Work Smart – Does Your Fraud Team Suffer From Decision Fatigue?

Right now, consumers have never had such a broad range of options to pay for goods and services. What is more, the channels through which the consumer may purchase their goods and services have never been more diverse.

The cost of these new payment options and omni-channel engagement methods has increased the complexity and associated costs for issuing banks, acquiring banks and merchants; it is a cost they must bear in order to stay competitive through this ‘consumer self-service’ point of sales revolution.

The increase in complexity has created both opportunity and great risk for three key groups. Firstly, consumers have the opportunity to choose how and where to buy like never before. This creates the opportunity for the second group, sellers, to increase volume of sales. But with complexity comes confusion, and the third group, fraudsters, has taken full advantage.

Today’s fraudsters are highly sophisticated and very well organised. To combat this, legitimate businesses that want to stay competitive need to be both equipped to stop the fraud, and able to do this in an efficient and cost-effective manner.

A balance between man and machine

It is this need for efficiency and effectiveness in the face of ever-increasing and more complex fraudulent activity that drives ai’s product development. Our automated systems have been developed to be more effective than manual human decision-making. The efficiency improvements that come with reliable and consistent performance are beyond what any human could be expected to achieve.

It is often said of ai that we are a ‘people business’. We agree – it is people that drive any successful business and, as our clients testify, it is often our people that help drive other businesses. So, in the case of the fraud management world, what are we doing to ensure we support this principle? If we think about the motivation for a fraudster versus an employee in an increasingly burdened fraud department, you could argue that it is incredible we manage to stop fraud the way we do. So how do we tackle this imbalance?

Many young graduates join a fraud team in order to start a corporate career. Invariably they would start by managing alerts after some kind of induction programme. It is now well-evidenced in the field of behavioural economics that as familiarity regarding a role grows, other human biases start to become more pronounced; in other words, the greater experience a fraud analyst has, the greater the risk that they will subconsciously be influenced to wander from the ideal resolution.

At ai we have spent a lot of time studying the psychology associated with this ‘decision fatigue’ and have developed our software to mitigate its damaging effects. The below graph demonstrates the otherwise hidden trend in human behaviour being influenced by external factors. In this case, judges presiding over a parole board discover their decisions are being dramatically influenced by something entirely human - their appetite. Do fraud analysts suffer from this?

Let machines handle the repetitive tasks

ai’s mantra to ‘automate tedious routines to release human creativity’ aligns with the mounting scientific evidence presented in the field of behavioural economics. In fact, one of the International Institute of Analytics top ten predictions for 2015 was that analytics, machine learning and automated decision-making would come of age in 2015. With the 2015 launch of ai’s neural modelling and automated rule set engines, we believe they were right.

ai is very proud of our technical relationship with one of the world’s leading academic institution who is helping us provide “state of the art” machine learning solutions. Over the past 2 years we have invested over 40% of revenues into research and development.

At ai, we believe some jobs are best done by machines, leaving creative decisions to humans. Therefore, our tools have been designed to complement business teams, automating many of the repetitive activities and allowing our customers to focus on the more complex issues.
Scientifically proven

There is undeniable evidence through peer-reviewed studies that external influences cause human decision-making to change during the day, leading to intraday inconsistencies. Isn’t it human nature to think about the weekend and evening events rather than maintain complete focus through a work shift?

For fraud teams, such distraction could result in serious financial repercussions, but is entirely foreseeable and indeed natural for humans to become distracted like this, more so when working in an increasingly complex payments environment. The questions you should perhaps be asking are: could your fraud team or fraud service provider be suffering from decision fatigue and if so, how can you counter this?

About Mark Goldspink

Mark has spent 25 years in general management roles. Mark joined The ai Corporation (ai) in 2013 to work with Ashley Head on developing and expanding a whole series of inter-related payment businesses globally, but with main focused on ai.

About ai

ai provides fraud prevention solutions to some of the world’s largest financial institutions, merchants and PSP’s. Our unique self-service solutions, including our new ‘state-of-the-art neural technology, protect and enrich payments experiences for more than 100 banks, 3 million multichannel merchants monitoring over 20 billion transactions a year.