Login     Sign Up     |      Home      Regions      Verify a Certification     EBA Portal    

Using Big Data and Analytics to Manage Fraud


The Fraud Management Insights 2017 report from Experian was released in November, and it showed that financial institutions in Asia-Pacific must make use of technology to prevent fraud in our digitized world by gaining a better understanding of their customers.
 
The report claimed that security loopholes are being created by emerging channels and leaving banks open to fraud. The report was a compilation of research from across 10 different Asia-Pacific nations; the three industries of finance, telecommunications, and retail; 80 organizations; and 3,200 consumers said that the variations of fraud show that there are many vulnerabilities in a finance transaction.
 
These kinds of fraud have always been a problem for the industry, but financial service companies are still unable to cope with the problem. It’s going to take a lot of effort to build trust in the digital world. The next generation of fraud prevention will be made possible by advances in the fields of big data and analytics.
 
Even though banks are investing a significant amount of money in preventing and managing physical fraud, more and more fraud is being done in cyberspace. As the threat of fraud evolves, businesses must also evolve and take a multi-layered approach to the problem of fraud.
 
By making use of analytics and technology, using biometrics, machine learning, artificial intelligence, and alternative data, it will be easier to discover a pattern or trend that could indicate suspicious behavior; alerting to the institution to potential fraud.
 
Financial institutions may be able to prevent fraud by discovering suspicious activity and tracking how their customers use various channels. Analyzing this behavior and using it to learn more about how customers behave is just the first step. Next comes using risk-based analytics and analysis methods like anomaly detection or relation pattern analysis.
 
A spokesperson for Experian said banks are having trouble keeping up with the constantly evolving problems caused by the increased use of digital transactions. Australian banks have made significant investments and shown they aren’t complacent, but even their investments have proven to not be enough.
 
The current fraud detection tools – even those implemented before other markets – as well as real-time detection must grow quickly, particularly in the context of the increase in online fraud. Real-time detection has been recognized as a challenge, as current tools can only detect incidents after they happen and have a short delay even then.
 
Trust is more essential than ever in the digital world. Governments are laying the foundations to increase digitization and adopt digital services to improve the economy, making it essential that organizations ensure that there is plenty of trust for their digital offerings. A consumer will never use a product or service that they don’t trust.
 
When comparing Australia to other Asia-Pacific countries, consumers in Australia are the most satisfied with the post-fraud services of banking and insurance. The tolerance for fraud was lower however, as 85% of Australians agreed fraud was unacceptable; slightly higher than the average of 83% for the whole region. Around half of those surveyed said that they would consider switching service providers if they became a victim of fraud.