Financial Fraud is a significant financial and reputational risk to financial services institutions. And in today’s digital-first world, it is more prolific than ever. Fraud is on the rise. So too is the cost of fraud to financial services institutions.
Financial fraud refers to a broad range of deceptive activities, committed to gain an unfair financial advantage, at the expense of financial loss for the victim. Common types of financial fraud include:
To protect their customers and brands, financial services institutions are forced to take stringent measures to ward off fraud and identity theft. Even a single instance of fraud can severely damage a Financial Institution’s reputation - meaning prospects won't sign on, and customers won't stay.
The Australian Competition and Consumer Commission (ACCC)’s 2023 Targeting Scams Report found that Australians lost $2.74 billion to financial fraud in 2023. With this alarming figure in mind, regulatory bodies have ramped up their anti-scam measures. Several regulations, such as those set by the Australian Securities and Investments Commission (ASIC), the Australian Prudential Regulation Authority (APRA) and the Australian Banking Association (ABA), mandate that Australian financial services institutions maintain robust security systems for monitoring, preventing and reporting financial fraud.
Underpinning these regulations is Prudential Standard CPS 234, which mandates that financial services institutions maintain high information security standards.
Furthermore, the ABA, in partnership with the Customer Owned Banking Association (COBA) have developed the Scam Safe Accord. The accord provides a set of regulations aimed at preventing fraud, with its overall goal being to make Australia’s financial sector a tougher target for scammers.
The scam accord applies to all ABA and COBA member organisations. Under the accord, financial services institutions must:
The scam accord sets the foundations for a robust security posture in the financial sector, as the government enacts legislation to enshrine and support this united call to action. The Australian Competition and Consumer Commission (ACCC) are expected to play a key role in holding Financial services institutions accountable for adhering to the accord.
The consequences of these developments for Australian financial services institutions is clear: financial services institutions must take sophisticated fraud prevention measures. Otherwise, they will be faced with financial penalties and risk their brand reputation – for any type of financial fraud that occurs through their channels.
Fraud prevention tools are essential for survival in today’s banking industry. These are tools that automatically identify, and take-action against, fraudulent behaviours.
Some of the deterrents in deploying and running third-party fraud prevention tools has been the associated costs, which can prove to be expensive and time-consuming. Furthermore, fraud detection and prevention has historically required monitoring on fragmented systems that have a silo focus on specific areas and aren’t holistic, such as cards or Internet banking.
Ultradata’s Fraud Interceptor is an end-to-end solution that provides real time, 24 x 7 monitoring across all channels.
Fraud Interceptor is a fraud detection and prevention tool that is both robust and agile. It continues to develop new functionality to combat the ever-evolving threat landscape.
Historically, fraud detection and prevention has required monitoring fragmented systems that focus on specific areas, such as payment cards or Internet banking. Fraud Interceptor monitors activity across all channels – including staff-initiated transactions.
Fraud Interceptor provides financial services institutions with greater visibility over their transactions, and the flexibility to respond to potentially fraudulent transactions as they see fit. It is available as part of the wider Ultracs Ecosystem toolkit
Fraud Interceptor works by responding to transactions based on a set of rules.
Here’s an overview of the Fraud Interceptor process:
Fraud Interceptor, is fully customisable, meaning your organisation can, with the click of a button, instantly add or change rules as new threats arise or your strategy changes.
The key driver of Fraud Interceptor’s effectiveness in preventing fraud is its intuitive user interface.
Skills gaps pose a challenge to maintaining a robust cyber security posture in financial services institutions. With visibility over an organisation’s operating environment, operators have a comprehensive, innate understanding of the conditions in which the fraud occurs. However, setting security parameters traditional fraud prevention tools require a high level of technical knowledge. Fraud Interceptor allows non-technical operators to quickly and easily set rules and test the impact of specific rules before implementing them.
Operators can set rules based on the live information about a transaction on the Ultracs Ecosystem, such as its:
A key strength of Fraud Interceptor is that users can refine its targeting by filtering rules through the use of lists. This gives financial services institutions greater control over how they respond to certain types of fraud risk.
