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How machine learning and 4D analytics can protect Australians from financial fraud

While COVID-19 is changing the face of reality on a global scale, it is also bringing many Australians unprecedented financial struggles.  Unfortunately, we are also seeing a rise in financial crimes and identity theft as scammers target Australian families, businesses and the Government to illicitly acquire proceeds from bank accounts and retirement savings to name a few examples. 

Of course, financial crime is not a new concept and, with continuously progressing technology, hackers are finding more and more ways to infiltrate the security controls of large scale businesses and the Government, not to mention Australians who are far more exposed.  

The value of illicit funds which infiltrate into global banking systems is estimated to be 2 to 3 per cent of the global GDP hence this is and continues to be a sizeable issue for Banks and Government. In Australia, the story remains similar as fraud has been estimated to be 56 cents for every $1000 (card fraud as an example).

But thankfully there are also technological advances that are helping financial institutions such as banks and super funds combat the ongoing threat from bad actors.  

In COVID-19 times, with people not able to physically present at a branch or government office, technology providers have significantly increased anti-fraud capabilities, measures and controls such as tampering algorithms or liveliness and likeliness testing, which help verify the identity of customers and citizens online through sophisticated matching techniques including anchoring on photos taken on your mobile against existing documents such as driver licenses. 

These algorithms use analytics and data-driven insights to determine the percentage of symmetrical nature or whether there is any deviation against the template to identify fraudulent IDs.  There is a minimum percentage it has to hit for the transaction to be taken to the next step.

The Government now also provides very substantial services for institutions to verify their customers through sources such as Government identification sources, electoral rolls, etc. which allow institutions to make a more informed, richer and more accurate view of the customer upon onboarding or registration.  

Additionally, banks and super funds need to ensure that the behaviour of the customer is aligned to the initial profile created during onboarding or registration. To do this, organizations employ AI techniques using their data environments to raise alerts on on-going behaviours of the customer – ‘ongoing monitoring’. These alerts use history and high-risk clients to flag abnormal behaviours in the customers for review and investigations. Again, with the objective of identifying and stopping suspicion behaviors. Each institution and its technology solutions determine what abnormal is and what different scenarios ring alarm bells. It is a requirement that each and every transaction is monitored for fraudulent, or suspicious behaviour and that is the obligation of the institution themselves.

Scammers are also using archaic methods of identity theft such as sifting through garbage looking for discarded statements and other documents.  This, in turn, allows them to access accounts and websites change the details to their own and away from the true account holder which triggers an email to the original citizens themselves saying that details have changed, however at this point the scammers have the security questions.  This highlights the criticality of having an ongoing monitoring program that is dynamic and data-driven for organizations. 

While AI and data analytics are invaluable in helping to combat the ongoing threat of banking and superannuation scams, these tools work best in conjunction with customer responsibility.  Simple things like monitoring balances and transactions, non-generic passwords and staying vigilant with online security measures will help make sure we can safeguard ourselves from being victimised by bad actors.

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Eranda Gurusinghe

Eranda Gurusinghe

Senior Risk and Financial Services Consultant at Teradata

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