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Fight Fraud With Real-Time, Product-Level Data

By Milan Gauder, Executive Vice President, Services, Europe

Real-time data analysis is an essential part of protecting businesses against fraud.

When it comes to fighting fraud, many businesses may not have access to the real-time data insights they need to quickly detect and prevent it. Instead, they can find themselves looking in the rear-view mirror at historical information, trying to play catch up with increasingly sophisticated fraudsters. It stands to reason that the longer it takes to arrive at insights on fraudulent activity, the longer it takes to rectify it, and the larger the losses. So how can financial institutions refine their approach to combating fraud?

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The Benefits of Real-Time Data Insights

Access to real-time transaction insights remains critical to detecting fraud in its infancy, before losses reach critical levels. For example, when it comes to detecting and preventing credit card fraud, banks face a particularly challenging problem. The perpetrators of credit card fraud, which often involves sophisticated, transnational crime syndicates, move quickly to avoid alerting banks of a scheme in progress. They also use a number of tools and techniques to help fraudulent transactions appear routine.

That's why credit card fraud detection and prevention requires real-time data insights and in-depth analysis of cardholder activity, such as those offered by the Mastercard Intelligence Center. In addition to helping banks stop fraud, real-time metrics provide financial institutions with more information to help minimize denials of legitimate cardholder charges (known as "false declines"). And since many fraud tools incorporate artificial intelligence, they improve their accuracy over time, which translates to more fraudulent authorizations detected and declined and more legitimate transactions analyzed and approved.

Digitization and the Era of Instantaneous Payments

When it comes to wire transactions, banks commit to sending funds within minutes of receiving a request. Nonetheless, with more and more banks availing themselves of real-time fraud detection solutions designed to flag fraudulent wires at their inception, the industry continues to take steps toward cracking down on wire fraud schemes. By scrutinizing an outgoing wire before it's sent, banks can identify suspect transactions in real time, buying themselves the opportunity to request additional verification.

Mobile commerce and the constant push toward digital transactions continue to change the time it takes to process payments. While credit and debit card transactions post instantaneously, many forms of payment used to take days to process. That's no longer the case.

Today, direct deposit and remote check deposit transactions often post within hours, and consequently, there's an even greater need for real-time visibility into payment transactions. Fortunately, there's also a growing number of sophisticated fraud detection solutions that can interrogate transactions as they occur, including cutting-edge options that use advanced techniques like machine learning to detect fraud. As the software learns what constitutes fraud, its accuracy improves — all in real time.

Since many fraud schemes result in compromised customer information, in addition to stopping fraud before the losses pile up, a real-time view of transactions also allows financial institutions to better safeguard their customers' privacy.

The Case for Better Tools

Though fraud continues to be a perennial problem, many businesses struggle to justify the investment in prevention, detection and investigation tools. Nevertheless, utilizing real-time data means the fraud checks occur earlier in the transaction process, increasing the odds of detecting fraud schemes just as they emerge. With greater visibility, losses inevitably drop, and with access to moment-by-moment data insights, businesses can comfortably keep their eyes on the road ahead.

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