Overcoming the omnichannel fraud management challenge

Financial institutions today depend on interacting with customers across a range of online and offline channels. Recently, the focus has been on securing digital channels, often to the detriment of others. Because financial institutions lack omnichannel visibility, fraudsters have been able to stitch together access to customer accounts and initiate unauthorised transactions using sophisticated attacks and social engineering. Further complicating the lack of omnichannel visibility is the rise of emerging channels such as APIs and internet of things (IoT) devices.

While fraudsters have gotten better at their game, the tools and technologies used to detect and mitigate fraud events have also gotten better. Yet two challenges remain:

There are too many tools to manage. Many fraud detection tools are point solutions providing defence against a specific type of attack. A survey commissioned by RSA found that 57% of organisations use 4-10 different tools within their anti-fraud operations.

Fraud detection tools operate in silos. Most fraud detection tools are designed to work in a specific channel. For example, software solutions designed to establish identity and trust in call center environments are often not able to be correlated with activity in digital channels.

How can organisations make these siloed products work together in an integrated platform? The term “fraud hub” has been used to describe a centralized fraud management platform that can ingest third-party risk information from other channels and fraud prevention tools (as well as from internal business intelligence) to enhance risk scoring models, increase fraud detection rates and improve fraud investigation.

A case study: the benefits of an omnichannel approach to fraud management

The experience of a major US-based financial institution illustrates the benefits of an omnichannel approach. The bank had gathered extensive knowledge of risk factors from its call center and wanted to leverage that data to enhance protection within its digital channels. By applying six custom facts to the riskiest digital transactions (the top 1 percent), the client was able to realise the following improvements to existing fraud detection rates:

2 percent increase in existing fraud detection rates across all event types

3.6 percent increase in fraud detection for login transactions

1 percent increase in fraud detection for payment transactions.

Even just a 1 percent increase in fraud detection for payment transactions yielded significant results amounting to an average monthly fraud savings of USD 44K — or half a million dollars in a year.

Challenges to Omnichannel Fraud Management

Financial institutions still struggle to achieve an omnichannel fraud management strategy. This is not only a technology problem, but a people and process problem as well. While a top-down view is key, business-line priorities often undermine the drive to enterprise fraud management. Another challenge to overcome is determining which line of business owns the fraud loss. For example, if unauthorised access to a customer account in the web channel enables a fraudster to commit fraud in the call center, which channel is the loss allocated to?

Mastering omnichannel fraud management is challenging, but it’s not impossible. Join us on October 9 for a live webinar, “Overcoming the Top Ten Challenges to Omnichannel Fraud Management,” where we will be discussing the top challenges financial institutions face and how to overcome them.

About Mathew Long

Mathew Long is a Sr. Advisor for the RSA Fraud and Risk Intelligence division. Mathew leads the global go-to-market efforts for RSA’s consumer authentication and fraud intelligence solutions. Mathew is a prolific blogger and a regular presenter at industry events and media engagements. For the past six years, he has focused on working with leading financial institutions on anti-fraud and cybercrime prevention strategies to reduce fraud and improve customer experience.

About RSA

RSA, a Dell Technologies business, offers business-driven security solutions that uniquely link business context with security incidents to help organizations manage digital risk and protect what matters most. RSAs award winning cybersecurity solutions are designed to effectively detect and respond to advanced attacks; manage user identities and access; and, reduce business risk, fraud, and cybercrime. RSA protects millions of users around the world and helps more than 90% of the Fortune 500 companies thrive in an uncertain, high-risk world.