BANKING • SOLUTION BRIEF
How can we reduce ACH and wire fraud losses while
lowering associated IT and staffing costs?
Business Impact
“SAS is committed to ensuring that
we continue to have a leading-edge antifraud solution. We are very pleased with
the results.”
Derek Wylde
Head of Group Fraud Risk,
Global Security and Fraud Risk
HSBC
YOUR GOAL: More effectively and proactively combat ACH and wire fraud
The Electronic Payments Association (NACHA) reports that ACH payments exceeded
19.4 billion in 2010 – a 3.44 percent increase over the previous year. While ACH payments were once considered low risk, their increasing accessibility and popularity have
attracted the attention of criminals who use the high volume and relative anonymity of
such transactions to commit fraud on a growing scale. The 2011 AFP Payments Fraud
and Control Survey conducted by the Association for Financial Professionals (AFP) revealed that 71 percent of businesses surveyed reported being the targets of such fraud.
Challenges
• Insufficient fraud detection
systems. While rules-based systems
are good at spotting recurring and
known fraud patterns, too many
legitimate customers get flagged,
and fraudsters can use trial and error
to discover ways to circumvent
the system.
• Lack of predictive abilities.
Rules-based systems are limited to
after-the-fact fraud detection and are
unable to identify the likelihood of
fraudulent activity in the future.
• High operational costs. Too many
false positives, inefficient investigative
processes, and lack of speed in
transaction authentication all drive
up operational costs.
• Organizational complexity. An
increase in electronic payments (e.g.,
ACH and wire) and the management
of multiple portfolios and related
business lines across channels have
made fraud detection more difficult.
• Disparate systems. Disparate
transaction systems and systems
of record make getting a handle on
the true scope of the problem and
measuring the success or failure of
existing fraud defenses a challenge.
Poor economic conditions and the growing popularity of electronic payments have
provided criminals with fertile ground, and everyone is at risk. Larger institutions have
higher volumes and more complex ACH transaction mechanisms, and have largely
done away with the callbacks and manual controls that could prevent some fraud.
Smaller institutions, which are often unprotected from and unaware of online security
vulnerabilities, have been hit hard in recent years by online security breaches that lead
to ACH and wire fraud.
OUR APPROACH
As business customers adopt more electronic payment vehicles, the ongoing prevalence of ACH and wire fraud will require constant vigilance and a range of fraud-fighting
tools. SAS approaches the problem by delivering software and services to help you:
• Enhance information credibility by integrating disparate data sources – regardless
of format (including unstructured text, like notes fields in call center files) – and applying embedded data quality techniques to ensure accuracy.
• Better monitor the behavior of individuals to incrementally detect fraud and
reduce false positives by using data across all of a customer’s accounts and
transactions (e.g., checking/current account, card, Internet banking, nonmonetary)
to generate more accurate profiles at the account, customer and product levels.
• Find ACH and wire fraud faster – before money goes out the door – with realtime integration to authorization systems and on-demand scoring of 100 percent
of purchase, payments and nonmonetary transactions.
• Uncover hidden relationships, detect subtle behavior patterns, prioritize
suspicious cases and predict future risks using a hybrid analytical approach that
incorporates anomaly detection, predictive data mining and the Self Organizing Neural
Network Arboretum (SONNA) architecture, which includes an adaptive segmentation
scheme with advanced neural networks for improved predictive performance.
• Improve investigator efficiency with a Web-based environment that lets you
visualize data from multiple angles, perform interactive queries and generate reports.
• Measure program performance by defining and monitoring KPIs via a dashboard
environment to determine how effective and efficient your antifraud programs are.
The SAS® technology framework integrates with existing IT infrastructures, smooths
the flow of information across departments and functions, and supports future technologies and business processes not yet defined.
THE SAS® DIFFERENCE: A holistic, customer-centric view of fraud
The SAS Enterprise Financial Crimes Framework for Banking lets you develop a cohesive strategy for control, discovery, prioritization and deterrence with comprehensive:
• Data management capabilities that handle data at the enterprise level, along with:
– A flexible API that describes all transactions according to who was involved, type
of activity, where the transaction originated, why the transaction was approved
or declined, and how the transaction was authenticated.
– The ability to deal with nonstandardized transactions and different business policies.
• Detection and alert-generation tools that offer multiple analytic techniques for:
– Setting up rules to flag suspicious activities.
– Scoring 100 percent of transactions in real time.
– Detecting abnormal patterns that may indicate previously unknown fraud.
– Capturing all payment behavior from all sources via a unique signature technology.
What if you could ...
Improve data integrity
What if you could integrate disparate
data sources and easily eliminate
duplicate names, addresses and other
identifying information so you could
significantly reduce the number of falsepositive alerts generated from dirty data?
Quickly capture changes in
behavior that may indicate fraud
What if you could create unique customer
signatures using variables from application, bureau, negative-file, derived-value
and cross-product data at account,
customer, product and network levels?
– Using predictive modeling to uncover new fraud based on previous fraud profiles.
Score transactions in real time
– Linking multiple parties based on associative behavior or common ownership.
What if you could score batch ACH
transactions and individual transactions
in real time to determine whether to
accept, reject or defer payment to help
prevent fraud at points of sale before
the money is gone out of the account?
– Automatically routing suspicious cases for further review.
• Flexible alert-management capabilities that let you assemble alerts from multiple
monitoring systems, associate them with common individuals or entities, and automatically prioritize and route suspicious cases to appropriate team members.
• Fraud network analysis for going beyond individual views to analyze all related
activities and relationships at a network dimension so you can uncover previously
hidden linkages that would otherwise go undetected.
• Case management capabilities that systematically facilitate investigations and enable
the capture and display of all pertinent information, either via your existing case management system or the enterprise case management system offered by SAS.
Adapt strategies to
regional practices
What if you had the ability to easily configure and adapt your fraud strategies
to regional business practices and your
bank’s specific needs?
You can. SAS gives you
THE POWER TO KNOW®.
SAS provides the only fraud solution designed from the ground up to offer real-time scoring of accounts by looking at all transactions – sender, receiver, purchases, payments
and nonmonetary. In addition, SAS can be tailored to each local implementation to avoid
preconceptions, prejudices or customizations that are only applicable in one country.
S A S FAC T S
CASE STUDY: A large regional bank in the US
• SAS customers make up 97 percent
of banks in the Fortune Global 500®.
Situation
The bank needed to modernize its approach to ACH/wire processing and fraud
detection. Its existing solution was based on regulatory and hard-coded rules that
made it practically impossible to stop fraud transfers in real time. And while ACH/
wire fraud had a low incident rate, the resulting losses were high.
Solution
SAS delivered a solution that enables the bank to process 100 percent of transactions in real time with no loss of transaction data using multiple signature scoring
and advanced predictive models in a champion/challenger environment.
• More than 3,100 financial institutions
worldwide are SAS customers.
• SAS has more than three decades of
experience working with financial
institutions all over the world.
Learn more about SAS software
and services for banking at:
www.sas.com/industry/fsi
Results
The bank is now able to process ACH/wire transactions in real time, has increased
its fraud detection rates and has lowered its false-positive rates.
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