In recent months, FICO’s Enterprise Fraud Group has been seeking informed counsel from individuals across the financial services spectrum, looking to understand how enterprise fraud management is evolving in different organisations and in different parts of the world. What we’ve found represents a real change in the concept of enterprise fraud management and how it will be achieved.
Most business leaders we’ve spoken with agree that the historic concept of enterprise fraud management – one monolithic system that does everything in a fraud management context across all products and channels – is yesterday’s vision. Sure, some organisations have the operating model, IT infrastructure, integration capability, business appetite and vendor contract alignment to make it happen, but that is rare. Most businesses are hampered by divergent operating models, complex legacy architecture, conflicting priorities and a desire to maximise existing business investment. The reaction against the old vision is so strong that some bankers told us to stop talking about “enterprise” fraud management altogether! Banks want to keep their existing systems that work well, and join them where possible to create a more cogent and cohesive fraud management system.
There are still many divergent ideas about how extensive and connected an “enterprise” fraud system needs to be. But there is a very strong common thread: the need for a more informed and insightful approach through the determination, capture, interpretation and application of data across a customer relationship. It’s not enough to have more information about a customer — the information needs to be analysed and applied intelligently and appropriately to improve fraud protection and thus customer satisfaction.
For example, being told that a customer is about to go on holiday abroad might, today, result in a bank applying a “holiday flag” to their fraud detection system to limit the risk of the customer being declined whilst overseas. Even data as simple as this can be applied more intelligently — for example, it could be used to postpone delivery of a new card of cheque book to the customer’s house while they are away, thus reducing the chances of interception.
In the next 30 days, FICO will release an Insights white paper that captures the state of enterprise fraud thinking, and presents the approach we are taking to match banks’ changing strategies. It may not be the final word in the “enterprise” debate, but it should prove interesting reading for any bank looking to maximise fraud protection while minimising investment. To make sure you get the white paper when it’s published, sign up at www.fico.com/insights.