What is the strategic business value and financial return on investing in improved fraud prevention? While this will be different for every financial institution (FI) based on business priorities and current operations, the key to evaluating the business case for investing in improved fraud prevention is to understand all of the business opportunities created by mitigating fraud risk plus the value of achieving the full potential of new and existing banking services.
There are four categories of value: enhanced compliance, improved competitiveness and growth, reduced fraud risk and losses, and increased operational efficiency. In this 4-part series, we’ll explore each of these topics. (watch our video that introduces all 4.)
Part 4 of 4: Increase Operational Efficiency
With new products and services being made available, FIs need to reconsider their operations and how they can scale processes to support growth and meet clients’ needs. Using behavioral analytics to prevent fraud improves operational efficiency in several ways.
Stop More Attacks – The most obvious time savings is the result of catching more fraud. An iSMG survey found that 59% of institutions found out about fraud from their account holders. Clearly, it’s more efficient, and less of a fire-drill, if the FI detects fraud first.
Avoid Lost Productivity While an Attack is Investigated – When an FI suffers a fraud attack, even if there is not a fraudulent transaction, employees will drop what they’re doing to investigate the attack, including how the fraudster got “in,” what actually took place, if processes need to be reviewed and updated, and who, if anyone, is responsible for not catching the fraud and if roles need to be redefined. If there is a transaction involved, additional time is needed to try to get the money back. Our customers report spending 100-200 hours per fraud incident investigating the attack, communicating with impacted account holders, and reporting to management.
Stop Reviewing Low-risk Activity – Analysts can stop wasting time reviewing low-risk activity and false positives. Behavioral analytics solutions can automatically release low-risk payments, for example. They also have a very low false-positive rate thanks to individual behavioral models instead of generic rules.
Reduce the Time Spent Monitoring Activity Manually – An automated behavior-based solution significantly reduces time-consuming manual reviews of transactions and verifying requests with account holders. In a recent survey of FraudMAP customers, users reported 25%-75% improvement in efficiency of operations.
Detect Fraud Early in the Fraud Lifecycle – A Ponemon study reported that 78% of fraud victims had money leave their accounts before anyone noticed. Instead of waiting for a fraudulent transaction, behavioral analytics solutions detect early-stage fraud activity – such as account takeover, reconnaissance, and fraud setup – when it’s easy to intervene. And it avoids the much higher time commitment required to claw back the money after it’s gone.
Apply Resources to Higher-priority Projects – When current staff spends less time reviewing and investigating low-risk activity, they can focus on high-priority projects and can support growth without having to add headcount.
Increasing operational efficiency is only one contributor to high-level strategic value delivered by FraudMAP. We offer two options for learning about the full return that financial institutions will receive:
A short video (TRT: 4:22) introduces the four strategic business goals supported by improved fraud prevention. Watch it now.
An in-depth write up (PDF, 323KB) includes topics for internal discussion as you build your business case plus detailed proof points based on feedback from our customers. Download it now.
This concludes this 4-part series.