All posts by TJ Horan

Fraud & Security AI Meets AML: How Smart Analytics Fight Money Laundering

Brain with AML highlihgted in neural pathways

In the last six months alone, I think I’ve read at least 1,000 Wall Street Journal articles on artificial intelligence (AI) and its technologic cousins: robots, drones and self-driving cars. Between those three things, I’m pretty sure most of the jobs humans have today will change. Some will even disappear. There is so much noise about AI and its ilk that, in my opinion, it’s important for us in the worlds of fraud and compliance to take a step back and focus on how we can implement this incredibly advanced technology in the context of our current technology and regulatory environment. For example, while it’s pretty cool how AI is now being leveraged to play poker and beat professionals in real games, it’s a distraction from the discussion of ways that AI can help right now, today, for real business challenges. One of the places where AI can make a... [Read More]

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Fraud & Security Report from Frankfurt: Compliance as Competitive Advantage


Yes, it’s true. When it comes to anti-money laundering (AML) and financial crime, the right strategy, people resources and technology can transform the compliance function into a competitive advantage. That was a big theme at the 13th annual FICO TONBELLER user group meeting I recently spoke at in Frankfurt, Germany. It was my second TONBELLER user group, and I was excited to return. This year, as in 2015, I was intrigued to meet compliance professionals from around the globe, talking about the challenges in their markets. The downstream impact of financial crime One of the folks I met is Stefan Segerer of Finanz Informatik, a German company that provides IT solutions to savings banks in Germany. In this FICO video Stefan talks about how Finanz Informatik uses FICO TONBELLER solutions to protect more than 430 banks from financial crimes. Stefan sums up the impact nicely: “Money laundering costs the financial... [Read More]

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Fraud & Security 4 Payments Predictions for 2017 – Mobile, Fintechs and EMV (Still)

Psychic office

It’s predictions time again. And while I was correct that 2016 did turn out to be the year of bad analytics—see the ultimate illustration below—this year I’m doing something different: I’m predicting what won’t happen in the coming 12 months. The past year perhaps held no analytic surprise greater than the 2016 US Presidential election. Source: New York Times Let us move on to 2017. 1. Prediction: There will be no clear winner in the mobile payments wars A plethora of payment apps emerged in 2016, further upping the already densely populated payments landscape. Launches included Wal-Mart Pay, CVS Pay, Kohl’s Pay and CakePay (my personal favorite), to name just a very few. These apps are follow-ons to Apple Pay, and while many of them aren’t quite as good, that hasn’t stopped the stream of new entrants. Despite consumer confusion and high levels of market fragmentation, the payments landscape is going... [Read More]

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Fraud & Security Four Tips to Protect Your Phone From Hackers

Hacker message with ban symbol

Wash your hands. Brush (and floss) your teeth. Don’t reply to emails from Nigerian princes asking you to accept a wire transfer. These are just a few of the lessons we learn as kids, and adults, to develop good hygiene: “conditions or practices conducive to maintaining health and preventing disease, especially through cleanliness.” When I read about people infecting their Android phones with Gugi––a Trojan malware that steals user credentials when consumers log into mobile banking apps––by clicking on a link in a random text message, it’s clear to me that mobile phone users are in need of some security hygiene lessons. Here are four ways to keep your mobile phone safe from malware and hackers: 1.   The most basic: Don’t click on clickbait links in marketing text messages from senders you don’t know––even if the message promises you something really great, like a free cruise, an 80-quid coupon or a... [Read More]

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Fraud & Security Securing Digital Payments with Less Friction and Fraud


At the grocery store the other day, I paid using ApplePay. With just a tap of my iPhone and a chipper (payments humor!) musical chime, my payment was accepted. A few seconds later, after touching a few buttons on the payment terminal screen, I was walking out the door. What just happened? I experienced two things: a frictionless digital payment, and a mild customer experience victory.* Bringing down, or rescuing, the house Best of all, I wasn’t dealing with the “swipe or dip” decision point, and I certainly wasn’t putting myself at risk for knocking out the store’s POS devices. (Check out the blog in the tweet below for another payment expert’s hilarious, deeply personal tangle with EMV.) Based on my newfound confidence from the grocery store, I then marched into the local CVS pharmacy, brandishing my iPhone near the POS terminal only to hear the cashier say, “Oh, are... [Read More]

