A Holistic Approach to Fraud and Risk
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Bank Technology News (BTN) ran an article on the first of the year entitled “9 Trends Reshaping Risk Software”, and Trend 8, “The bringing together of different risk systems”, caught my eye (being a fraud guy). My observation over the years is that centralized / consolidated vs. decentralized/ siloed is a cyclical thing. The idea of consolidating and centralizing keeps coming back, so that tells me it is generally considered to be a good idea. One explanation for the cycle swinging the other way might be the technical issues associated with implementing the consolidated model. A common data model goes a long way toward resolving many technical issues and systems that run disparate solutions on a single data model are promising for the consolidated approach.
There is another aspect of consolidation that involves bringing together separate systems from different vendors. I have seen a greater willingness on the part of fraud detection vendors to explore the possibilities in this area. The concept of an overall view of fraud events connected to a given customer for example would bring together alerts form a variety of systems to the analyst or analysts (some alerts may still be dealt with by specialists). The big picture is certainly beneficial to the analyst in recognizing a sophisticated attack on a given customer. Online account takeover provides the fraudster with access to all of the victim’s accounts and opens the door to a variety of attack vectors.
To accomplish this, systems should work from a common data model and store. Alerts and associated data could be funneled to a single presentation layer in one model. A high level view could have a director function that takes the analyst to the appropriate display to work a given alert in another model. To have an effective consolidated solution you need to overcome the disparate data model/store and the diversity of presentations used to review items.
Is this challenging? Yes. Is it worth it? I think yes, for the overall quality of a bank’s fraud detection program and improved overall efficiency.