Bank Mandiri Strengthens Digital Banking Security in Indonesia, Cuts Fraud 80%
Indonesia’s largest financial institution reduces fraud losses on its Livin’ by Mandiri banking super app using FICO Falcon Fraud Manager
Bank Mandiri, Indonesia’s largest financial institution, is using the industry-leading capabilities of FICO® Falcon® Fraud Manager and the FICO® Falcon® Intelligence Network to safeguard all transactions across its retail channels, including booming digital platforms in a continuously evolving fraud landscape.
In 2022, FICO’s fraud solutions safeguarded over 1.64 billion financial transactions valued at US$156 billion on Bank Mandiri’s Livin’ mobile banking app, amidst a staggering 50% year-over-year growth. This substantial investment in enterprise-wide fraud protection reaped significant rewards. Fraud losses on the app decreased by 85% from January to August 2023 compared to the previous year. Across credit and debit cards, fraud losses fell by 77% in 2022.
“The boom in ecommerce and digital banking services in Indonesia post-pandemic, coupled with the expanding economy, has been remarkable,” said Adityo Wicaksono, Senior Vice President Retail Product Delivery & Fraud Risk Group, Bank Mandiri. “Maintaining customer trust and experience through a comprehensive digital transformation strategy is imperative for us. FICO’s solutions help us to stay ahead of fraudulent actors, so we can focus on delivering exceptional digital banking services for our customers.”
You can read more about this story in the full media release.
Fighting Changing Threats
When Bank Mandiri implemented Falcon Fraud Manager, it did not just benefit from FICO’s partnership, expertise, technology platform, and fraud models. It also leveraged FICO’s global fraud data consortium, the FICO Falcon Intelligence Network.
The Falcon Intelligence Network is a unique consortium at the core of FICO’s ability to innovate. More than 10,000 financial institutions worldwide provide anonymized, tagged data for monetary and non-monetary transactions, which FICO then uses to train and improve powerful fraud-fighting AI and machine learning-powered models.
“The consortium data allows us to stay ahead of emerging fraud trends,” said Wicaksono. “After the implementation of fraud models and intelligence derived from the consortium, we were able to achieve immediate, impressive reductions in credit and debit card fraud effectively without having to design new fraud models from scratch. We are now ourselves a contributor to the consortium.”
A Robust But Agile System
Bank Mandiri’s digital transformation drive in 2023 saw the creation of over 30 new mobile banking features, including Paylater and the New Branch Delivery System (NBDS), enhancing customer experiences with Livin’ by Mandiri. Partnering with FICO enabled seamless integration of these innovations into its fraud protection solutions, demonstrating FICO's agility and scalability.
“The rapid integration of existing and new channels along with the hundred newly integrated features demonstrate that FICO's solution can meet the challenge of simplifying the integration process within Bank Mandiri's complex system architecture and high volume of transactions," added Wicaksono.
Battle Against Scams
Bank Mandiri and FICO are currently collaborating on the escalating threat of scams. With the rise of Authorized Push Payment (APP) fraud both globally and in Indonesia, there's an urgent need for robust fraud prevention measures.
"We are encouraged by the results we're witnessing, mirroring the success seen by FICO's other clients,” concluded Wicaksono. “FICO’s scam detection model, combined with targeted profiling and the retail banking payments model, has proven highly effective. This approach has enabled Mandiri to detect a significantly higher number of scam transactions, all while maintaining a sub-1% transaction review rate."
For its achievements, Bank Mandiri won a 2024 FICO® Decisions Award for Fraud Management.
“Mandiri impressed the judges with its belief in a data-driven ethos, using advanced analytics and insights to optimize fraud detection and underpin its digital progress and ambitions,” said Paul Mah, senior editor, CDO Trends and one of the FICO Decisions Awards judges.
To see the full list of 2024 FICO Decisions Awards winners, check out: https://www.fico.com/en/fico-decisions-awards-2024
How FICO Can Help You Stop More Fraud
- Explore how FICO helps fight fraud, regardless of channel or portfolio.
- Get details about the FICO® Falcon® Intelligence Network
- Customer Communications Services for Fraud engages customers in real time to fight card and CNP fraud.
