By Ian Macallister, Head of Customer Success
Last month we heard top things to consider when financial institutions (FIs) are implementing a new P2P payments platform. This month Wade Hobbs, Business Development Manager for Levvel’s Payments practice, went deeper on another important topic - fraud management.
Levvel is a technology consulting firm that works with financial institutions to design, develop and launch new payment products and services. They offer a full range of IT consulting services including strategic evaluations, requirements definition, architectural design, vendor evaluations, and custom application development and integration services.
In case you missed it, here is a link to the previous Q&A with Levvel.
Ian: Thanks for all the great insights last month. Let’s jump right in, how might Zelle or any P2P payments system impact a bank’s fraud management strategy?
Wade: Always a pleasure, Ian! What we normally find is that introducing any faster payments system may expose cracks that already exist in a fraud strategy. Basically real-time payments need real-time fraud solutions. If there’s a fast way to move money out of an account, then fraudsters will look for the easiest ways to get it. We recommend that banks continually review their fraud management toolsets for real-time decisioning capabilities, offline case management solutions, and robust authentication tools like one-time passcodes. It’s critical to identify and stop a questionable transaction, and the data you get from studying past cases will be helpful in preventing tomorrow’s attack.
Ian: What are real-time fraud mitigation best practices?
Wade: FIs with low fraud rates employ a full suite of real-time decisioning and after-the-fact reviews. The best inline decisioning solutions will utilize transactional data, historical/behavioral data, and external data from sources like the mobile network providers. On the backend, FIs with the lowest fraud rates use tools with correlation detection, anomaly identification, and machine learning to detect patterns among known fraud cases. Those learnings will feed tomorrow’s version of an FI’s real-time scoring models so it can stay one step ahead.
Ian: I know many core processors and Early Warning offer fraud mitigation tools. What should an FI consider when purchasing these tools?
Wade: We advise asking vendors the following questions, at a minimum:
- Do you offer a decisioning platform capable of stopping a fraudulent transaction in real-time? Will it require custom integration with my online or mobile banking provider?
- Is your fraud solution part of your core offering? How much would it cost to add this solution to our existing relationship?
- Is your solution able to perform end-to-end case management? Will my existing fraud operations staff have access to the needed tools out-of-the-box, or will custom integrations be needed?
- Can you explain all the technologies that will be included in your offering? This is a tricky one - In some cases, less is more. Make sure you understand exactly what you need.
Ian: Will the FIs be able to learn about fraud trends or developments at other banks?
Wade: There is no shortage of networking opportunities with practitioners from other financial institutions and outside consultants for knowledge sharing. They definitely won’t have to go it alone!
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About the Author:
Ian Macallister is vice president and Head of Sales and Customer Success for Early Warning, with responsibility over Early Warning’s sales organization. He brings substantial industry and leadership expertise to the role with a focus on how to always keep the customer at the center of product and service solutions.
About the Interviewee:
Wade Hobbs is the Business Development Manager for Levvel’s Payments practice. Wade has over 20 years of experience in the banking industry, has held the position of Product Manager for implementing Zelle at a top 5 bank, and has served as product manager for emerging payments and data monetization platforms. Wade manages partnerships within the payments and digital banking ecosystem, including core platforms, payment processors and advanced technology service providers.
Levvel helps clients transform their business with strategic consulting and technical execution services. We work with your IT organization, product groups, and innovation teams to design and deliver on your technical priorities. The Levvel Payments practice combines real-world experience and insider knowledge to help you navigate the complex arena of payments. For more information, contact Levvel at email@example.com.