Analysis and Predictive Analytics: you are placed into a cohort (those like you) which allows an examination of your cohort’s purchases.

Furthermore, tracking your web searches and examining your on-line and off-line purchases can, exponentially, increase the accuracy of the Predictive Analytics. The understanding that if you do one thing you most likely will do another thing is easy to understand like buying golf balls usually means that you own golf clubs and you play golf: of course this may not always be accurate but buying golf balls is Predicate of golfing.

FinCEN is on a crusade to have banks and credit unions integrate Fraud Detection with Anti-Money Laundering. At most banks and credit unions, these two functions are in different departments and, in many cases, under different management. FinCEN uses a legal concept called “predicate crime” that ties Money Laundering to Transactional Fraud. A predicate crime is a crime that is part of a bigger crime. Transactional Fraud is often a Predicate Crime with Money Laundering. By bringing the two departments together, into a unified Financial Crimes Department, your financial institution will operate much more efficiently and effectively.

The two departments are separate due to the genesis of each department.

AML/CFT Department was created to address a regulatory requirement and Fraud Detection was created within the Risk Department to help banks and credit unions combat fraud. The first is a Cost of doing business and the second is a Cost Reducer (Profit Center). But fines placed on banks/CUs and reputational damage for AML/CFT can be devastating; just look at Fulton Bank in my hometown.

It has been proven that AML and Transactional Fraud are very correlated. Addressing these two monsters separately is like wearing a blindfold in a wrestling match. AML and Transactional Fraud, by looking for these two patterns together, ushers in the ability to use Cohort Analysis and Predictive Analytics. This will enhance your ability to predict money laundering and at the same time, the information loop that is established will help shut down transactional fraud much quicker and earlier in the fraud scheme.

Your technology partner needs to have an application that is extremely strong in AML/CFT, Transactional Fraud Monitoring, and Enterprise Case Management. Your financial institution needs to move to a single department for all Financial Crimes and we can help accomplish this.

Clari5 Clients Continue Their Winning Streak! More Global Acclaim for Real-time, Cross-channel Banking Enterprise Fraud Management

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Clari5’s financial institution customers are continuing to receive highly coveted acclaim from global industry bodies for adopting Clari5’s novel cross channel approach to fighting financial crime.

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NASSCOM

IndusInd Bank Wins ‘Model Bank’ Award

IndusInd Bank has won the Celent Model Bank of the Year Award For Growing Revenue While Managing Fraud. This is an endorsement of Clari5’s ‘Yin & Yang’ Approach to Fraud Management and Cross-sell.
Mridul Sharma, ‎EVP & Head of Technology, IndusInd Bank said, “Clari5’s ‘central nervous system’ not only helped us prevent fraud in real-time across channels, but also delivered real-time actionable insights for cross-sell and upsell.” Read more on the IndusInd Bank website and in Express Computer.

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NASSCOM

Karnataka Bank Receives Global Recognition

One of Clari5 early customers, Karnataka Bank, earned the ‘Highly Commended’ citation for ‘Best Use of IT for Risk and Compliance’ at the prestigious Banking Technology Awards in London in a glittering ceremony attended by luminaries from the global banking industry.
Karnataka Bank had also earlier won the Indian Banks’ Association (IBA)’s Banking Technology Award for Best Risk and Fraud Management’.

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NASSCOM

Clari5 Expanding Global Footprint

Clari5 meanwhile is increasingly becoming the partner of choice for leading financial institutions. Several new banks were added to Clari5’s fast growing client roster including Philippines’ 7th largest bank and the world’s first and largest Islamic Bank. Clari5 is now present in 7 countries across North America, Africa, Middle East and Asia Pacific.
By adopting an intelligent and smart technology like Clari5, banks are able to focus on their core business instead of investing in heavy infrastructure and reduce regulator penalties for non-compliance.

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NASSCOM

Clari5 Bags Global ‘Best Product’ Awards

Clari5 also recently bagged the Golden Globe Tigers 2017 ‘Best Banking Enterprise Fraud Management For Islamic Banking’ Award at Kuala Lumpur. Previously Clari5 had bagged the Risk.net ‘Best Fraud Detection Product Award’ – an iconic recognition that is the global equivalent of bagging an Oscar for Best Picture – in London. Read more on the Risk.net website.

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NASSCOM

Prominent Analyst Positioning for Clari5

Clari5’s parent company CustomerXPs was positioned in premier analyst firm Chartis’ RiskTech Quadrant on ‘Enterprise Solutions for Fraud Technology’ for market positioning and completeness of offering.
The company was also featured in Chartis’ RiskTech 100 rankings for the 3rd consecutive year.
Download the full report here.

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NASSCOM

CustomerXPs Fast-tracking Growth

Given its 191% revenue growth last fiscal, CustomerXPs was featured in Deloitte’s prestigious Technology Fast500 AsiaPacific and Fast50 India listings. View the full report here.

