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Manage fraud with ‘big data and analytics’: Experian

By Jessica Yun
4 minute read

Banks must understand customer habits more deeply and make use of data analytics in order to defend against fraud, says global information services company Experian.

Released today, the Fraud Management Insights 2017 report by Experian found fending off fraud in an increasingly digitised world would require financial institutions in Asia-Pacific to better understand customer habits by harnessing technology.

“Additional security loopholes presented by emerging channels continue to leave banks more vulnerable to fraud,” the report said.

The report – which compiled research from 10 Asia-Pacific nations, three industries (financial services, telecommunications and retail), 80 organisations and 3,200 consumers – said the “sheer variety of fraud” demonstrated “the many points of vulnerabilities in [financial services] transactions”.


“These types of fraud have been rampant in the industry, but [financial services] companies are still struggling to cope,” the report said.

Commenting on the report, IDC Asia/Pacific group vice president Sandra Ng said more needed to be done to build trust in a digital world.

“The next-generation fraud prevention is made possible today by technological advances in big data and analytics,” she said.

Experian head of fraud and identity Jon Malone added that banks had invested heavily in "physical fraud management infrastructure", but that fraud was increasingly happening in the online space.

“As fraud threats continue to evolve, businesses need to employ an agile multi-layered approach to combat fraud incidences," he said.

"Using advancing technologies and an increased use of analytics, incorporating biometrics, alternative data, machine learning and artificial intelligence can help uncover trends and patterns of suspicious activities that may be signals of fraud."

Financial institutions could defend against fraud by uncovering patterns of suspicious activity and tracking customers’ usage of the various channels.

“Analyse it and learn from it to glean added customer behaviour, pattern and activity context,” the report advised, then follow up with the “use of risk-based analytics and advanced analysis”, such as “anomaly detection and relation pattern analysis”.

A spokesperson from Experian indicated banks were struggling to keep up with new and constantly evolving” problems presented by the growing adoption of online and digital transactions.

“While Australian banks have invested a lot to date, they are not complacent it is clear they know their investments are not enough,” the spokesperson said.

“In particular, existing fraud detection tools (even if they are supposedly implemented ahead of most other markets) and also real-time detection will need to grow quickly, especially in the context of rising online fraud.”

Real-time detection was outlined as a challenge, with existing detection tools “detect[ing] incidents only after an occurrence, and often also encounter[ing] a short delay.”

Experian chief executive Ben Elliott said trust was an “essential currency for today’s digital world”.

“As governments across the region lay down plans to increase digitisation and enhance their economic outlooks through adopting new digital services, it is imperative that organisations ensure trust in their digital offerings are high, as consumers simply will not use services they do not trust,” he said.

When compared against other countries in the Asia-Pacific region, Australian consumers were found to be most satisfied with the post-fraud service of the banking and insurance sector.

Tolerance for fraud was also lower than regional peers, with 85 per cent of Australians agreeing fraud was unacceptable compared with the APAC average of 83 per cent.

Nearly half (49 per cent) of respondents said they would consider changing service providers if they were affected by fraud in a given industry.