The take up of
electronic identity verification by banks to prevent online fraud
can be expected to rise across Europe in 2012, and convenience is a
key metric that lenders are keeping in mind, Experian’s head of
identity and fraud, Tony Connell, tells Meghna
Mukerjee.
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A greater
take up of electronic identity verification can be expected across
Europe in 2012, says Tony Connell, head of identity and
fraud at Experian, the data and decision support vendor.
Connell told RBI at
Experian’s 11th International Credit Risk Forum 2011 in Berlin on
24 November, that UK and Germany are hosting the highest proportion
of phishing outside of the US, followed by Italy, adding that “this
is happening on an increasingly global basis”.
According to Connell, there are
less issues in the application side of fraud, particularly for
internet banking. However, “there is a lot around the identity
aspect”, says Connell.
Currently, one of the big factors,
from a customer perspective, around ID verifications is
convenience, according to Connell.
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By GlobalData“What does fraud mean to the
consumer? There is a key aspect around convenience and the
additional checks,” he adds.
A new study commissioned by
Experian in conjunction with the International Fraud Prevention
Research Centre, released in the first week of December, reveals
the extent to which time-consuming identity and security procedures
continue to be a source of frustration for consumers.
Consumers are more tolerant,
however, with security procedures of online banking, being prepared
to wait almost as long online as in-branch, and undergo five
minutes worth of checks with signing up for online banking compared
to six minutes in branches, the study reveals.
“One of the interesting things is
the drop-out period of six minutes,” says Connell.
“Fraud is looked at as a focused
issue but you have to take into account the complexity, in terms of
customer relationship.
“What we are seeing from across the
region is that there is a drive to ensure good customers rather
than purely preventing bad ones.”
Across Europe and UK, Experian
provides an anti-fraud data sharing system – Hunter.
“What Hunter does is essentially it
provides a capability that links into the application processing
system and looks for inconsistencies in the application compared to
some aspects of the where we have seen the application before and
such,” explains Connell.
For Experian, in certain countries
such as UK, Spain, South Africa, Russia, South Korea and India,
Experian has an anti-fraud data sharing system known as National
Hunter.
“It uses the same sort of
technology and compares that application with applications of other
banks within the same geography,” says Connell.
“We have a couple of different
components, for example we look at used data to match to give a
level of confidence about the individual, because it is about using
the appropriate risk application and technology at a certain point
of the lifecycle.”
Five retail banks in Russia are
already using National Hunter and so are six retail banks in India.
In South Africa, a large-scale pilot of National Hunter is taking
place.
Connell adds that fraudsters have
become more “sophisticated and coordinated”, and are “much more
commercial than you think”. There is a tendency for agents of fraud
to outsource parts of their fraud activities to experts around the
world.
“We are aware many are sourcing
high-end malware and other tools from competing criminal
organisations that can be deployed to source information,” says
Connell.
“Quite often if you take the
example of organised crime they will collect large amounts of data
and will be systematically targeting multiple originations –
necessarily often all within a short space of time.
“What it can help us do if an
organisation captures or detects threat is that the others will
benefit from it and vice versa. It is a big thing around data
sharing. There are benefits of just applying an application like
Hunter.”
In UK and Italy, Experian also
offers the Detect application that identifies where people have
masked parts of their credit history.
According to Connell, the
cross-border nature of fraud has made banks more vigilant of
identity threats through out 2011.
Paul Barnes, director of the
International Fraud Prevention Research Centre, said: “Identity
checks are in all our interests and necessary, however
time-consuming they appear at the time.”
There has been exploitation of
globalisation as well as the web for fraudsters to target important
data in 2011, says Connell, and banks need to be conscious of who
they are hiring and how authentic the customer information is at
the time of registration.
Banks also need to have advanced IT
and analytics systems intact for maximum data protection and
optimisation, says Connell, though there has already been “wider
take up of digital capabilities of identity”.
The nature of fraud, though, is
market specific and in markets where central controls and checks
are not strictly in place, cases of fraud are naturally higher. “It
changes depending on the economic conditions”, says Connell.
Though identity and soft fraud
threats are likely to keep growing in 2012, legislative measures
are expected to rise, says Connell.
“What you would expect to see is an
increasing reliance in certain areas of fraud. Everyone is taking
into account what [applications] they have, but using them in a
more holistic manner. One of the key things we are doing is
assuring more convenient and appropriate verifications through
different channels.
“Also, the ability for organisations to work together by sharing
data to prevent fraud would be my key points for 2012.”
