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Category: Fraud Management

Financial Crime in South Africa!

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Financial Crime in South Africa is overwhelmingly omnipresent. According to Christopher Malan, Head of Financial Intelligence Center, South African banks have to work towards being more compliant in combating financial crime i.e. Terrorism Financing and Money Laundering.

Four big banks of South Africa were fined for R125 million by the Reserve Bank for failing being compliant to the regulations. Banks are highly criticized for forming cartels, and behaving monopolistically in the African region. This is one of the various reasons for high financial crime rate in South Africa.

According to PWC report, the biggest thieves are not the lowest paid or least educated but was quite opposite. The senior management are the main perpetrators in South Africa. The fraudsters are mainly in their thirties with University degrees.

The most common scams prevailing in South Africa are internal fraud, money laundering, e-mail scams, identity theft, remittance scams, bribing and corruption, and misappropriation of assets. The leading scam among all the above list is the internal fraud. This revelations by PWC has built a cloud of uncertainty and mistrust inside the organisation. This has  shattered the trust of customers on the financial organization.

Financial crime in South Africa has taken its toll on the lives of people. It has directly or indirectly affected the livelihood of people. Frauds and Scams have robbed people of their resources. It has drained the funds available for country’s development. By knowing what to look out for, one can avoid falling victim to common fraud and scams. Hence, the following infographics will give an overview of different prevailing scams in South Africa. I hope you find it useful.

 

 

 

Financial Fraud in Australia

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Financial Fraud in Australia

Financial fraud is pervasive. Not only developing but developed countries grapple with fraud. With new channels of financial transactions opening up for consumers, it is becoming even more difficult to monitor fraudulent events in real-time. For instance, online banking & payment cards have become so ubiquitous that we cannot imagine transacting without them in our day-to-day life. On the other hand, banks are threatened by high levels of fraud that are associated with electronic transactions. In Australia, the total amount of money spent on payment cards was AUD 624 Billion in 2013. At the same time, an estimated AUD 1.4 Billion was lost to personal fraud that has emerged as the largest form of financial fraud in Australia.

This infographic below delves deeper into the fraud scenario in Australia and highlights ways to combat fraud in real-time.

 

Fraud Landscape In Africa – The Pervasiveness of Online Fraud

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Fraud Landscape in Africa

Financial Fraud has perpetrated the banking industry in big way. As more people use the Internet for their banking needs, the number of fraudsters eyeing online financial transactions has also multiplied. In Africa particularly , online fraud has proved to be one of the most pervasive forms of financial fraud and is hugely impacting the fraud landscape.

 This infographic below details out the fraud landscape in Africa and how use of innovative anti-fraud technology mitigates & prevents frauds from taking place in real-time.

Types of Fraud in Banking

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Types of Fraud in Banking:

Fraud is an escalating threat for banks. Technological advancements and changing customer preferences have opened up new avenues of banking for modern consumers. But these channels of convenience have also attracted massive threat from fraudsters.  For instance, 41% of customers globally who have been victims of financial cyber fraud have failed to get even a single cent back. Fraudsters have not only perpetrated direct channels but have also gained entry within the banking system as insiders.

The following infographic throws light on the different types of fraud in banking and how use of innovative real-time anti-fraud technology mitigates & prevents bank frauds from taking place.

 

Continued Commitment to Fight Banking Fraud

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Gartner recently published a report on Banking Vertical specific software. According to the report, the banking and securities vertical specific software market grew by 5.9%, riding on replacement of legacy applications in mature markets and new technology investments i emerging markets.

CustomerXPs features in the report as a notable vendor providing banking software. With our Clari5 suite of products, we continue to focus on Enterprise Fraud Management and Customer Experience Management for Banks. Inclusion in the report is confirmation of our focus and belief.

Around same time, Gartner published Market Guide for Online Fraud Detection. This guide provides recommendations to fraud managers for their strategic planning in using technology to combat Online Fraud. In this report too, CustomerXPs is mentioned as a Representative vendor. This inclusion is also a testament to credibility of CustomerXPs as a provider of software to fight banking fraud.

As I have written in an earlier post, there is a sense of satisfaction in receiving the positive feedback from the industry analysts and customers alike, a motivation to continue on the journey we have embarked and to keep committed to our goal of helping customers bank in a fraud free environment.

Increasing Importance of Big Data in Banking

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Increasing Importance of Big Data in Banking:

The phrase big data has become a buzz word. Everyone talks about it or has information in bits and pieces, but only few companies know how to utilize the same. Big data is characterized by the tremendous volumes, varieties and velocities of data, that are generated by a wide array of sources, customers, partners and regulators (IBM)

Banking is among many industries which has a vast and useful data about their customers.  But right now, only a handful of banks are utilizing this pool of information and taking steps to enhance Customer Experience and deducing the data to combat fraud. Banks are aware of the fact that if the data is used smartly they will be able to cater to the needs of customers accurately.

As per research from (Capgemini) only 37% of customers believe that banks understand their needs and preferences. Banks have an abundance of informative data, but the major challenges they are facing today is how to utilize it intelligently, shortage of skilled people, insufficient tools, time constraints, the high cost associated, unstructured vast data and much more.

Most of the banks have silo based solutions to harness this pool of information. (Capgemini) research shows that organizational silos are the single biggest barrier to success with big data. Banks should apply 360 degree approach and understand the customers’ needs and act accordingly.