For example, it can implement:
Security and intelligence at every stage
Fraud Interceptor’s comprehensive set of features are designed to help your organisation manage its overall fraud program.
Successful fraud prevention is dependent on four key pillars:
At every stage, Fraud Interceptor offers market-leading workflows, that are customisable to suit any organisation’s requirements.
Monitoring Transactions:
Fraud Interceptor provides the ability to choose what transactions to monitor based on a wide range of options. Common threats to monitor include:
Responding to Activity:
Once Fraud Interceptor detects suspicious activity, Fraud Interceptor offers flexible response workflows that can be adjusted based on the time of the day, day of the week, or staff availability.
These include:
Learning:
Cybercriminals always continue learning to gain an advantage. Therefore, effective fraud prevention is just that - continuous learning from what went wrong and using that knowledge to increase an organisation's cyber security posture. Ultradata clients meet regularly with an extensive client user group and continually exchange rules, experiences and best practice.
Fraud Interceptor's ‘test mode' allows organisations to trial a rule's impact before it is implemented, safeguarding operations. With the ability to test rules, financial services institutions can confident in applying new rules that keep them one step ahead of fraudsters.
Iteration:
Once an organisation is ready to apply a new rule, the Fraud Interceptor enables authorised operators and respective teams to manage the solution and create new rules in real time.
Fraud Interceptor offers a great number of benefits for all financial services institutions, including:
Seamless integration: Fraud Interceptor works in tandem with the Ultracs Core Banking Solution. This equips organisations with all the information and intelligence required to successfully prevent fraud – on one single platform.
Custom rule creation: Creating a rule in Fraud Interceptor is straightforward and non-technical. Access to Fraud Interceptor is maintained via standard Ultracs access controls. For added security, an optional “two to authorise” can be enabled.
Agility: When a new pattern of fraudulent activity occurs, there’s nothing more frustrating than having your hands tied. If you’ve noticed a pattern of suspicious transactions, Fraud Interceptor has the ability to implement a rule that prevents subsequent similar transactions occurring. The ability to act fast will protect customers from becoming a victim of fraud, an experience they’ll associate with the brand of an organisation.
Compliance with regulations: The Fraud Interceptor is built to assist organisations in meeting regulatory requirements and its agility allows organisations to set parameters that respond to and anticipate changes in the regulatory environment.
Ability to “shape” behaviours: While preventing fraud is its primary purpose, Fraud Interceptor’s capabilities are flexible enough to meet a wide variety of needs. For example, an organisation may utilise Fraud Interceptor’s transaction reporting and blocking capabilities as ‘parental controls’ to create a card product aimed at children.
Real-time monitoring across all channels: Frequently, an organisation’s ability to defend against fraud will depend on how quickly a financial services institution is able to act.
Cost savings: Through empowering operators to self-manage and create rules in real-time, an organisation can save significantly on the ongoing costs typically associated with fraud prevention tools.
Efficiency: The ease in which operators can create rules within Fraud Interceptor allows for greater efficiency and helps boost cyber security posture. The greater the efficacy, the greater the fraud protection is.
Evolve alongside the threat landscape: Fraud Interceptor has been a part of the Ultracs Ecosystem since 2010. Over the years, Ultradata has constantly updated the platform so it evolves alongside the cyber security landscape and the changing demands of industry regulations.
Instil customer confidence: In the current environment, customers are increasingly holding banks accountable for financial fraud. A survey by FICO found that 13% of consumers will leave their bank if they don’t like its response to a scam. Fraud Interceptor will hold your fraud prevention strategy to the same standards as your customer do, so you maintain their trust.
Expert advice and support: While Fraud Interceptor is simple to run and manage, that doesn’t mean you’ll go it alone. The Fraud Interceptor is backed by Ultradata’s expert project, consulting and support teams. From guiding its onboarding and integration, training your staff, and providing ongoing support, Ultradata is there every step of the way to help organisations make the most of the Fraud Interceptor product.