Mobilizing the Front Lines of Fraud Prevention

I have been in countless dialogues regarding fraud prevention with fraud and risk specialists at various management levels within financial institutions of all sizes. In my many discussions around various fraud prevention measures, I’ve come to realize that while a sophisticated enterprise fraud management system is the bank’s best line of defense, the frontline employees can play a valuable role in detecting and preventing fraud.

Bank tellers are the front line of the institution, handling deposits, withdrawals, and transfers while trying to accurately account for every piece of paper and coin that passes through their hands every day. They also are human and, while they have been trained to spot alterations, counterfeits, and other fraudulent items, they also have instincts. Many times, a teller might not have physical proof of fraud but often has a ‘gut feeling’ that something just isn’t right.

I recently visited a bank that empowers their tellers to act on their instincts and bring fraud awareness to the next level. The bank has implemented a program that allows tellers to systematically communicate directly with the loss prevention unit about suspicious transactions - those that they are uncomfortable with for whatever reason. It’s key to do this with technology. Other solutions won’t scale well and bog down item processing. The teller has access to ‘quality control tickets’ - a non-dollar entry with a special transaction code that does not affect item counts, service charging, etc. – it’s just along for the ride. The information in the ticket is passed along through the item capture process to the enterprise fraud system and generates an alert on the transaction that the loss prevention analyst can review. I think of it as a dynamic transaction-level watch list. (If you want to get fancy, you could include the teller ID in the MICR line so the analyst would know who to contact. That also can be gleaned from teller logs, but this would be easier.)

Being a former item processing manager in addition to a “fraud guy”, I feel that the beauty of this idea is that it goes right into the transaction flow with very little impact on current processes. A few adjustments need to be made to accommodate the new tickets, but I view those changes to be minimal and well worth the benefit of connecting the frontline personnel with the loss prevention folks on a transaction level. Kudos to this bank for coming up with an innovative and creative way of connecting the front line to the fraud prevention effort in a very real way. Tellers become an extension of the loss prevention unit and the result is better risk mitigation. Something I always like to see.

If you know of additional ways to bridge front line and back-end fraud fighting, please share. 

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