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NASSCOM
“This trend can be directly attributed to an increased global uptake for a unified approach to fraud management.
Our differentiated ‘human brain’ based cross-channel approach and our 100% implementation success when combined with a hyper-localized product avatar ensures global banks can go live very quickly on the smartest fraud management platform.”
-Rivi Varghese, CEO, CustomerXPs

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July 2017 Issue

Posted on by Clari5

Express Computer: Clari5 Client IndusInd Bank turns Fraud Management into Revenue Stream

“By using insights from the fraud management system, we can better understand how customers transact and get more intelligence on their transactional behavior. We can look at common patterns and make our marketing campaigns more effective,” Mridul Sharma, CIO, IndusInd Bank.

Event: Clari5 at Colombo Risk Symposium

The premier event featured Clari5 demonstrating how Sri Lankan banks can tackle the growing threat of financial crime with an unconventional approach.
 

Blog: Situational Intelligence in Fraud Prevention

Customer communication and preferences can be vital in detecting fraud early. Can a bank equip customers to control transactions as an effective fraud protection mechanism?

Infographic: Leveraging Big Data Analytics in Banks

While the generic benefits of Big Data Analytics are known, applying it in the banking context for fraud prevention and cross-sell must be treated differently.
 

June 2017 Issue

Posted on by Clari5

Combat Fraud and Grow Revenue with Clari5

Watch our latest video to know why Clari5 is a bank’s best bet for fighting fraud and growing revenue.
 

Top 5 Bank Transforms Customer Engagement with Instant Contextual Insights

See how Clari5 is helping the bank’s 4500+ branches generate over 1000 cross-sell/upsell opportunities every day with precise real-time insights.

How to Better your Bank’s AML Compliance

Alarming revelations on money laundering and banking frauds have emerged in recent surveys of Middle East and North African nations. Read more to discover what can be done.

 

How to Better your Bank’s AML Compliance

There is an upsurge in regulations and fines with banks failing to comply with AML guidelines. See the key factors influencing compliance, the challenges and actionable strategies.

Asia’s Growing Financial Crime – Shielding from the Growing Threat

Posted on by Clari5


‘Attempted heist of $1 billion by unidentified hackers’ the shot rang out across the financial world which experienced first-hand the tremors of cybercrime.
The yet to be identified hackers made off with $81 million and embroiled Rizal Commercial Banking Corporation (the bank used as a conduit for the heist), in penalties totaling 1P billion imposed by Bangko Sentral ng Pilipinas (BSP).

Meanwhile, the Monetary Authority of Singapore (MAS) fined DBS and UBS (2 of their biggest banks) amounts totaling $4 million for alleged money-laundering activities connected with Malaysian sovereign fund 1MDB.

Banks across China to Singapore to Philippines to smaller nations, are regularly falling prey to cybercrime, banking fraud and money laundering.

Let’s take a closer look at 5 prominent examples from recent survey reports and a few doable ideas to start beating the threat.

China
China was one of the countries surveyed for the state of financial crime. Some of the eye-openers include:
● 63% from organizations affected by financial crime said the most severe losses were incurred when an insider was involved in the fraud.
● 35% of respondents had no idea about the number of times their organizations had conducted a fraud risk assessment in the last 2 years.
● Corruption and bribery were pointed out as the most likely trends in organizations by 38% of respondents.
● While 36% claimed that an opponent of their organization got the upper hand in competition by paying a bribe, 22% said that they were asked for bribes.

Meanwhile, in Hong Kong and Macau –
● Money laundering and cybercrime are the most prominent themes.
● 50% claimed that cybercrime was the biggest threat to their organizations.
● 43% said their strategies against money laundering failed because organizations were unable to hire proficient, experienced people.

Singapore
Being a powerful investment banking hub, the nation has the most stringent compliance regulations. The recent 1 Malaysia Development Berhad (1MDB) bank fiasco and the subsequent lapses discovered in a number of banks that acted as a conduit for funds has severely challenged the nation’s risk compliance framework.

Alarming findings from recent surveys and other reports include:
● Rate of card fraud in the country is the 6th highest in the world and the 3rd highest in Asia-Pacific! About 66% of consumers were impacted in 2016.
● ACI Worldwide (a prominent payment solutions & electronic banking firm), reported that around 28% of its customers using debit cards, prepaid cards or credit cards experienced unauthorized transactions in 2014. In 2016, the number rose to 36%.
● Switzerland-based bank Falcon’s Singapore unit was shut down because of its involvement in the 1MDB debacle. The bank has been fined around 14 times a whopping $3.12 million for breaching anti-money laundering laws!
● While having a strong framework against money laundering, the country has failed to investigate any cases of terrorism financing despite having almost 780 potential leads.

Having noted the flaws in its defence mechanism, the country has pledged to further fortify it. But the constantly changing regulatory standards are making it harder to devise a comprehensive financial crime compliance strategy.

