Expert perspective: How can businesses tackle the top challenges facing them in fraud in the next four years?

Chris Thomas, Fraud Sales Director, EMEA, gives his perspective on the top three challenges identified by businesses in the area of Fraud in the run up to 2020. To read the full report, which analysed responses from 255 key decision makers from 195 telecoms and financial services organisations in eight regions across EMEA,click here.

Top fraud challenges for businesses in the next four years:

  • Fraud integration across internal systems/challenges
  • Safeguarding the business whilst optimising the customer experience
  • Identifying repeat offenders

What is your perspective on the top challenges?

The deployment of a modern fraud protection strategy across multiple business channels and their related systems, is a challenge which cannot be under-estimated. As we know, fraudsters will always seek out and exploit weaknesses in systems, processes and infrastructures. We are seeing more examples of this across the globe, through fraud attack methodologies, such as social engineering, that are fully focused on exploiting these gaps in an organisation’s fraud defences. However, what makes fraud protection across multiple systems and processes such a challenge is that it is inherently multi-dimensional.

On one level, organisations need to access and integrate existing customer data (i.e. data submitted or accessed as part of the application process) from a complex myriad of multiple legacy systems, which may have evolved from mergers, acquisition and takeover. Simultaneously, further additional static customer data may be held within the systems of partner organisations. The extent to which this data can be accessed and integrated to allow a complete view of customer related data will then impact the organisations’ core capability to combat fraud. This can also have a negative impact on customer experience, as viewing incomplete relationship histories can lead to incorrect decision making.

As organisations are already recognising, there is an increasing need not only to ensure a complete view of a customer’s data, but also to gain a deep knowledge of the customer’s behavioural data, both at the static data level (names, addresses, payments etc.) and at the digital level, as digital channels become the main interaction point for customers.

Behavioural data relates to the behaviours of both the end customers themselves and of the devices that are used to interact with the business. It is vital in providing an additional means of identifying fraud – either through helping reveal anomalies and inconsistencies between the customer and the device, or potential links to other suspicious devices or devices previously associated with fraudulent activity. By gaining a deep understanding of activity happening in real time at the digital level, organisations can defend themselves against the modern cyber-criminal much more effectively. Simply asking the customer to provide static data – passwords, one time codes, secret questions etc. – is no longer effective and is increasingly intrusive on good customers. Time and again we see organisations lose to the criminals as the cyber-criminal has everything they need to breach these types of defences, and our valued customers are ultimately suffering by having to interact with more onerous processes to access their services.

The third dimension of fraud protection integration will see the extension of static and behavioural data matching beyond the environment of the organisation itself (and its channel partners), to encompass an entire business sector or even across multiple business sectors. Collaborative fraud risk management across both static and behavioural data is an area where we envisage there will be significant activity on the part of organisations, to ensure a wider view of fraudulent activity and stop criminals attacking multiple organisations at will.

However, as if this multi-dimensional challenge were not enough, all of this integration needs to be given a further overlay which not only reflects the end customer’s preferred channels but does so in as seamless a manner as possible to avoid compromising the customer experience.

How can businesses overcome these challenges?

Firstly, organisations must adopt a holistic approach to fraud prevention, that doesn’t focus purely on anomaly but looks instead for malice. Applying traditional prevention techniques and strategies to the new digital channel just will not work. Customers are more mobile than ever and demand the ability to interact with their services from anywhere in the world, at any time. If a customer receives a poor experience due to archaic fraud prevention techniques, the modern customer will not hesitate to look for alternative providers.
Access to real time behavioural data is a potential game-changer in terms of fraud prevention. However, this alone will not help organisations balance the competing priorities of managing risk, whilst simultaneously growing revenue, enhancing reputation and building lifetime customer value.

If behavioural data is just viewed from the perspective of being a further data overlay then infrastructures and processes face becoming ever more complex in nature.
Instead, progressive organisations are recognising that behavioural data creates opportunities for a shift in mind-set. It will increasingly enable organisations to move away from a one size fits all approach to fraud prevention which frustrates the many good customers and pushes them into the arms of competitors.

When used in the right way, behavioural data can help organisations recognise the activities of good customers far quicker, thereby enabling them to be offered secure yet light authentication. A virtuous circle may be identified as the potential prize – where behavioural-based authentication builds loyalty and helps organisations assume the position of go-to-provider of choice. This in turn will enable organisations to move towards a re-evaluation of their risk management infrastructure, the faster adoption of low cost digital operations, and the quicker reduction of traditional high cost bricks and mortar resources, such as call centres.