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Staying ahead of the digital curve with real-time decisioning

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Dynamics of digital

Financial institutions used to be the last candidates for change when it came to technology adoption. But over the recent past the banking sector has seen a dramatic ‘digital’ transformation given a discerning and demanding ‘digital’ generation, ferocious competition and a briskly evolving regulatory landscape.

From a customer’s perspective, a bank that has gone digital should be able to, at a minimum, instantly provide accurate information across devices, platforms and geographies. Customers are intolerant to service downtimes and want their needs addressed promptly and efficiently almost 24/7.

From credit cards to ATM to net banking to phone banking, the bank of today provides customers with an experience that is both seamless and of superior quality.

But banks can do a lot more to stay ahead of the ‘digital’ curve.

The digital bank of tomorrow

Many ‘progressive’ banks have gradually unified their entire IT ecosystem to harness the capabilities of big data analytics.

But there’s one more vital aspect banks must know – that they virtually have the customer’s ‘aatma’ or soul with them, given the behavioral intelligence and insights already resident across their multiple systems.

A bank is the only body that has the complete and in-depth lifestyle information of customers – earnings, spending, travel locations, home ownership status, marital status, right down to monthly fuel consumption.

With the variety and depth of insights available, banks can create instant, hyper-individualized interventions using a ‘segment of one’ approach to target customers precisely for intelligent cross-sell and up-sell.

So a unified, cross-channel digital strategy that utilizes this ‘soul’ to deliver an exceptionally superior customer experience becomes essential. Combine this with real-time technology, and banks have a compelling value proposition.

The soul of true digital transformation

The soul analogy also applies perfectly in combating sophisticated financial fraud, where deviations and discrepancies can be detected and resolved ‘intelligently’ in the blink of an eye.

Given the customer insights available, the same real-time decisioning can be leveraged to instantly detect anomalies and prevent them from occurring.

A meaningful digital transformation must include the customers’ soul. The digital bank of tomorrow must articulate a strategic platform that goes beyond servicing customers flawlessly and have intelligent revenue maximization and fraud detection capabilities.

AML as a Service

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AML as a Service

Past few months have seen a lot of activity from regulators, bankers and industry bodies alike towards curbing money laundering. Rules are becoming stringent and reporting more accurate. Then there were hefty fines levied on certain banks for non compliance with AML guidelines.

During our conversation with bankers, it consistently emerged that bankers have AML compliance as one of their top priorities. This is a clear outcome of lot of banks having plugged their technology for AML, leaving the banks which have not yet taken solid steps towards AML exposed to becoming a conduit for money laundering leading to take evasions, balck money and terror financing.

However, a major barrier these banks face is that technology investments are CAPEX which means budgeting for these investments at the beginning of financial year. It also necessitates a longer procurement cycle and boardroom discussions with other departments on redirecting budgets towards AML.

Second barrier is diversion of resources from revenue generation towards maintenance of AML technology, annual licenses,a project management team to monitor the technology and additional costs to incorporate the changing regulatory requirements.

Third barrier is upfront purchase of such technology entrenches the bank with the software vendor, making switching costs very high.

Understanding these concerns of our customers, CustomerXPs has launched Clari5 AML-as-a-Service to help them overcome the above mentioned barriers and provide a safe banking environment.

The first barrier of CAPEX is overcome by changing it to OPEX. This means that banks no longer have to make upfront investment in software, but use the ‘pay as you go’ model of monthly payments. This model of payments is more comfortable to the CIO, CRO and CFO.

Second barrier is taken care by the fact that there is no annual license, no maintenance required by the bank and incorporation of all the additional requirements come as part of the subscription.

Third barrier of entrenching with the software vendor is overcome by the fact that the subscription is monthly which means that banks can switch to other models with all risks covered.

Cybercrime increased by 300% compared to last year

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Cybercrime in India has increased by 300% since 2013 as the research by thepaypers.com indicates. Cybercrime in India has been on rise for last couple of years.

According to Mumbai police hacking, phishing and Nigerian fraud have risen to 36 in 2014 until October since 2014 from 9 registered in October 2013. 136 cases of cyber offences were registered in 2013 October compared to 418 in 2014 October.

The e-commerce in India has grown by leaps and bounds until recently. This has not only made online shopping a pleasurable experience but also made e-portals vulnerable to various cyber threats. Storage of various customer information have painted them as the next high priority target. Recent incidents of Cybercrime in United States are the clear indication of incoming danger.

 

 

In cases of Nigerian fraud, the victim receives an e-mail or SMS stating the mobile number or e-mail of the selected lucky draw in millions of United States dollars or British pounds. These e-mails or SMSs contain the contact number for claiming the money. The fraudsters also ask for meagre amount of money for clearing customs and for domestic money conversions. The fraudsters provide the account number where the specific amount has to be deposited.

In cases of phishing where the fraudsters sends an e-mail to a user falsely claiming to be an established legitimate enterprise. This fraudulent enterprise in attempts to scam the user into surrendering private information that will be used for identity theft. The e-mail directs the user to visit a website where they are asked to update personal information, such as passwords, and credit card, and bank account numbers, Cybercrime is truly a menace.

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.

 

 

 

Banking Customer Experience in Middle East

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Banking Customer Experience in Middle East

The growing importance of customer experience has taken over the banking industry by storm. A recent report published by E&Y details out latest trends in customer experience from around the globe and suggests that banks should aggressively leverage valuable insights from customer behavior to effectively chart out their customer experience strategy.

The infographic below throws light on banking customer experience in Middle East and how implementing real-time technology solutions result in customer delight by making use of deep customer insights.

 

 

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.

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.