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Prevent Fraud in the Branch Through Simple Tactics

November 15, 2016

By Meredith Deen, President, FMSI

Major cyber-criminal news stories have been shining the spotlight on what is already a 24×7 omni-channel initiative for the financial services industry. The perfect combination of constant vigilance and relying on the right technologies is required at all levels of banking to fully ensure that the account holder and the institutions’ confidential information and assets are as secure as possible.

With sophisticated behavioral authentication tools, such as cognitive biometrics, advanced technologies can now potentially even identify online fraudsters by their typing cadences and mouse patterns. But while this science-fiction-like technology will surely grab the headlines this year, preventing fraud at the branch level can still go a long way at stopping criminals.

Most financial institutions can gain serious ground in their anti-fraud efforts by rolling out much simpler technologies and tactics, such as better capturing of account-holder activities through dedicated applications and then leveraging this business intelligence to help identify criminals in the branch.

Lobby sign-in

Most branch lobbies rely on some sort of paper-based lobby sign-in process to capture account-holder activity. For fraud detection, lobby sign-in information provides a record of anyone who has visited the branch, including criminals trying to open bogus accounts at multiple locations.

The problem with a paper-based system, however, is that it does not connect account holder activity in real-time with every employee in the branch network. Banks that abandon paper sign-in sheets and instead embrace business intelligence solutions to collect and analyze this data on a bank-wide basis can better identify individuals that may have tried to perpetrate fraud at other locations.

For example, FMSI recently worked with an institution whose lobby-tracking solution enabled it to identify attempts by fraudsters to open accounts with false IDs, where they intended to empty out the provided credit of the new accounts, and then disappear.

Although the system was designed to help improve customer service and cross-sell ratios, the institution was able to use sign-in and CSR-session data—which the solution aggregated and analyzed for all branches—to run an additional check of individuals trying to open bank accounts.

To achieve this goal, CSRs were instructed to check each new account requestor against the database to see if they had attempted to perform questionable activities at other branches. The system thwarted some fraudulent attempts to open bogus accounts, and the institution continues to check all new account requests against historical records in the same way.

Good anti-fraud training

In addition, while technology can certainly help identify criminal activity in the branch, one also must not underestimate the power of face-to-face observation. Train your associates to identify any signs of suspicion, such as nervous behavior by the potential account holder.

A great exercise is to hold a group role-playing session where employees take turns trying to pick-out the randomly selected “criminals” in the group. Such an activity, if designed properly, can also incorporate cross-selling training for the “non-criminals.”

The next step would be to have a clearly defined process for handling suspicious behavior, such as having another associate come over to confirm the situation, and to double check identification through third-party means.

It is prudent to remain polite and professional in any and all situations that may occur. Remind your associates that other account holders will likely be in the branch, and in some cases the perceived suspicious activity may be harmless.

Harnessing the power of business-intel

A number of technologies exist that can capture data (tagged by processor and time stamp) from the financial activities that transpire in the branch, including transaction processing, teller balancing, and more. This information is especially valuable for pinpointing occupational fraud such as skimming (short time-frames between deposit and withdrawal are often evidence of this type of fraud).

The value of business intelligence often lies not in the individual databases at institutions, but in how banks can use such data collectively to detect anomalies, develop behavior profiles to identify when activities do not match, and perform other investigations. In doing so, institutions can gather telling data, provided through reports, alerts and other mechanisms, that identifies the red flags of fraud.

While criminals have been around since the beginning of commerce, their tactics have changed through the years, and they will continue to evolve in this omni-channel world. Thus, institutions that properly curb these risks at all the different avenues of attack by utilizing the right available technologies can potentially scare away fraudsters and impress their investors and customers. The word spreads fast in the criminal underworld about which institutions are more vulnerable.

So it’s essential to help establish the right kind of reputation for security at your institution by comprehensively establishing the right security protocol.


This article was originally published in Financial Manager’s Society

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