Customer Experience

Fraud Prevention: When is the Best Time to Invest in New Tech?

December 21, 2017

In my role at Emailage, it’s very normal for me to connect with fraud professionals who find themselves in a very similar situation to where I was in my career a few years ago.

I was fresh into a new assignment at my former employer. At that time, the company was chiefly focused on credit cards, but due to the housing crisis and the recession the previous year brought, they decided to begin offering high-yield savings accounts. The goal of this business expansion was to function as an insourced funding mechanism to reduce dependence on external money.

By 2011, when I was assigned to lead their fraud strategy, they had a couple billion dollars in the portfolio. Though fraud losses were insignificant, at only a few thousand dollars a year, I quickly found that the fraud review process was overly reliant on manual processes because fraud exposure was significant.

When I brought my findings to leadership to secure budget to invest in technology, I encountered some resistance because fraud losses were so low. This is very normal in the fraud industry and something you’ve probably experienced in your career, as well.

When fraud losses are low, it’s difficult to secure budget

Due to a false sense of security, it’s often challenging to justify a budget increase. Why invest in more fraud prevention capabilities when the losses are low?

However, low fraud losses do not necessarily indicate a low fraud risk. It’s very similar to how you’d take measures to prevent a data breach. Though you may not have been exposed to an attack, you still have to proactively invest in the right technology. There’s little choice otherwise, as a large-scale data breach would be detrimental to your company.

The ideal time to properly invest in more comprehensive controls — further reducing the imminent threat of a fraud attack — is when your team isn’t distracted by putting out existing fires.

To convince the leadership team, I decided to build a business case for investing in new technology. I looked at the number of accounts we had and verified the limit for daily transaction amounts. When I combined these two elements, I discovered that our fraud exposure was huge. These results helped me justify incremental investment to build the right fraud decision capabilities.

The time to repair a roof is when the sun is shining

At that point, I was successfully able to convince my senior leadership to invest in fraud prevention controls for the personal savings division.This proved to be the right choice, as the business grew more than tenfold in a short period of time, drawing an increased attention from fraudsters.

We were able to improve our fraud hit rates by over 10x, while significantly improving customer experience. When I took over my new position, we had close to 16 fraud analysts doing manual review.

As we expanded our capabilities alongside the growth of the division, we were able to reduce the amount of dedicated analysts by half. The right fraud prevention technology and decision science controls led to an overall optimization of process and resources, allowing us to scale while keeping our overall costs in check with minimum fraud exposure.

I’m sure this is common in the life of all my fraud prevention colleagues

When there are little-to-no losses, that is the hardest time to secure fraud prevention budget.

But, as we all know, fraud is an evolving problem. Just because fraudsters aren’t focused on you yet, doesn’t mean that can’t change in an instant. The best time to invest in the right fraud prevention capabilities is when fraud is low.

This will help make your company more secure for the future, and allow you to focus on on what really matters: scaling your business, expanding into new markets and enabling more transactions without additional risk.


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