Bank Best Practices to Prevent Fraud
Jim George is an independent consultant to banks focusing on issues of fraud. He brings over 25 years as a consultant to major banks in Associate Partner and Principal roles at PriceWaterhouseCoopers Consulting, IBM Consulting in Bank Risk and Compliance, and Andersen Consulting (now Accenture). Jim had worked in fraud prevention, investigation, identity issues, and systems projects.
Fraud is of more concern to banking leaders today than ever before. This is driven by national media coverage, actual dollar losses, the attack on trust (which is key to customer relationships), costs to allay customer concerns, changing regulatory environment, and changes in how fraud efforts are being organized. Fraud is no longer just a “cottage industry”, it is moving to an industrial model where specialists steal data and sell it to others who organize high-volume attacks by multiple perpetrators. Banks cannot combat the “Fraud Industry” with yesterday’s methods.
There are reasons to believe that fraud losses are actually higher than recognized. Some fraud losses are buried in card interchange fees. A significant amount of fraud losses likely get reported in banks’ accounting as credit losses. But they weren’t due to poor credit decisions, they were fraud scams from day-one. The software is widely installed to identify specific patterns and “unusual” transactions. But the fraudsters know this and are constantly striving to create new patterns where their transactions are designed not to be flagged. Like in a game of chess, the advantage goes to the side that thinks the most moves ahead.
Recent massive data exposures have put the spotlight on fraud risks to banks, merchants, and personal banking customers. Fraudsters are always looking for new opportunities and new weaknesses. The availability of customer data on the black-market gives them new power tools to use to enrich themselves. A bank has responsibilities to its shareholders and customers to protect them from these ever-changing threats.
- Reasons for focus on fraud, it is not just the money
- Two-step process: Identity and Execution
- Specific Identity aspects of frauds
- Payment systems issues (check image, ACH growth)
- Credit issues (cards and loans)
- Centralizing financial crime responsibilities
- Eight points where fraud can be addressed by a bank
- Four ways to add value to your bank
Course Level - All Levels
Who Should Attend
- Retail Banking Leaders
- Risk and Compliance Officers
- Loss Control Managers