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In the previous Digital Banking Security tip, I have mentioned about what are needed in order to prepare a nice security cocktail for your bank and Fraud Detection System (FDS) is one of the most critical components of it. FDS is the bottom of a
full glass of water, if it is broken – the water (in our case money!) flows away. For this reason, it deserves a higher level attention.
In simple definition, Fraud Detection System is a software that monitors suspicious activities in Digital Banking and may produce alerts (even block the transaction) if the risk score is high. The risk score is calculated in the light of the predefined variables
(that are called rules) – like the money transfer to an account first time, amount of money or time of the transaction. As fraudsters regularly change tactics, FDS system should be flexible enough to respond these changes too. Also like a car need a driver
(sure driverless cars on the way – literally and metaphorically! but still), FDS needs fraud specialists for management.
This is the short version of the post.
Starting from Tip 2 to Tip 30 only short versions of my posts are available at Finextra. From Tip 31, full (long) versions of my posts can be read here.
Tolga, my friend 'you are the man' on this topic for sure and have read this 'series' with great interest. I wholeheartedly agree with your comments and there is a running theme which I believe should be an important requirement : 'Ability to on-board innovation
in the security space at relative ease'. By this I mean the security innovation landscape is moving at a rapid pace, I see this on a day to day basis. So as your tip 12 - maybe this is a key theme.
E.g. how does a fraud system take on board Apple Touch ID as an authentication method - if starts to be the way your conusumers behave. Beyond Apple Touch ID what's the next big security innovation, something Biometric related no doubt so being able to map
this into a fraud process and system is key.
Stay ahead of the curve, as they say.
Riten! Very pleased to hear from you :) Many thanks for your feedback, I think you got a point there - there has been a huge transformation in onboarding processes and a wide room for security innovation. So I will mention this topic in upcoming tips (no
promise for no: 12!). Digital Onboarding can solve most of the problems bank currently face, at the same time legislation and compliance lagging behind this I am afraid.
I hope to see you soon, either in Vienna or London or any other neutral place, like Amsterdam where I will present at EFMA.
Not sure whether factoring in Apple Touch ID is a part of the authorization system or fraud detection system. On another note, if onboarding a credit card into Apple Pay can be called "digital onboarding", it introduces an entirely new for banks by way of
Apple Pay Fraud.
19 Mar 2009
This post is from a series of posts in the group:
A discussion of trends in innovation management within financial institutions, and the key processes, technology and cultural shifts driving innovation.