Banks Fighting Financial Fraud in the Era of Big Data

Financial institutions need to get a handle on the proliferation of fraud and two things stand in their way: sophisticated fraudsters and big data.

The fraudsters

First things first, it’s important to understand that thieves are getting better and better at committing fraud. They are discovering new methods daily that allow them to easily steal identities, falsify mortgage applications and defraud banks.

Risk and Compliance Magazine explained criminals are launching massive, organized schemes across various departments, estimating that 80 percent of fraud attacks are collaborative efforts that target more than one division.

Why? Fraudsters have come to understand that regulated information isn’t shared easily among investigators at these institutions, especially within smaller organizations - revenue losses for these banks are, on average, higher than 10 basis points of annual revenue. That’s a major concern.

Fraudsters’ techniques lie in stark contrast to the methods banks use to detect these crimes.

Big fraud data

The massive influx of data available to investigators would, at the surface, seem to make their jobs easier. In reality they’ve become inundated with information and identifying even seemingly obvious connections is challenging, to say the least.

With the digital world of finance on their doorsteps, institutions are experiencing an increase in transactions across the board, according to a study from Accenture.

As a result, financial institutions have remained stagnant when it comes to fraud detection, making 2017 an easier time than ever to hide fraud.

There is hope.

Adopting a different approach to fraud prevention

Many have realized that they’re unable to prevent fraud and see potential in improving their fraud detection practices. R&C Magazine reported that 52 percent of larger banks recognize that excellent fraud detection and prevention can be a competitive advantage. Smaller organizations should follow suit.

To do so, global, national, and local banks should take advantage of growing sets of data and leverage a system that provides:

  • Better data governance: Banks must be able to centralize data aggregation from various sources and identify the particular indicators that are common among fraud cases.
  • Automated connections: Manual methods of investigation don’t reveal actionable insights from analysis of pertinent information quickly enough. Data investigation platforms can provide investigators with the connections they need to stop fraud.
  • Data visualizations: With evidence coming from a growing number of departments, transactions, and accounts, being able to visualize data in graphs and charts will help investigators draw connections between crimes that seemed separate at the surface.

Visallo can help. It’s a big data analysis and investigation platform that can be applied specifically to the financial sector to help investigators make sense of the growing amount of data in their lives.

By drawing from both internal and external data sets, Visallo allows financial institutions to visualize crimes on a case-by-case basis in an effort to better understand the complex and collaborative crimes that are growing more prevalent by the day.

Using pathfinding and data clustering, investigators are able to piece together the story of the crime by drawing from social media, account records, transactions, personal information and other unstructured data sets of the person in question. They’re also able to easily share their investigations with internal collaborators, allowing them to share their work and findings with other departments.

The future of financial fraud is a murky one, with criminals deploying complex attacks aimed at taking advantage of siloed methods of detection. Visallo helps investigators wade into the waters with confidence, knowing they have the tools to dissect the growing amount of data.