For any firm in the financial services sector, one of the biggest challenges they face on a day-to-day basis is how they detect and fight fraud. This is a serious issue for the sector, as figures from the Association of Certified Fraud Examiners suggest firms lose an estimated $3.5 billion annually to this crime.
One of the biggest problems is that by the time an incident has been spotted, it is usually far too late to do anything about it. Traditional fraud detection processes can only look at transactions after the event, by which time the losses will have already been incurred. And with the amount of activities handled by banks and other financial firms growing all the time, it is harder than ever to identify fraud in a timely fashion.
This is something criminals have been quick to take advantage of, Forbes noted, particularly as more and more financial activities have now moved online. While this offers many advantages, such as speed, accessibility and efficiency, these also make the digital world a haven for fraudsters.
But fortunately, there are steps companies can take to minimise their risk and protect their assets – and real-time analytics is at the heart of this.
With so much data available on customers through their transactions and other activities, financial firms can quickly build up a highly reliable picture of what normal activity constitutes on an individual basis. This may range from how much they like to spend to the locations from which they will interact with a business.
This means red flags can be quickly raised should a customer deviate from their established patterns. So, for instance, a consumer who rarely makes transactions of more than £100 suddenly looking to clear £1,000 or more at once may be cause for concern.
Similarly, if the majority of their actions come from a mobile app with location data indicating they are in the UK, a transaction from another country may require further investigation.
With real-time analytics, these activities can be spotted at the instant they occur – rather than days or even weeks later – giving firms an opportunity to request more information in order to verify a transaction. Done correctly, this can greatly increase fraud detection, while also minimising the inconvenience to legitimate customers.