Combating the growth of fraud in the UK

According to a recent report by the CIFAS, fraud in the UK is up by 10 percent. Reports like this continue to show evidence that putting more and stronger locks on the door to keep out criminals simply isn’t enough; fraudsters continue to gain access and capitalise on opportunities to defraud (among others) financial institutions and their customers.

More and more, the industry is coming to understand that transaction monitoring to detect unusual or suspicious customer behaviour is a second key part of a layered defence against fraud attacks in any payment channel. See the recent FFIEC Guidance on internet banking security in the U.S., for example. Beyond identifying the occurrence of known fraud patterns, the more sophisticated tools can also build an understanding of each customer's normal behaviour, based on the customer's own history and the average activity of any peer groups he belongs to. Such characteristics can range from the amounts and destinations of financial transactions, to the locations and devices the customer uses.

Using this information, attempts to clean a victim's account(s) can more accurately be identified as behaviour that is outside the norm for that customer. Next to general system security measures, transaction monitoring can thus complement and even orchestrate authentication strategies. It can prevent and otherwise limit fraud losses, while enabling the bank's fraud teams to deal with case investigation and resolution.

Locks on the door remain an arms race that the criminals have yet to lose, as the increase in UK fraud shows. We also need something to catch them once they're in the house.