The Need for Holistic Fraud Transformation

????????????????????????????????? The Need for Holistic Fraud Transformation is NOW !

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1.?Current Landscape Background

Advent of Digitisation, then COVID & now Technology disruptors such as AI/Gen AI have only accelerated the demand for Fraud Transformation as the Industry comes to terms with the evolution & spread of New Age Digital Fraud. The last 5 years have rapidly and dramatically changed the Fraud Landscape.

We are now at a defining phase where the Industry is not only battling the current digital Fraud but also has to prepare itself for the next wave of AI Fraud which if not controlled will have significant impact on the P&L’s of most organisations.

AI & now Gen AI is now the most popular Technology Disruptor - like most things where AI creates solutions - it can unfortunately be leveraged to generate Fraud. Voice Cloning & Deep Fakes are no longer projected Fraud Vectors but are now real threats which are already surfacing around the globe . Fraud Trends now don't stick around for long - they change and change drastically. Example - APP Fraud had left most Banks & FI's vulnerable as the legacy capabilities struggled to detect it.

AI Fraud is the next wave/trend which has already started to surface in some parts of the world and is a ticking time bomb. The critical piece is that the Controls don't need to follow the trends, but the Controls need to be built ahead of time to meet the anticipated trends.

Fraud, Fin. Crime and Cyber are no longer isolated functions but really need to work together to fight the next wave of Fraud Typologies leveraging each other’s capabilities.

Lastly, new Regulations like the PSR will always create an impact on the Fraud Functions and entail creation of new processes or modifications to the existing processes.

2.?Impact to FI’s/ Banks

Provisions for Fraud Losses have increased steadily across FI’s/Banks in the last 3-4 years.

• Banks are now looking to invest to upgrade their Fraud Framework as legacy systems aren’t enough/ not powerful to detect sophisticated Fraud Typologies.
• Most banks/FI’s have Multi-Layered Fraud Frameworks but they aren’t still enough to stop all Fraud – they need to have the right balance of Internal Capabilities along with specialised External/3rd Party Solutions.

Increased Demand from Upstream Processes

• Contact Centre Volumes have only increased over the years due to increased disruptions and case volumes and increasing capacity is not the answer. Need for digital communication is important to not only solve for the demand but also to enhance Customer Experience.
• Disputes volumes mainly driven from Scams have also just started to stabilise after witnessing a steady increase over the last 3-4 years – need for specialised Disputes Platform.
• Fraud Operation Processes have increasingly become complex & layered with the addition of new Fraud Typologies and the case volumes have also increased at a steady pace.
• Multiple System Navigation to investigate Fraud Cases & Disputes have only increased and there is a need to consolidate/enhance existing Case Management Platforms.

?3.?Need of the Hour

• Holistic assessment of the entire Fraud Lifecycle from Application Fraud, Transaction Monitoring , Servicing (Disputes, Complaints) covering the 3 pillars of Prevention, Detection & Servicing.

Upgrading the Fraud Framework

• Overhauling the Fraud Engine is the need of the hour for most FI’s to control Digital Fraud.? Investment in the Technology & importantly the right technology is the need of the hour as there is an ocean of fraud solutions available in the market and there is a problem of the plenty.
• Design of the Fraud Architecture is also key to achieving the right ROI in terms of Loss Savings & Cost to run the engine.
• Large Organisations have legacy platforms & controls which take time to change - they need to adapt and move fast to the changing trends by utilising the power of 3rd party specialist solutions.
• FinTech’s/Start Up's need to scale fast to grow and hence need a guide/advisory on how to navigate the journey in a structured and phased manner.
• Fraud Operations Transformation is critical to managing the upstream demand efficiently is key which involves taking a Real Look under the Hood – to simplify, standardise and automate the Fraud Processes.
• You also need the Right Tools to aid the investigator/frontline troops on the Floor to take fast & accurate decisions.

?4.?Solutions offered by Genpact

We offer a suite of solutions across the Lifecycle and? listed below are only some of those solutions.

?4.1 - Industry Benchmarking to see what the best are doing & how they are doing it – across the 3 pillars of Fraud.

Benefit – To give the leadership a detailed and informed view on the best practices globally in the banking world. Importantly, call out the specific recommendations tailor made for the Client and focussing on the HOW to build these best practices in terms of capabilities and processes.

?4.2 – Fraud Operations Process Transformation?????

An in depth evaluation of the Fraud Processes across all Fraud Workstreams by applying lean six sigma levers to simplify, standardise & automate the Processes.

We don’t stop at identifying solutions but also help implement the solutions including automation and Gen AI solutions.

We look at Processes from the Customer Lens which is critical to maintaining a good Customer Experience through the Fraud Journeys.

Impact – Streamlines the key processes and increases productivity across dimensions.

Benefit – Meaningful Cost Saves for the Function

4.3 -Capability & Controls Assessment – A thorough assessment of the performance of the existing Capabilities by categorising & scoring each capability across selected parameters/dimensions.

Impact – Identifies the Weak Capabilities/Controls in the Fraud Framework & recommends best-in-class replacement capabilities.

Benefit – Pro-active identification of weak capabilities which leads to reducing Fraud Losses.

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4.4 - ?Evaluation of the Latest 3rd Party Capabilities – This is linked to the Capability & Controls Assessment module and offers in depth Vendor Evaluation with specific advice & recommendations.

Impact – Clearly identifies the top vendors for a specific solution based on the industry performance.

Benefit – Confidence to the leadership in selecting the right Fraud solutions.

Direct Cost Saves as the leadership doesn’t have to POC multiple 3rd party capabilities to compare performance.

4.5 - Creation of a Futuristic Roadmap –Build a 3-year Roadmap incorporating the best-in-class industry capabilities to fight the latest vectors/typologies.? The Roadmap is built on two dimensions – Criticality & Strength of Controls and serves as a guide to plan and invest in upcoming new capabilities.

Impact – Helps the leadership across the enterprise to plan, assess and invest/plan for the future. Creates a Build versus Buy view for the Leadership.

Benefit -? Saves Cost, Reduces Fraud Losses & ensures alignment across critical functions of Fraud Strategy, Fraud Operations, Fraud IT, Architecture Teams and also the Digital Enterprise Teams.????

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Disclaimer:?The postings on this site are the authors’ personal opinions. This content is not read or approved by their current or former employer before it is posted and does not necessarily represent their positions, strategies or opinions.