Identity, Risk Assessments/Management, Threat Management, Threat Management

New financial fraud scoring service promises to help firms be more proactive

Pictured: A printing supervisor inspects sheets of one dollar bills run through the printing press at the Bureau of Engraving and Printing on March 24, 2015, in Washington. (Photo by Mark Wilson/Getty Images)

As the saying goes: Forewarned is fore-armed.

For financial institutions concerned with monetary losses, damage to their reputation and regulatory fines if they suffer fraud that they could have prevented, services providers are taking a classic approach to this relatively new problem.

Earlier this month, payments software and services vendor ACI Worldwide launched a set of “fraud scoring services,” aimed at offering financial institutions better insights into the likelihood of fraud that might impact their institutions — their business and retail customers. Rolling out initially to the financial industry in North America and Europe, the cloud-based fraud scoring platform is promised to reduce fraud losses by up to 75%, according to ACI Worldwide.

“In today’s real-time environment, machine learning is crucial as part of an effective fraud prevention operation,” Cleber Martins, head of payments intelligence and risk solutions for ACI Worldwide, said in a prepared release. “But developing, managing and staying up-to-date with machine-learning strategies is a challenge for most businesses.” 

A recent case in point: Just this week, the U.S. Justice Department dropped its charges against the former CEO of the Bank of Oswego, and is expected to settle with the Oregon community bank’s former chief financial officer over an insider fraud case.

Arguably, proactive measures to determine potential inroads to cyber-compromise are still lacking, even within the financial industry, which is reportedly ahead of many other sectors in its preparedness.

According to the 2020 Global Study on Occupational Fraud and Abuse which looked at internal sources of fraud, proactive data monitoring and analysis using traditional and AI-based solutions was only used by 38% of the organizations that were successfully breached. The study was based on a survey of 2,504 cases reviewed by the Association of Certified Fraud Examiners.

Offered as a managed service, the financial-fraud scoring is aimed at giving banks, credit unions and payments companies an early insight into how likely they are to experience fraud, with an eye to mitigate the potential risks in advance of a crippling attack.

With a background in developing real-time payments software, ACI Worldwide has been increasingly striking out into bill payments, online commerce, and fraud and risk management services. The service provider is using machine learning technologies to create more efficient and accurate modeling, and to better train their fraud models.

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