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Collaboration to combat e-banking fraud?!

06 May 2008 1 comment

Retired member

There have been a few different conversations stemming from the publication of the EC’s report on “Fraud regarding non cash means of payments in the EU”, but none so far seem to address the fact that the report lacks any kind of concrete recommendations. The EC is missing the opportunity to advocate stronger fraud counter-measures, despite the continuous growth in fraud levels across Europe. Instead of encouraging banks to collaborate on anti-fraud strategies, the report devalues the importance of data sharing to combat e-banking fraud. By contrast, industry experience has proven that malicious online banking attempts are duplicated around the world – the same criminals are targeting banks globally without leaving the comfort of their computer chair. Although the banking industry views fraud as a non-competitive market, the EC must wake up to the value of information sharing in an online environment and promote the uptake of services for banks to collaborate. Particularly as the Single Euro Payments Area develops and digital borders are broken down, financial institutions must be encouraged to jointly combat online crime. I know that there are some nations that are more advanced than the UK when it comes to actively collaborating to fight fraud, but even banks here in the UK are beginning to work together, as they are witnessing the detrimental effect fraud can have on their brand value and customer relationships. What are others’ experiences of sharing fraud data between financial institutions?

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Comments: (2)

A Finextra member

06 May 2008

I suspect that there are a few things going on in the background - on the 'qt'.

I am confident that fraud will be significantly reduced soon. I would suggest that within 2 years everyone will be on-board or over-board, so if you are in the business, don't wait for someone to come knocking on your door to save you.

As pricing on cross border payments, P2P and retail transactions declines significantly in the next two years there will be market rationalisations. I don't expect to see nearly as many banks as there are now and certainly none with less than the best possible fraud controls for both insider and external fraud. When the majority are fixed the only targets left for the baddies will be very popular targets. Anyone left doing things the old way will be out of the business before long.

In terms of cost to business, insider fraud is the real weak point as it's effects are the most acutely noticeable. The businesses which do not get that under control will face increased legislation and penalties from the market, both in ratings and relationships. Consumers will react with their wallets as switching accounts and institutions will be increasingly easier.

The EU will fail unless the financial and economic borders come down very fast so don't expect those governments to sit around waiting too long. Cross border payment and interchange fees are going to come right down, and the participants shouldn't be under any illusions that they won't.

I'm certainly not sitting on my hands, and I am not alone. The time for window dressing, spin-doctoring and half-baked 'solutions' is over. It action time - everywhere, or at least in over 150 countries that I know of - and that probably includes yours.

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Sriram Natarajan Risk Dog at Credit Risk Fraud Cards Professional

07 May 2008

Absolutely right. The report is pretty tame and is more of a primer than a recommendatory report. Crooks aren't bothered with intra-EU clampdowns. As long as there is a magstripe on a card and they are valid globally - online and off-line- fraud will thrive. The biggest market in the world - US - still remains unsold on EMV. So, who cares for precautions within the EU- we live in a truly globalized world which is flat for fraudsters!

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