Orchestration for Improved CX and Fraud Management
Orchestration enables enterprises to align controls, grab the best data, derive valuable insights and take the best actions to achieve specific outcomes
If data is the lifeblood of the modern banking enterprise, then orchestration is its circulatory and nervous systems. Orchestration is what enables an enterprise to align its controls, grab the best data, derive the most important insights at the right time, and then take the appropriate actions to achieve specific business outcomes.
This flow of data, analysis and live decision-making is necessary because banks must make fast, integrated decisions in succession across multiple channels and through many facets of different account and product lifecycles. Orchestration enables banks to execute processes related to customer experience and fraud prevention. As customer journeys and fraud management processes become more integrated and digitized, the outcomes from their automated decisions can influence other decisions made along the chain.
Orchestration is what keeps these chain reactions aligned and timed correctly so that integrated data analysis and decisioning can work rapidly and accurately across the enterprise to protect consumers against fraud.
Why Orchestration Is Important
Since ChatGPT is the rage, I asked it why orchestration is important. Its answer was surprisingly clear.
ChatGPT says orchestration is “important in software because it helps manage complex systems made up of multiple components or services that need to work together to achieve a desired outcome.” It adds that “each component has its own responsibilities and they must coordinate their actions to achieve a common goal.”
This is especially true for fraud and risk management as schemes become more complex. Individual behaviors that are part of a fraud scheme may not trigger anything on their own, but taken together with a centralized, orchestrated viewpoint, the patterns are detectable. The key is minimizing the time to detect and then act, and orchestration is central.
Picture a scenario where data collected across an enterprise is fed to a fraud management platform which, in its rapid analysis, detects incidence of fraud and immediately triggers multi-channel communications to affected customers. These steps are best coordinated with orchestration so that many different types of positive actions can be defined and supported. This is a stark contrast to hard-coding procedures into place, which may not be sufficient to improve fraud management or customer experience, especially as the fraud environment changes over time.
4 Aspects of Orchestration to Improve Fraud Management
Orchestration’s key benefits include scalability, consistency, flexibility, and the ability to enable sophisticated automation across the enterprise. Each plays a key role in any enterprise’s ability to combat fraud and assure positive experiences, even when transaction volumes and fraud cases peak.
As banks look to adopt orchestration to improve fraud management, they will find that a methodical approach delivers the best results. Here are four fundamental steps to get started.
1. Get and normalize the data
The first questions a bank must answer are what data it requires, how to get at that data wherever it lives in the enterprise, and what paths exist to feed it to something that can analyze and act on it.
These datasets can be extremely diverse and include internal sources, external and third-party sources, data entries from customers, data lakes and data marts, core systems, and more. Knowing where the data lives and how to access and move it is crucial as is the ability to parse and merge data and perform extract/transpose/load (ETL) functions on it to put it all in a common format.
2. Know your capabilities and desired outcomes
Once the data is in hand, the next step is knowing what to do with it. The bank must define what capabilities to invoke based on the data and the desired outcome(s). Different types of fraud are detected based on analysis of very different data sources. A mapping of which data goes with which analyses and functional capabilities is the key.
3. Know where to send the data
With capabilities mapped, a bank can define where and when to send data to derive insights to take the best actions. In the past, complex processes were built like funnels where all capabilities would be executed in a specific structured order. In the digital world, flows are more like many mini-funnels, where bits of data are captured, decisions are made, decision outcomes are created, and capabilities are invoked in different orders depending on the scenario.
Picture a consumer who logs into a mobile app, changes their address and mobile number, adds a beneficiary, and sends a real-time payment. Without orchestration, each of these individual steps may happen without causing any kind of risk alert. But using robust orchestration, and tying this specific series of actions with known patterns associated with authorized push payment fraud (APP fraud), this case could easily be flagged as a real-time payment scam. If that insight were generated, the right data would go to fraud management to kick off the proper actions, such as contacting the customer to address what happened.
4. Define how capabilities, decisions and outcomes will be orchestrated
Imagine you have 10 different capabilities that are part of a solution. Those capabilities might include calling data from customer profiles, retrieving transactions histories, or executing step-up authentication as transactions exceed limits. But not all the capabilities are called in every scenario.
It is necessary to define which capabilities are utilized in different scenarios and in what order. Keep in mind that data and decisions can make multiple trips around an analytical loop. New insights can be generated each time, and they should be available when the next decisions are made so that a continuous feedback loop is created. Then all insights from decisions that have been made or are being made now can be applied to other orchestrated decisions, where the outcomes will benefit as a result.
Orchestration: The Great Differentiator
Orchestration is important for banks because they can be large and complex businesses where customer journeys – and frauds – can span many channels with disconnected systems and processes. Orchestration is the way to align controls by having the right data and decisions applied at the right time and in the right place to improve customer experiences and fraud management.
With a centralized, platform-based orchestration approach, banks can cut through the noise, gather the data they need to fuel automated decisions, and act in real-time to improve customer experiences and fraud prevention.
How FICO Delivers Enterprise Orchestration
- Register for FICO World 2023 to hear directly from experts on orchestration and fraud protection
- Learn how FICO Platform provides a comprehensive technology foundation for the entire enterprise, including your fraud organization
- Read more about Authoring and Orchestrating Impactful Decisions with FICO Platform
- Explore more on using contextual intelligence and orchestration to fight fraud
Popular Posts
Average U.S. FICO® Score at 716, Indicating Improvement in Consumer Credit Behaviors Despite Pandemic
The FICO Score is a broad-based, independent standard measure of credit risk
Read more
The GSE Data Is Public. Here's What It Shows About Credit Score Modernization.
Independent Milliman analysis of GSE historical data confirms what anyone can now verify directly: FICO® Score 10T is the most predictive score.
Read more
FICO® Score High Achievers: Is Age the Only Factor?
<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>
Read moreTake the next step
Connect with FICO for answers to all your product and solution questions. Interested in becoming a business partner? Contact us to learn more. We look forward to hearing from you.