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Expert opinion

Why the answer is an analyst

Friday 19 May 2017 | 08:57 AM CET

Kieran Mongey, ACI Worldwide: Fraud detection and prevention requires efficient processes, high performing teams and advanced technology

Above all, it needs human intelligence and expert analysis. With increased consumer choice comes increased opportunity for fraudsters. The growing variety of channels, payment types and fulfilment methods has created a fast changing payments landscape that brings huge challenge for merchants.

Striking the right balance between fraud prevention, conversion and customer service requires a dynamic, multi-faceted risk strategy. For many merchants, one of the most vital components of this strategy is the human one – the expert risk analyst. Having the right people in place to support your strategy plays a critical part at every stage in effective fraud prevention – and experienced analysts go beyond prevention, to create fraud management strategies that enable business growth and new revenue streams.

Knowledge is power

Access to a wealth of data is one of the most critical resources in fighting fraud while enabling genuine consumers – but turning that data into actionable intelligence can be a real challenge. Fine tuning fraud prevention strategies in line with changing trends and customer behaviours requires continuous, proactive analysis of available data. At ACI, we believe this process is most effective when it is driven by dedicated fraud experts - experts who appreciate the fraud challenges unique to a merchant’s business and who can select the most appropriate, effective rules and strategies in support of that business’s growth targets and Key Performance Indicators (KPIs).

Getting the best from technology

Whether a merchant uses predictive modelling capabilities, a rules-based engine, or both to detect fraud, these solutions need to be tailored, implemented, monitored and adjusted by fraud experts. Technology should be working continuously in the background, updating, flagging and linking fraud and profiling risk. Analysts should be immediately taking this data / intelligence and, with it, fine tuning fraud rules, adapting strategies and constantly enhancing the KPIs that drive bottom line profits.

Fraud rules and predictive models must be built on a thorough understanding of the data available (internal and external) and rules must be adapted in line with seasonal promotions, emerging trends, merchant objectives and market developments.

Expert analysts can also deliver value to other parts of the business. Geographic expansion, product diversification and the introduction of new payment types all carry their own unique set of risks, on which analysts can advise and for which fraud strategies can be adjusted. It is this level of tailored, expert support which can make a good fraud detection system into a highly effective holistic fraud and risk management solution.

Supporting timely action

Fraudsters are becoming increasingly sophisticated as they test for, learn and exploit our weaknesses. They are moving faster and their activities must be shut down more quickly. This is why proactive detection and prevention by expert analysts is so important.

By using business intelligence and analytics tools combined with system alerts, knowledgeable analysts can examine transactions, monitor rules performance, assess patterns and identify emerging trends in real time, spotting and stopping fraudulent activity in its tracks.

This is particularly important during major incidents, when merchants need to know instantly how they have been affected and what action to take to support customers. The ability to rapidly analyse and report on incidents can make all the difference to reputation management, as well as limiting losses.

But risk analysts do not only work on transactions in real time. They will often continue to investigate a transaction long after it has taken place. Further screening - one hour, 24 hours, 72 hours or 30 days after the original transaction occurred – can help to build a more accurate, detailed profile of transactions and associated fraud.

Transactions that are initially accepted and later identified as suspect or confirmed fraud can still be recovered - by halting shipments, cancelling bookings and preventing further orders from being processed. In this way too, merchants can reduce chargebacks, shipping costs and product losses.

Fraud expertise at your fingertips

Often working as an extension to the in-house team, the ACI analyst provides deep fraud expertise and global intelligence, supporting loss prevention, customer service and revenue growth.

Beyond real-time

Working with one of our large retailers, our risk analyst team identified additional savings of over GBP 80,000 across a six-month period simply by taking another look at approved orders before they were shipped. This was done across all delivery methods including those with smaller review windows such as Next Day and Click & Collect. As well as the fraud savings, other benefits and savings derived from this subsequent identification included a reduction in chargeback fees, a reduction in physical goods lost to fraud and savings derived from reviewing linked orders to identify associated fraud.

Preventing fraud while enabling good business High fraud rates made a major international airline extremely risk adverse, causing the company to implement a strict fraud ruleset that, in turn, was limiting their ability to accept good business. Their newly appointed ACI risk analyst thoroughly reviewed the rules, using internal measures to weight efficiency. The analysis highlighted a potential increase in revenue that could result from some careful tailoring of the fraud rules. Accepting these changes led to a decrease in the Deny rate from 15% (the average over the prior six months) to 5%. Total traffic through the online sales channel also increased by around 20%, delivering a major uplift in revenue for the airline.

For similar stories, please check out our Web Fraud Prevention and Online Authentication Market Guide 2016/2017 to get access to an insightful outline of the global digital identity and web fraud ecosystem.

About Kieran Mongey

Kieran is a qualified accountant who has specialised in payments and fraud management over the last eight years. He currently leads consultancy and solution optimisation strategies for merchant customers within Europe, working as part of ACI’s global solutions consulting team.

 

About ACI Worldwide

ACI, the Universal Payments company, powers electronic payments for more than 5,100 organizations around the world. More than 1,000 of the largest financial institutions and intermediaries as well as thousands of leading merchants globally rely on ACI to execute USD 14 trillion each day in payments.

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