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DIGITAL BANKING Tips - Tip 11: Increasing Security with Fraud Detection Systems

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 โ€“ 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) โ€“ 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 โ€“ 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.



Comments: (4)

Riten Gohil
Riten Gohil - Sphonic - London 20 May, 2015, 12:35Be the first to give this comment the thumbs up 0 likes

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.


A Finextra member
A Finextra member 20 May, 2015, 13:46Be the first to give this comment the thumbs up 0 likes

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. 


Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 20 May, 2015, 16:27Be the first to give this comment the thumbs up 0 likes

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. 

Riten Gohil
Riten Gohil - Sphonic - London 20 May, 2015, 18:071 like 1 like Tolga, always glad to hear from you and yes London, Vienna, Amsterdam are always possible but you know I'm an Istanbul guy - Ulus 29 to be exact :) Let me clarify when I talked about on-boarding innovation, I meant the integration of innovation into the banks fraud platform not necessarily for the use case of on-boarding. What my key point is with all of the innovation in the security industry fraud systems must be easily be able to adopt new technologies without long tech projects. The demand will be driven by your customers, you won't have a choice as it is part of their digital behaviour. So Apple Touch ID as an authentication method (RBS & Natwest are doing this already) or be it behavioural biometrics, document verification etc etc all these tools need to be easy to deploy into your target fraud system so you can future proof your technology and not have to rip out and replace in 2 years time when the platform becomes legacy.

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This post is from a series of posts in the group:

Innovation in Financial Services

A discussion of trends in innovation management within financial institutions, and the key processes, technology and cultural shifts driving innovation.

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