Banks Can Boost Fraud Detection by More Than Ten-fold Through Better Collaboration, Research Shows

Rhea-AI Summary

LexisNexis Risk Solutions reveals that banks and online retailers can significantly improve fraud detection through shared intelligence networks. A US bank improved high-risk event detection by 1700% by combining email risk with digital identity signals, while a top US card issuer enhanced detection by 23x using multiple data points. Currently, only 27% of financial services and retailers in EMEA use fraud insight exchange initiatives. Metro Bank uncovered £2.5 million in fraudulent payments within six months, achieving a 105% improvement using collaborative risk insights.

Positive

• US bank achieved 1700% improvement in fraud detection through combined data analysis
• Metro Bank uncovered £2.5 million in fraudulent payments within 6 months
• Major UK bank increased fraud detection value by £1.7 million in one month
• Collaborative model identified one in eight flagged accounts as mule accounts

Negative

• Only 27% of EMEA financial services and retailers currently use fraud insight exchange initiatives
• Five times greater fraud risk from devices displaying negative behaviors

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• Just one in four (27%) financial service and online retail businesses in EMEA currently employ consortia or fraud insight exchange initiatives
• Top US card issuer combined digital identity, email and physical data to boost high-risk transaction detection by a factor of 23

ATLANTA, Nov. 19, 2024 /PRNewswire/ -- Banks and online retailers can significantly improve their ability to capture hard-to-detect high-risk fraudulent transactions through combining shared fraud intelligence into their risk assessments, according to the latest Global State of Fraud and Identity Report from LexisNexis^® Risk Solutions.

Examples include a US bank that boosted its ability to detect high-risk events by 17 times or 1700% through combining email address risk with broader digital identity signals, such as device intelligence and IP address. Similarly, a top US card issuer combined digital identity, email and physical data, such as postal address, to boost high-risk transaction detection by a factor of 23.

Currently, only around one in four or 27%¹ of financial services and online retailers in the EMEA region employ consortia or risk insights exchange initiatives as part of their fraud prevention technology.

A shared collaborative network enables organizations to flag suspicious activity relating to device, IP address, email address and others, to help all members improve their fraud risk assessments. For instance, a device displaying negative behaviors poses a five-times greater risk of subsequent fraud compared to baseline, analysis shows. If anti-fraud solutions flag a device and email address relating to a single identity, the fraud risk is eight times² greater than baseline. Trusted customers also benefit from these shared networks, since member organizations can flag trusted devices to boost recognition of genuine customers, speeding up login and transaction time.

Such improvements in fraud detection can also result in significant savings for organizations. Metro Bank, a top 10 UK bank, uncovered over £2.5 million of fraudulent payments within six months — marking a 105% improvement – using a collaborative risk insights model to spot outgoing proceeds-of-fraud payments to mule accounts. The model also later found one in eight of the accounts flagged during the period to be mule accounts, helping to protect the bank from the risk of additional fraud losses and regulatory fines.

"On their own, email address, digital signals such as device intelligence and verified identity components can reliably detect certain aspects of identity manipulation, but when used together, they become significantly more powerful for assessing application risk that would otherwise be invisible to banks relying on just their own view of customers," said Stephen Topliss, vice president of fraud and identity, LexisNexis Risk Solutions.

"Organizations that share fraud risk intelligence gain a more comprehensive understanding of fraudulent activities, which allows them to predict and pre-empt the next moves of fraudsters," Topliss added. "Sharing intelligence magnifies insights, revealing connections between disparate incidents that might otherwise go unnoticed. Moreover, it streamlines processes by reducing investigation times and allows humans to focus efforts on the most severe threats, thereby elevating fraud prevention success rates. Collaborative networks enable businesses to genuinely understand the complex, networked inter-relationships between every transaction, building this into a digital identity over time."

Another major UK bank increased the value of its fraud detection by £1.7 million in just one month by analyzing collaborative email intelligence, including email address age, domain and composition. Newer email addresses and ones used to create accounts in a cryptocurrency marketplace within the past month were also found to carry much higher risk than others, according to the analysis.

Topliss continued, "As fraudsters network with one another and develop increasingly sophisticated strategies, no organization can stand alone in effectively countering their threats. It takes a network to combat networked fraud. Collaborative networks that leverage the power of shared knowledge, risk insights and technology enable organizations to share critical information about fraud trends and patterns in a safe and compliant way. This pooling of resources, combining technological advancements with diverse expertise, creates a robust defence system that far exceeds the capabilities of any single entity or organization."

The Global State of Fraud and Identity Report draws from both the underlying datasets of the LexisNexis® True Cost of Fraud™ Study and the LexisNexis® Risk Solutions Cybercrime Report 2023.

About LexisNexis Risk Solutions
LexisNexis® Risk Solutions harnesses the power of data, sophisticated analytics platforms and technology solutions to provide insights that help businesses across multiple industries and governmental entities reduce risk and improve decisions to benefit people around the globe. Headquartered in metro Atlanta, Georgia, we have offices throughout the world and are part of RELX (LSE: REL/NYSE: RELX), a global provider of information-based analytics and decision tools for professional and business customers. For more information, please visit LexisNexis Risk Solutions and RELX. 

Media Contact:   Mike Normansell | Mike.normansell@lexisnexisrisk.com | 07743899948

 

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SOURCE LexisNexis Risk Solutions

FAQ

What percentage improvement did Metro Bank achieve in fraud detection?

Metro Bank achieved a 105% improvement in fraud detection using collaborative risk insights model, uncovering over £2.5 million of fraudulent payments within six months.

How much did fraud detection improve for the US bank using combined data signals?

The US bank improved its ability to detect high-risk events by 17 times (1700%) through combining email address risk with broader digital identity signals.

What percentage of EMEA financial services use fraud insight exchange initiatives?

Only 27% of financial services and online retailers in the EMEA region currently employ consortia or fraud insight exchange initiatives.

How much did the major UK bank increase fraud detection value using email intelligence?

The major UK bank increased its fraud detection value by £1.7 million in just one month by analyzing collaborative email intelligence.