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<p>FICO’s latest research on <a href="http://www.fico.com/en/blogs/risk-compliance/us-credit-quality-rising-the-beat-goes-on/" target="_blank">national FICO® Score distribution</a> shows that US credit quality continues to trend upwards, with an increasing number of consumers scoring in the highest scores ranges. Given that, we decided it was time to refresh our study on “<a href="http://www.fico.com/en/blogs/risk-compliance/infographic-what-does-a-high-credit-scorer-look-like/" target="_blank">FICO® Score high achievers</a>,” where we examine the credit behavioural profiles of consumers with higher credit scores.</p> <p>As expected, our latest study showed that older people generally have higher scores, as has been the case in our <a href="http://www.fico.com/en/blogs/risk-compliance/age-before-beauty-credit-worthiness-before-youth/" target="_blank">past research</a>. This is largely because they have trade lines that have been open longer, which leads to higher scores (assuming the trade lines are in good standing and all other things equal). The most credit savvy among you will remember that length of credit history accounts for roughly 15% of the overall <a href="http://www.myfico.com/CreditEducation/WhatsInYourScore.aspx" target="_blank">FICO® Score calculation</a>.</p> <p>But for younger consumers, it isn’t too helpful to say, “just wait until you are 50 years old, and that will fix things!” Thus, I decided to dive deeper with our analysis, including looking at the credit behavioural characteristics of younger consumers with high FICO® Scores.</p> <p>In this analysis, I looked at credit characteristics for the two highest score bands, 750-799 and 800-850, which have about 16% and 23% of the population, respectively. I further broke this down by looking at the characteristics of the youngest 15% in each group, which occurs at age 29 for the 750-799 group and 43 for the 800-850. We used FICO<strong>®</strong> Score 9 for our analysis, and examined typical variables of the categories that go into the make-up of the score.</p> <p><a href="http://www.fico.com/en/blogs/wp-content/uploads/2016/10/FICO-Score-High-Achiever-table.png"><img class="alignnone size-full wp-image-29367" src="http://www.fico.com/en/blogs/wp-content/uploads/2016/10/FICO-Score-High-Achiever-table.png" alt="fico-score-high-achiever-table" width="715" height="747" /></a></p> <p>Since there’s a lot to dissect in this chart, I’ll highlight a few findings that struck me: <ul> <li><strong>Credit history.</strong> Higher scores are undoubtedly associated with a longer time on file. What’s striking is the higher average time on file for the 800+ group, both overall and for revolving accounts (the most common trade line). Clearly, it helps to start credit use early in life – but that’s not the sole determining factor for high scoring. The younger cohorts in both the 800+ and 750-799 groups have time on file medians significantly less than their older counterparts.</li> <li><strong>New credit.</strong> High credit scorers do, in fact, pursue new credit. We see little variation in months since last trade line opening and last inquiry among all groups observed.</li> <li><strong>Pay on time.</strong> As you might expect, the further in the past the delinquency, the higher the score – and that’s <u>if</u> a delinquency ever happened. 95% of the 800+ people and 72% of the 750-799 group have never been delinquent, which is a striking contrast to the 57% for the total population. The percentages for the younger groups are even higher, especially so for the 750-799ers. Collection items are also scarce for these high scorers. While 23% of the national population have collection items greater than $99, the figures are only 0.5% for the 800+ group and 3% for the 750-799 group. It is clear that, in conjunction with starting a credit file early, paying on time is a key trait of the FICO® Score high achiever.</li> <li><strong>Balance and utilization.</strong> Finally, we look at how credit is being used, focusing on revolving product use. (Since most people only have one mortgage or one auto loan, variation in instalment product figures is minimal and driven by payment history, which is near perfect for high scorers, as we’ve seen.) FICO® Score high achievers tend to have more open revolving accounts. While the % active trades and utilization are generally lower, by no means do high scorers avoid the use of credit products. What drives the difference here is the amount of <u>available</u> revolving credit utilized. The 800+ group is roughly 1/4 of the national median, both in total and on their highest utilized card; they also have lower balances and more cards<em>. </em>The 750-799 group is more active and higher utilized, but still only at 2/3 of the national figures. The young 750-799 group compensate with lower revolving balances and, as a result, lower utilization, which is in line with what we see for the 800+ group.</li> <li><strong>Benchmarks.</strong> I’d like to point out that while this study provides good benchmarks of the typical credit traits of the FICO® Score high achiever, individual credit profiles will vary widely. And keep in mind that when we sort groups of consumers as a whole by different behaviours, some results may look superficially odd. For example, the 800+ band has a longer median average open account time (128 months) than average revolving months on file (140 months).</li> </ul> So, what do we conclude? A huge takeaway is that high scorers don’t have too much in the way of serious delinquencies and negative public record data.</p> <p>In most respects, the young 800+ people are like their peer group. They really only differ markedly in their shorter credit history and higher non-mortgage balance, both of which are a function of life stage. Our results show that you don’t have to be a credit product hermit; these high scorers have more credit cards. The takeaway is to start credit activity early and maintain well-managed and moderate usage.</p> <p>In many ways, the young 750-799 people are more interesting because their age profile is much younger. Their credit characteristics differ more from their peer group, particularly in terms of length of credit history. They compensate by having almost pristine credit records and lower balances.</p> <p>Ultimately, 39% of US consumers are FICO® Score high achievers, which they accomplish by following common-sense credit practices. It ain’t rocket science!</p>
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