Protecting the Customer: Fighting Bank Fraud in a New Environment

In this article, Accenture analyzes the challenges and identifies five actions that banks should take to transform their fraud-management capabilities and achieve high performance.

Changing customer demographics, the expansion of banks into new markets, and the adoption of new technologies and channels present new challenges in fraud protection. Rapid technological and social changes alter the relationship between banks and their customers in a way that creates new opportunities for fraudsters. In addition, customers expect to be protected from fraud, but also want anti-fraud tools to look at them holistically, assessing the fraud risk of transactions based on their individual profiles.

Faced with a rapidly changing marketplace, new fraud threats and evolving customer expectations, banks may wish to re-focus and enhance their approaches to fraud management and prevention. Technology, analytics and customer-service capabilities are likely to evolve and may be tailored to differing customer expectations and fraud threats across mature and emerging markets.

New challenges for preventing fraud are being created by:

• Changing customer demographics. Aging, rich populations are vulnerable to attack, with online fraud the most common type. As more people use caregivers and family to help manage their finances, banks might want to rethink their approaches to how customers identify themselves.

• Market expansion. Banks are expanding into emerging markets but fraud management and prevention techniques in those markets are undeveloped.

• Adoption of new technologies and channels. Broad adoption of new technologies such as social media and mobile Internet has created new channels for transfers and purchases—and fraud. Banks should consider combining their IT security and fraud management functions to address the increasingly technical nature of fraud attacks.

Banks that can leverage advances in technology and analytics to improve fraud prevention will reduce their fraud losses. Doing so in a way that is acknowledged and valued by the customer may also improve customer trust and retention.

By contrast, banks that use technology in a way that is considered cumbersome, or provide a service that is seen to be impersonal, may actually damage their reputations and cause customer attrition.

To optimize fraud capabilities, banks should take the following actions:

• Assess the fraud implications of the bank’s strategy.

• Model customer demographics and build strategies.

• Develop dynamic analytical models.

• Develop pan-channel customer authentication.

• Develop IT strategies for holistic decision-making.

Chris Thompson is an executive director, Risk Management, for Accenture’s Banking and Capital Markets in North America. Specializing in complex, large-scale finance and risk programs, he works with some of the world’s leading retail, commercial and investment banks. He brings his nearly 20 years of broad-based experience in financial architecture, risk management, performance management and trading to organizations determined to become high-performance businesses.

Heather Adams is a senior manager, Risk Management and leads the Accenture Fraud and Financial Crime business services, defining and developing capabilities to support clients in their fraud and financial crime prevention efforts. Based in London, she has extensive experience in delivering large-scale complex business change for banks and has worked with senior leaders to define and implement fraud and financial crime prevention strategies to drive high performance.

Jackie Morley is a senior manager, Risk Management and leads the Accenture UK Fraud Group within the Risk Management practice. Based in London and with more than 10 years of consulting and industry experience in internal, advanced, third-party and first-party fraud prevention and detection within financial services, she is focused on delivering process, organization and technology change programs to drive high performance.