The work of a Chief Security Officer (CSO) is never finished. Scammers continuously invent new tricks and fraudsters keep coming up with new technologies. As a risk management professional, you certainly have your work cut out for you. Fraud cases have skyrocketed dramatically in recent years, with the Federal Trade Commission receiving 2.8 million fraud reports from consumers in 2021, representing more than $5.8 billion in losses. It’s critical to have the right fraud management solution that enables you to use your existing customer data to protect both them and your organization.
The sharp increase in fraud poses a real challenge for organizations of every variety. Nonprofits, technology companies, government agencies, banks: all have been targets of fraudsters and scammers. CSOs and other risk management professionals are especially faced with increasing challenges, charged with the responsibility to protect their organizations from risk and reputational damage.
To combat the increasingly sophisticated methods used by fraudsters, a robust information security program is essential to instantaneously detect who your true customers are — and aren’t. You need advanced tools and technologies that offer real-time insights. You need a comprehensive solution that will protect your customers and account holders — and your organization’s bottom line — from all types of frauds and scams.
That solution is a fraud data platform (FDP).
What is a fraud data platform?
A fraud data platform (FDP) stops fraud before it happens by activating real-time, contextualized data.
Put more simply, an FDP uses advanced tools to separate legitimate customer behavior from that of fraudsters and scammers. Real customers are identified through complex identity graphs, created by a combination of:
- personally identifiable information (PII),
- activity and behavioral patterns, and
- behavioral biometric data such as hand dominance, and navigational tendencies.
At the same time. scammers are ferreted out through their inconsistent or unusual behaviors. And because a real-time FDP acts instantaneously, it offers continuous protection without disrupting legitimate customer activities.
An FDP automates many security processes, dramatically reducing the time it takes you to service customers while effectively preventing fraud. This speed is especially important today, when the gigantic number of fraud attempts being made make it difficult for organizations to function.
The goal of an FDP is to prevent fraud while simultaneously delivering frictionless, invisible, and uninterrupted user authentication. After all, legitimate customers don’t like being asked to repeatedly prove their identity when purchasing goods or services in good faith. A strong FDP minimizes false alarms while also accurately pinpointing fraud. Ultimately, an FDP helps prevent financial losses while strengthening customer trust and loyalty.
CSOs need an advanced and reliable suite of tools to automate as much of the security work as possible. An FDP that captures data on clients’ information and behavior — then parses, analyzes, and understands it — is essential so your organization can make fast, automatic decisions when processing business transactions.
What makes an FDP different from other fraud management systems?
A real-time FDP goes a big step above and beyond legacy fraud management systems. Most of these older systems — sometimes called fraud prevention or fraud detection platforms — do not work in real-time at all, and are thus unable to stop fraud before it happens in the way an FDP can. The few legacy fraud management systems that do offer real-time prevention tend to add a lot of friction to both organizational processes and customer transactions.
How so? For one, legacy systems turn up too many false positives. As third-party systems, they come with limitations related to data sharing, encryption requirements, and other important factors — resulting in false alarms. Furthermore, because of these limitations, organizations are often forced to run multiple fraud management systems for different parts of the company — and thus are unable to detect complex scams running concurrently in several departments.
Worse still, when a transaction does get flagged, the event usually receives a simple score with no further content by which to fully analyze what happened. In essence, these legacy systems are black box, offering little sharable intel.
In contrast, an FDP is a first-party solution that is installed and hosted within your organization’s own system. As such, it is able to work behind your own firewalls and other security structures, seamlessly sharing all data in true real-time — eliminating data transfer delays or data sharing concerns and providing full visibility into all the data related to every event.
All of this also allows an FDP to create more complete identity graphs for each customer. Identity graphs are continuously updated throughout the customer journey by the FDP, providing contextual understanding of their behaviors.
The benefits of an FDP for banks and financial institutions
Fraud hits some industries more heavily than others. McKinsey reports that organizations — especially those in financial services — are “overwhelmed” by fraud attempts: “many banks are so inundated by fraudsters that they cannot meet online origination targets; they are unable to verify identities and authenticate customers while combating fraud.”
At the same time, banks have a lot at stake when it comes to fraud prevention. As financial institutions, banks are subject to government regulation and penalties if they fail to adequately protect themselves from fraud. Major financial institutions like banks must adhere to the fraud risk management principles outlined by the Office of the Comptroller of the Currency (OCC). These guidelines include preventive measures to deter and minimize fraud, such as sound information security programs and controls to prevent fraudulent account opening, closing, or transactions. CSOs and other risk management experts are in charge of upholding these guidelines.
Fail to abide by the guidelines, and penalties ensue. Citigroup, for example, recently had to pay hundreds of millions of dollars in fines. As the New York Times reported, regulators at the Federal Reserve and the OCC found that Citigroup showed a “longstanding failure to establish effective risk management.”
Regulators said Citi had failed to fix problems — including those in its programs to catch money launderers, such as drug dealers who were using the bank to funnel money into the U.S. As a result, Citigroup had to agree to create a new committee to improve its risk management — and to pay $400 million in penalties.
That’s no small sum. Clearly, risk management — or the lack thereof — can have huge impacts on an organization’s revenue and profitability. That’s on top of the immediate bottom-line losses that can come from revenues lost due to the frauds themselves. Failing to adequately manage risks and prevent fraud has a profound effect on an organization’s profit margins, affecting customers, employees, and shareholders, too.
Inadequate risk management also causes reputational damage. When newspapers report that a bank has failed to prevent fraud, this has a far-reaching effect in the way the business is perceived in the outside world, both by other organizations and by consumers. When customers and companies start to distrust a bank, they’re likely to take their business elsewhere. Worse, a bank with a poor reputation can end up facing more scrutiny — and more regulation.
How Celebrus FDP can help
Online fraud, scams, and financial crimes happen more frequently than ever — and are smarter and more sophisticated to boot. To win the battle against them, CSOs of financial institutions need advanced tools that serve and protect customers.
Celebrus FDP offers that high level of protection for your organization and clients. It seamlessly collects all individual-level data from customer interactions — regardless of channel, device, or session. Whenever customers interact with an online platform on your website, mobile app, or other property, Celebrus FDP records the information. By capturing and analyzing this data, we create a robust contextual understanding about individual behaviors and activities — which simply can’t be replicated by fraudsters.
That understanding allows Celebrus FDP to shut down scams before they happen by:
- Identifying your true customers while protecting their personal information. Celebrus FDP authenticates users by building complex and intricate identity structures through comprehensive data sets. At the same time, our solution is 100% compliant with global data and privacy regulations, including GDPR, CCPA, and APEC.
- Detecting and tracing fraudulent activity in real-time. Celebrus FDP instantly spots behavioral anomalies or inconsistent patterns, making it easy to identify fraud and take action to prevent it immediately.
- Spotting and tracking illicit funds through multiple accounts. Celebrus Sense and Trace features recognize mule account activity and can trace it to additional compromised accounts and identities. Then you decide which triggers and alarms you want to set, and how to action them.
- Automating fraud management actions. No more manual reviews for busy CSOs! Celebrus FDP has triggers that work to instantly shut down scams.
- Offering a smoother customer experience. By reducing false positives, Celebrus FDP keeps transactions frictionless for customers while still protecting them and your organization from fraud.
Best of all, Celebrus FDP works seamlessly with existing authentication and fraud management systems, augmenting their capabilities.
Looking for a way to integrate into your business processes the most advanced fraud prevention tools available? Invest in Celebrus FDP. Our technology will help you minimize fraud, reduce financial loss and fines, and mitigate reputational risks — empowering you to create the strongest risk management program for your organization.
