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NewEMVchipcardsmakeittechnicallyunfeasibletocounterfeitcreditanddebitcards.
Thedownside:Fraudstershavehadtoswitchtactics,drivinga130percentincreasein
newcreditcardaccountfraudfrom2014to2015,accordingtoJavelinresearchin2016
DigitalChannelThreatReport:DeriskingConvenience.
In2015,70percentofnewcheckingaccountsand80percentofcreditcardaccounts
wereopeneddigitally,Javelinfoundagreatconvenienceforcustomers.Similarly,in
moststatesitseasytoapplyonlineforfoodassistance,healthcarecoverageor
Medicaidprograms.Thedownside:Thefacelessnatureofthosedigitalinteractions
makesthemprimetoexploit,withhelpfromstaticinformationfrommassivedata
breaches.
Feworganizationsarefullypreparedforthischangingfraudlandscape,accordingto
researchbyInformationSecurityMediaGroup(ISMG).InFacesofFraud:TheAnalytics
ApproachtoFraudPrevention,ISMGreportedthatonly34percentofsurveyrespondents
havehighconfidenceintheirorganizationsabilitytodetectandpreventfraudbeforeit
causesseriousharm.
Sixteenpercentofrespondentssaidtheirantifraudtoolsandteamjustcantkeeppace
withevolvingfraudschemes.Threequartersofthemratedtheirantifraudcontrolasonly
averageoraboveaverage.And37percentsaiditsusuallycustomerswhodetectthe
fraud,nottheagencyorinstitution.
Whyhavetraditionalfraudpreventionapproachesfallenshort?AccordingtoISMGsurvey
respondents,itsbecausetodaysfraudschemesaretoosophisticatedandevolvetoo
quickly(56percent),customersand/orpartnersfallforsociallyengineeredschemes(56
percent),andsodoemployees(52percent).
Mountingmonetarylosses.AccordingtoISMG,41percentofrespondentshaveseenan
increaseinfraudincidents,andtheyarenotveryspeedyaboutaddressingthem.More
thanhalfofrespondents(52percent)sayittakesdaysorweekstouncoverthefraud15
percentdontevenknow.
Sanctionsandfinesfromregulators.Nearlyoneinfiverespondentsinasurveyof120
bankssaytheyhavebeenfinedbyregulatorsorlawenforcementinthepastthreeyears,
accordingtoLongitudeResearchinCombatingFinancialCrime:TheIncreasing
ImportanceofFinancialCrimesIntelligenceUnitsinBanking.Thehitissignificant22
percentofthesebankshavebeenfined$1billionormore.
Tarnishedreputations.Lossofreputationisahigherpriorityformanybanksthan
limitingactuallosses,butitisthemostdifficultlosstomeasure,saidaseniorfraudand
financialcrimesexecutiveinterviewedbyLongitudeResearch.IntheISMGsurvey,31
percentofrespondentssaidfraudhascausedcustomerstoclosetheiraccountsandtake
theirbusinesselsewhere.
AccordingtoLongitudeResearchonthebankingindustry:TheFCIUisarelativelynew
conceptthathasgainedtractionsincetheglobalfinancialcrisis.Itsencouragingtosee
that82percentofthebankssurveyedhavesetupanFCIUorareplanningto.Ofthese
banks,98percentsaytheirFCIUisatopcorporatepriority.
Theresstillworktobedone.Just11percentofbankssaytheyhavefullyestablished
FCIUsacrossallgeographiesanddivisions.Nearlyhalf(49percent)saidtheywillhavea
fullyestablishedFCIUwithinthreeyears.
Feworganizationsarethereyet.While74percentofrespondentstotheISMGsurvey
haveimplementedfrauddetectionandtransactionmonitoringsystems,acloserlook
suggeststhatthesetechnologiesmayberudimentary.
Morethanhalf(54percent)arenotcurrentlydeployingadvanceddataandanalyticstools
suchasbehavioralanalytics,predictiveanalyticsandsocialmediaanalysis(19percent
havenoplansto)45percentsaidtheircurrentsystemsallowforonlylimitedanalytics
and43percentsaidtheycantgetaconsolidatedviewofcustomeractivityacrossthe
enterprise.Soitsnosurprisethatnearlyonethirdofrespondentssaytheirorganizations
lackthetechnologycapacitytoproperlydetectandrespondtofraud.
Onthebrightside,26percentsaytheirorganizationswillinvestinbigdataanalytics.
LongitudeResearchconfirmsthistrend87percentofrespondentscitedbigdataanalytics
astheleadingtechnologytoolfortheirbanksFCIU.Otherpopularanalyticstoolsinclude
advancedsearchanddiscovery(80percent),machinelearning(70percent)and
unstructureddatamining(70percent).
AccordingtoTheForresterWave:EnterpriseFraudManagementQ12016,machine
learningisoneofthekeyfactorsthatnowdictatewhichprovidersleadthepack.
Investmentsherewillundoubtedlyhelpresolvesomeofthecurrentdeficienciesinfraud
detection.
Wheredoyoufindthem?Theskillsgapisreal.IntheISMGstudy,42percentof
respondentssaidtheirorganizationslackthestaffexpertiseparticularlydatascientists
whocanmanagethetools.
Itsonethingtofindquantitativescientists,butitsdifficulttofindquantitativescientists
whounderstandacertaingovernmentsectororcommercialbanking,saidDavidStewart,
DirectorofFinancialCrimesSolutionsatSAS.Longituderesearchconfirmsit:71percent
ofrespondentsreporthavingdifficultyhiringspecializedtalentfortheirFCIUsandits
evenmoredifficultforsmallorfastgrowingbanks.
Itsnotbecausetheyrenotlooking.Whentheyseektohirestaffmembers,85percentof
bankslooktoexistingcybersecurityprofessionals84percentsearchsoftwarecompanies
61percenttapuniversitiesand50percentlooktothegovernmentintelligencecommunity.
Theyarescouringdiversesources,butdemandforanalyticstalentissogreatthatgood
candidatesarehardtofindandhardertoland.Lookingtoboostexpertisefromtheinside,
94percentsaycombatingfinancialcrimeisatoptrainingpriority,accordingtoLongitude.
Strikingthedelicatebalancebetweentheorganizationssecurityandcustomer
conveniencewillrequirearesilientandadaptableantifraudsolutionwithrobustanalytics,
backedbywelltrainedpersonnelinawellestablishedFCIU.
Thegoodnewsisthattheexecutivesupportisthere,whichmeansthedollarsarethere
98percentofrespondentstotheISMGsurveysaidtheyexpecttoseeasteadyorgrowing
budgetforfraudpreventioninthecomingyear.Thesenewfundswillbeinvestedprimarily
innewantifraudtools(65percent)andstafftraining(61percent).
ReadthefullreportsfromJavelin,ISMGandLongitudeformoreonfraudtrendsfor
financialandgovernmentorganizations,theircurrentsecuritycontrolsandgaps,and
wheretheyplantheirbiggestantifraudinvestmentsfor2017.
Read More
FacesofFraud:TheAnalyticsApproachtoFraudPrevention.
LearnaboutSASsolutionsforfraudandsecurityintelligence.