Big data can do wonders for banks if mined properly. Big data help to limit customer attrition, help in relationship management, increase in ROI and reducing fraud. Big data can be utilized to:

 

  • Increase revenues by optimizing offers according to the customers’ needs
  • Cross sell & up sell to the customers based on the information deduced from big data
  • Reverse attrition & meets stringent regulatory requirements
  • Establish more meaningful customer relationships
  • Generate more personalized multichannel customer journeys
  • Detect and prevent fraud by using data analytics
  • Understand the behavior of their customers
  • Mine new revenue streams
  • Manage risk and take precautionary actions
  • Understand crime and help to predict where crime is likely to occur

Big data is being increasingly used and studied by banks now. Banks have understood the potential of big data and are taking measures to apply it.  Banks should come out of their silo based legacy solution to more wider and useful approach that will not only enhance customer experience, but also will help them to increase ROI, prevent fraud and reduce attrition rate.

Changing the Indian Banking Fraud Landscape with Real-time Fraud Prevention Technology

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Banking fraud is a $3.5 Trillion global menace. Indian Banking Fraud number instances have increased considerably over the past few years. This surge in banking fraud has not only resulted in banks losing millions but also sustaining irreparable reputational damage. With such attacks becoming more frequent, RBI has mandated banks to comply with recommended measures to secure the technology infrastructure and improve fraud risk management practices for frauds across channels. There is thus a growing need for banks to incorporate strong combat mechanism for not only detecting but preventing frauds in real-time.

The infographic below highlights recent trends in the Indian Banking fraud landscape and how implementing real-time fraud management technology would combat such frauds in a fool-proof way.

 

Online Banking- A blessing or a threat in disguise?

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Online Banking- A blessing or a threat in disguise?:

E-banking, or online banking as we call it, has become an accepted norm of financial transactions for millions around the world. The pervasiveness of internet has contributed to this channel of banking gaining prominence not only in developed countries but also in the developing ones.  The modern banking customer who is short on time does not hesitate to log on to her online banking account and make payments online or transfer money, much to her relief.  Aren’t we lucky enough to experience such luxury at the hands of technology?

Well, pause for a second. The growing menace of fraud has posed a big threat to the safety of these banking transactions. Identity theft, phishing & smishing (phishing through mobile phones) are the most common fraud practices threatening the online banking space. According to a report published by Kaspersky in 2013, online fraud is costing the global economy many times more than initial estimates of USD 100bn a year, with bank fraud contributing the maximum. Also with the emergence of various social media channels, fraudsters have upped their ante. As per a research by Microsoft, phishing via social networks was used in 84% of the total attacks carried out in 2011. Such attacks not only expose gaps in the online banking ecosystem but also pose a grave challenge for banks- in how to establish a counter-attack mechanism.

Banks must incorporate a strong combat mechanism- that cannot be achieved by simply following an outside-in defense approach that is reactive in nature. What banks need is an inside-out approach to fraud prevention using customer behavioral intelligence. Customer behavioral intelligence not only makes use of financial transaction patterns but also non-financial transaction patterns, user login patterns and device usage patterns to come out with fraud-risk advice.  This includes using 2-factor authentication to restrict the fraudster from making unauthorized access into the customer’s online banking account, as mandated by Reserve Bank of India, recently.  This fraud-risk advice being available in real-time empowers the banking system to allow, decline or challenge suspicious transactions thereby preventing the internet banking fraud from actually taking place.

Thus, implementing strong online fraud prevention technology is essential not only for making internet banking transactions fraud-proof for customers but also enjoyable. A good fraud prevention solution can not only benefit the bank in terms of improved customer loyalty but also help the bank improve its bottom-line.

Find the truth about your Customers, yourself!

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In an age where even scientific discoveries are turning out to be unreliable, scientists, of course state that these are “self correcting” and therefore in the long run, the truth shall prevail, businesses have something to worry about, mainly so because they need to take quick decisions based on the information they have available today and cannot wait till a more “accurate” version of the truth arrives tomorrow. To take a parallel in the medicine industry, many times wrong diagnosis has harmed businesses more than wrong strategy.

Here are a few reasons why research goes wrong in today’s world:

  • An interconnected world allows access to analysis in one part of the world, everywhere else. However conditions and assumptions underlying the analysis may not apply to your case

  • Hype about new media, like Facebook, Twitter and Mobile forces advertisers and marketers to embrace these channels so that they can brag about the logos. However, the ROI for the same may not justify the effort depending on how frequently decision makers in your segment access these channels

  • More data, more complexity – news gatherers try to hide the complexity of findings and analyses in simple terms, so that content is easy to read and generates more page views. However, only getting to the source of the content would tell the reader about the constraints and assumptions as well as the statistical probabilities observed

  • Terminology – different terms mean different things in the same language with the same industry. For example, a “savings account” could mean an fixed term deposit in the UK, whereas it means an interest earning demand deposit in India. An analyst reading about trends in savings accounts could make wrong interpretations owing to this

In summary, either

  • the third party research does not mean what you think it does, or

  • it isn’t relevant in your context, or

  • it works – and if it does, it’s more likely a fluke that’s not guaranteed to provide repeatable results

The solution?

  • do your own research

  • implement strategy based on this research

  • implement a feedback loop that proves / disproves your hypothesis

  • rinse and repeat

In the banking industry, it is more important than ever to not rely on trends, news sources and so called “independent” studies that are not validated for your customers, your business environment and your products based on your own data.

If you are a leading bank, you already have a huge amount of transaction data ready to be mined in real time. To find out how you can perform your own research to retain valued customers and maximize revenue, contact CustomerXPs at clari5@customerxps.com.

By Alok Kumar

Alok Kumar is Product Line Engineering Manager at CustomerXPs

He can be reached at clari5@customerxps.com

CustomerXPs offers real-time, intelligent products that empower banks with instant insights enabling influenced outcomes of deeper customer engagement and fraud-free transactions.