Some of the key requirements in these standards include:
● Creation of an effective FCC target operating model, especially for complex businesses
● Strict adherence to the 3-line “front office, audit and compliance” defence principle
● Demonstrable supervision and governance by the management
● Effective risk assessment and management

Philippines
Another South Asian country that is yet to achieve 100% compliance with respect to economic crime is Philippines. Regardless of its seemingly effective strategies against financial crime, banks in Philippines country are very often targeted by cyber criminals. PwC’s economic crime survey reveals:
● Around 36% of firms in Philippines are vulnerable to economic crime.
● More than 25% of respondents who participated in the survey, claimed they have had to pay bribes more often than their regional or global counterparts.
● Over 50% of respondents don’t have faith in law enforcement when it comes to combating financial crime.

Thailand
The situation in Thailand regarding financial crime is no better. In a survey by PwC, the response of whether they experienced financial fraud in 2016 was a 26% yes.
While most firms seem to have a defence strategy against financial crime and money laundering in place, many are blissfully ignorant about the repercussions of fraud.
Respondents were also asked to opine about the factors which contributed to fraud. While 24 % said that financial fraud is mainly motivated by the incentive (a person is likely to receive on misappropriating assets), 64% said that the opportunity to commit fraud – which only employees have – is the main factor.
6% claimed that rationalization, due to which a person commits a fraud and justifies the same, is the main cause.

Vietnam
Investments in Vietnam certainly have advantages owing to recent measures such as revision of Land Law (2013), Investment Law (2014) as well as Enterprise Law (2014).
But prevalent compliance risks pose a vital question – are these investments secure enough? Statistics from recent reports show that:
● Corruption is the greatest hurdle for financial investments in Vietnam.
● Regulatory standards are intricate and often confusing for investors.
● Laws against employee embezzlement or thefts haven’t been enforced properly.
● Around 68% of private firms in the country are able to get contracts only by paying bribes.

Arresting the Trend
There’s little doubt that the situation is a bit like a bomb waiting to go off. With Money Laundering leading the charge followed by Corruption/Internal Fraud & Card Fraud, the situation may seem bleak but not entirely unsalvageable.

While there are several actionable ideas, 4 of them that stand out are –

1. Push for a Regulator-level Transformation.
Assess risks associated with terrorism financing and money laundering, and co-develop a policy to mitigate them. Regulatory bodies must come out with a firm long-standing stance on anti-fraud measures that banks can readily implement. Frequent changes in policy causes considerable operational disruption which inadvertently causes breaches in a bank’s protection systems.
2. View Top-line Growth (upsell / cross-sell) and Bottom-line Protection (losses from Fraud) as 2 sides of the same coin.
Make investments in fraud management to pay for itself because fraud management and cross-sell are actually the ‘yin and yang’ (of risk management and revenue growth). Banks can reuse the in-memory data to offer simultaneous real-time cross-sell and upsell to customers using the same computed memory of fraud management. So the same contextual interventions at play in a real-time, cross-channel fraud prevention solution can also be used to generate revenue.

3. Unify your Bank’s Anti-Fraud & AML Departments into a Single ‘Financial Crimes Department’.
Currently the 2 departments are separate due to the genesis of each. The AML/CFT department was created to address regulatory requirements and the Anti-fraud cell was created within the Risk Department to help banks combat fraud. Money laundering and transactional fraud are closely correlated because transactional fraud is often a ‘predicate crime’ to money laundering. So, a cross-channel holistic approach is far superior because the system is strong in AML/CFT, Transactional Fraud Monitoring, and Enterprise Case Management. Operations can be exponentially more efficient by bringing the 2 departments together into a unified ‘Financial Crimes Department’.

4. Create a Federated, Asia-wide Anti-fraud Network.
Step up the fight to a regional level. A federated approach – specifically a pan-Asian anti-fraud network can be a useful strategy to consolidate, cross-pollinate and share intel among banks in the region. An interconnected framework allows member financial institutions to exchange authentic fraud intelligence in real-time, that can help detect and prevent potential crimes before they are perpetrated.

Data Sources:
1. https://www.pwc.com/sg/en/consulting/assets/economic-crime-survey/economic_crime_survey_2016_singapore.pdf
2. https://www.pwc.com/th/en/publications/2016/economic-crime-thailand2016.pdf
3. http://www.pwccn.com/en/services/consulting/forensic-services/publications/under-attack-are-organisations-doing-enough-to-tackle-the-cyber-threat.html
4. http://www.pwccn.com/en/migration/pdf/forensic-economic-crime-survey-2016.pdf
5. http://www.straitstimes.com/business/1-in-3-spore-consumers-victims-of-card-fraud
6. http://www.iflr.com/Article/3589987/Financial-crime-compliance-trends-in-Singapore.html
7. https://www.bloomberg.com/news/articles/2016-09-27/singapore-has-gaps-to-fill-in-money-laundering-fight-fatf-says
8. https://www.pwc.com/ph/en/consulting/assets/2016/pwcph-report-gecs-2016.pdf
9. http://www.corporatecomplianceinsights.com/cyber-fraud-on-the-rise-in-southeast-asia/
10. http://globalinvestigationsreview.com/insight/the-asia-pacific-investigations-review-2016/1024349/vietnam-compliance-risks

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Posted on by Clari5

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