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Banking FraudThe threat, the impacts and what to do about it
Including results from a research study sponsored by Neustar
and conducted by American Banker and SourceMedia Research
© 2016 Neustar Inc. All Rights Reserved 2
PRESENTERS
Adam Russelld
Executive Director, Financial Services at Neustar
Sam Jacksond
Director of Product, Risk Solutions at Neustar
Which of the following entry points represents, for your organization, the
greatest current vulnerability to account takeover and origination fraud?
© 2018 Neustar Inc. All Rights Reserved 3
Online channel
Mobile channel
Call center
Chat support
Telephone banking
Branch / in-store
None of the above
POLLING QUESTION
Study uncovered the latest and most challenging fraud issues facing
banks, credit unions and non-bank lenders
© 2018 Neustar Inc. All Rights Reserved 4
Online survey in June 2018 among American Banker audience
506 senior level executives from banks, credit unions and non-bank lenders of all sizes participated in the survey
Focused on account origination fraud and takeover threats - specifically, the business impacts, threats, and technologies being used by these organizations to address these
BACKGROUND
© 2018 Neustar Inc. All Rights Reserved 5
DEALING WITH FRAUD
34%
40%
41%
41%
44%
45%
49%
53%
Audit
Information technology
General management
Information security
Fraud prevention
Operations/processing
Compliance
Risk management
Who is dealing with fraud prevention and
fraud resolution?
© 2018 Neustar Inc. All Rights Reserved 6
DEALING WITH FRAUD
56% 58% 54% 51%
Total Banks Credit unions Non-banklenders
Priority for preventing or mitigating fraud
compared to other initiatives
% who indicated “Much higher” or
“Somewhat higher” priority
© 2018 Neustar Inc. All Rights Reserved 7
FRAUD RISKS
11%
12%
13%
15%
18%
19%
Customer/member losses
Business money/value losses
Productivity losses
Customer/member satisfaction risks
Regulatory actions
Corporate reputation risks
Increased risks in the last 12 months
% who indicated risk
“Increased significantly”
© 2018 Neustar Inc. All Rights Reserved 8
THE IMPACTS OF FRAUD
11% 12% 15% 36% 9% 8%4%
Real-time Less than1 day
1 day Multipledays
1 week 2-4weeks
More than4 weeks
Resolve a fraud incident
The average time it takes organizations to…
10% 13% 51% 9% 7% 4%
Less than1 day
1 day Multipledays
1 week 2-4weeks
More than4 weeks
Investigate a fraud incident
© 2018 Neustar Inc. All Rights Reserved 9
THE THREAT OF FRAUD
What are the high-threat entry points for…?
7%
8%
9%
9%
16%
22%
Branch/In-store
Chat support
Telephone banking
Call center
Mobile channel
Online channel
Account origination
8%
9%
9%
11%
15%
22%
Branch/In-store
Call center
Chat support
Telephone banking
Mobile channel
Online channel
Account takeover
% who indicated “Very high” threat
© 2018 Neustar Inc. All Rights Reserved 10
CALL CENTER FRAUD
66% 68% 57%
Banks Credit unions Non-bank lenders
Concern about call center fraud
% who indicated “Very concerned”
or “Somewhat concerned”
© 2018 Neustar Inc. All Rights Reserved 11
CUSTOMER/MEMBER FRICTION
22% 32% 23%
Banks Credit unions Non-banklenders
Priority for reducing customer/member friction
% who indicated
“Very high priority”
© 2018 Neustar Inc. All Rights Reserved 12
SOLUTIONS
16%
23%
26%
28%
29%
34%
40%
41%
42%
62%
Physical biometrics
Behavior based biometrics
IP geolocation information
Device fingerprinting and device identity
Data assets/data sources
IP reputation data or IP blacklists
3rd-party user identification data
Knowledge-based authentication (KBA)
User data (internal CRM)
Multifactor authentication (MFA)
Top identity solutions used
© 2018 Neustar Inc. All Rights Reserved 13
SOLUTIONS
8%
10%
12%
12%
13%
14%
15%
15%
29%
41%
48%
Device location
Address verification
Email verification
Name verification
Device identity
IP geolocation
Mobile phone verification
Behavior fingerprint
Knowledge-based authentication (KBA)
Biometrics (facial, fingerprint, etc.)
Multifactor authentication (MFA)
Strongest perceived identification verification measures
Multiple information
factors are likely to
thwart fraud.
The more questions
asked/answered the better the
chance of uncovering errors on
the part of a fraudster
It is the best cybersecurity
measure to me because it is
more complex and harder for a
fraudster to easily bypass than
2-factor authentication.
Based on bank's experience,
this seemed to decrease fraud
activity once implemented and
seems to discourage attempts.