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Fraud & Security UK Card Fraud Jump Is Largest in Europe

European Fraud Map 2015

Today we released our interactive European Fraud Map for 2015, showing card fraud trends for 19 European countries. The big news was the 18 percent rise in UK card fraud, largely driven by online transactions. The rise in UK card fraud equates to an additional £88.5 million lost. Some 75 percent (£66.7 million) of that increase was in card not present (CNP) fraud, and £42.4 million of CNP fraud came from e-commerce. The UK contributed about 43 percent of the total card fraud losses across the 19 European countries studied. Why was the UK’s rise so steep? My colleague Martin Warwick, who provided the commentary in the map, surmises that cyber crime and the theft of personal data was one culprit. But card issuers’ desire to make online shopping easy may also be playing a part. “We cardholders are very demanding, and if we don’t get what we want then... [Read More]

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Fraud & Security Mobile Payments: CakePay Is Eating the World

Cheesecake photo

As a payments professional with a sweet tooth, the name is as good as it gets: CakePay, the mobile payment app rolled out by The Cheesecake Factory a few months ago. CakePay is more yummy-sounding than the virtuous ApplePay, but not quite as good as CookiePay, which I’m sure is in development somewhere. Ignoring the risks of myocardial infarction from a slice of Toasted Marshmallow S’mores Galore cheesecake, I decided to take CakePay for a spin. And it was great. CakePay is easy to use, fun, and it made my restaurant checkout experience far more enjoyable. Here’s a quick summary of how it works (a more in-depth description can be found here): Install CakePay on your iPhone or Android phone and add your preferred payment card to it. At the restaurant, press the “Check In” and the app generates a four-digit code, which you show to your server. Your server... [Read More]

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Risk & Compliance Meet the New Financial Crime Sheriff: Analytics

Sheriff badge and spurs

The sheer scope of financial crime—money laundering, evasion of sanctions, financing of terror and other transgressions—is shocking. The past couple of years have been punctuated with blockbuster events like corruption at FIFA, the governing body of international soccer; the Panama Papers; and the 1Malaysia Development Berhad (1MDB) scandal. All of these crimes were years in the making, which makes me think there are many more still out there, still gestating. Recently the business press has done some excellent reporting on the challenges faced by banks in their de facto position as front-line financial crime fighters. For example, one global bank spent almost $3 billion on financial crime compliance in 2015, with a department staffed with 9,000 personnel. As a comparative data point, the bank’s 2015 revenues were nearly $60 billion. In another example, a Wall Street Journal article on terrorism financing said: “[Suspicious activity report] filings on customers—arriving at the... [Read More]

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Fraud & Security How You Handle Fraud Will Make Millennials Drop or Love You

Quote: "Contrary to popular perception, Millennials exhibit brand loyalty when presented with a favorable experience."

Millennials, now the largest demographic group in America, are possibly the most misunderstood, elusive market ever, a notion underscored by The Wall Street Journal’s article about the existence of $20,000-per-hour “Millennial consultants.” The Journal reports that companies like Oracle, HBO and Red Robin retain these consultants to help “stem turnover, market to young people and ensure their happiness at work.” If your company is a bank or a card provider and you’re wondering how make Millennial customers happy and retain them, you don’t need to run out to hire a very expensive consultant, or launch a huge advertising campaign. At least not yet. I have some information that can help you. Millennials reward positive fraud outcomes FICO’s latest research on consumer banking trends has revealed that 22% of US consumers will close an account after a fraud incident, while 29% of Millennials will close all accounts with that bank. In... [Read More]

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Fraud & Security News Flash: ATM Fraud in the US Jumps Sixfold

ATM with Hacked stamp

The FICO® Card Alert Service has just released some startling stats: The number of ATMs in the US compromised by criminals rose 546 percent in 2015 over 2014. This marked the highest number of ATM compromises we have ever recorded. The biggest targets were non-bank ATMs, such as those in convenience stores, where 10 times as many machines were compromised as in 2014. We first blogged about sharp growth in ATM fraud last May, and the trend we saw then has only gotten worse. It has also taken on some new patterns: shorter compromises with fewer cards. The average duration of an ATM compromise fell from 36 days in 2014 to 14 days in 2015. The average number of cards affected by a compromise was cut in half. You can read more about this “quick-hit” approach to fraud in our news release, and in the story just published in the... [Read More]

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