© 2018 Neustar Inc. All Rights Reserved 14
SOLUTIONS
17%
18%
18%
24%
26%
26%
27%
44%
63%
66%
Biometric categories
Voice recognition
Face recognition
Device reputation solutions
Geolocation solutions
Behavioral biometrics
Fingerprint recognition
Digital identity verification solutions
Account transaction monitoring/fraud detection
Multifactor authentication (MFA)
Top solutions used for preventing/mitigating
account origination or takeover fraud
© 2018 Neustar Inc. All Rights Reserved 15
ANTI-FRAUD INVESTMENTS
23%
26%
30%
31%
33%
36%
48%
51%
Hire fraud-prevention personnel
Enterprise-wide analytics for cross-channel fraud prevention
Increase total fraud prevention spending/budget
New fraud-prevention policies
Upgrade or purchase new fraud prevention technology
Modify fraud prevention processes
Increase fraud monitoring
Provide fraud prevention training/education to staff
Top planned anti-fraud investments for next 12 months
Reduce Losses and
Minimize Client Friction
©2018 Neustar Inc. All Rights Reserved© 2018 Neustar Inc. All Rights Reserved 17
45BDaily Inquiries
11BDaily Updates
220MPeople
26%Global Digital Media
Impressions
16KAttributes
© 2018 Neustar Inc. All Rights Reserved 17
NEUSTAR’S AUTHORITATIVE ONEID SYSTEM
DEVICE IDENTITY CUSTOMER COOPERATIVES
© 2018 Neustar Inc. All Rights Reserved 18
Device Fingerprinting Monitored Transactions
RISK MONITORING
Device
Reputation
DEVICE REPUTATION – A COMMON APPROACH
© 2018 Neustar Inc. All Rights Reserved 19
2018: THE YEAR OF BIG-TICKET DEVICE REPUTATION ACQUISITIONS
2016 2017 2018
+ +++
© 2018 Neustar Inc. All Rights Reserved 20
COMMON PHONE FRAUDS
SIM SWAP
CALL FORWARD
© 2018 Neustar Inc. All Rights Reserved 21
COMMON PHONE FRAUDS
PORTING
“Unstealable” Behavior
© 2018 Neustar Inc. All Rights Reserved 22
“UNSTEALABLE” INSIGHTS
© 2018 Neustar Inc. All Rights Reserved 23
Mitch Young
1234 Street Rd
Anytown, ST, 12345
703-555-2342
Mitch.young@team.neustar
HOME PHONE
COMCAST
TRIPLE-PLAY
PHONE
WIRELESS
PHONE
SKYPE
PHONE
BURNER
PHONE
Verification
Phone Type
Activity
Usage
Pre-pay flag
Port history
MNO Data
© 2018 Neustar Inc. All Rights Reserved 24
OUTBOUND RISK – HOW IT WORKS
OUTBOUND
CALL VIA
MOBILE PHONE Sim Swap?
OUTPUT
Less Likely =
More
Trustworthy
More Likely =
More Risk
Recently Ported?
Call Forward?
OUTPUTReal-time query
Has IMEI and/or
IMSI has changed?
No = Lower
Risk
Yes = Higher
Risk
OUTPUTOutbound
Risk
Joe Smith
222-555-9999
Low
Risk
High
Risk
No = Lower
Risk
Yes = Higher
Risk
© 2018 Neustar Inc. All Rights Reserved 25
INBOUND RISK SOLUTIONS
Benefits
Higher IVR containment
Decreased AHT (Average
Handle Time)
Agents focused on higher-
value calls
Greater customer satisfaction
Name: Joe Smith
Address: 123 Main
Landline: 222.666.7777
Mobile: 222.555.9999
Fill incomplete CRM records in real-time
Flag spoofed or recently ported phones
SCAM ALERT
Identify upsell/cross-sell opportunities
© 2018 Neustar Inc. All Rights Reserved 26
INBOUND RISK – HOW IT WORKS
IVR
Service
AgentPool Service
Agent
Client CRM
Name:
Address:
Landline:
Mobile: 222.555.9999
222.555.9999
Joe Smith
123 Main St
Vienna, VA
22182
H: 222.666.7777
M: 222.555.9999
Joe Smith
123 Main St
Vienna, VA 22182
H: 222.666.7777
Account: 1234
Authenticated: Y
IVR, High Risk or
Pool Service Agent High Risk Pool
Service Agent
High Risk
Pool
Anti-Spoofing
Detection
& Risk Scoring
1 2 3 4
© 2018 Neustar Inc. All Rights Reserved 27
DIGITAL IDENTITY RISK – HOW IT WORKS
Low Risk
Low Friction
Experience
High Risk
Additional
Verification
Required
Digital Identity
Matches
Consumer
Data?
Joe Smith
222-555-9999
Low
Risk
High
Risk
Authenticate
Manage
Protect
Recover
Application PII
Browser Cookie & IP
CONSUMER MOBILE PHONE MOBILE NETWORK OPERATORS
© 2018 Neustar Inc. All Rights Reserved 28
Device Identification Identify Phone Number & Subscriber ID
NEUSTAR
Identity
Verification
& Anomaly
Detection
DIGITAL IDENTITY TECHNOLOGIES MNO HEADER IDENTIFICATION
DEVICE IDENTITY PERSONAL IDENTITY
© 2018 Neustar Inc. All Rights Reserved 29
DIGITAL IDENTITY TECHNOLOGIES LINKING BROWSERS TO IDENTITIES
Cookie ID
IP AddressHousehold
Address
PII
Confidential and Proprietary – External Distribution is prohibited. © 2018 Neustar Inc. All Rights Reserved 30
ONLINE TO OFFLINE LINKAGES KEY DATA POINTS
Device to Email
Device to Address
Observed Distance from Home
Location
Device Tenure on Network
Transitive Linkage to Address
Transitive Linkage to Name
IP to Email
IP to Address
© 2018 Neustar Inc. All Rights Reserved 31
DIGITAL IDENTITY TECHNOLOGIES IP GEOLOCATION ANALYSIS
Geolocation solutions
are evolving. Highly
granular GPS data can
be combined with the
IP history associated
with a given device to
produce effective
signals for fraud
mitigation.
Questions?
© 2018 Neustar Inc. All Rights Reserved 32
Thank You
© 2018 Neustar Inc. All Rights Reserved 33
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