Against fraud we need data and analytics by Redazione LineaEDP 17/06/2022 Facebook Twitter LinkedIn

For Giulio Virnicchi, Global Consulting Practice, Experian, data and analytics are the cornerstones of fraud prevention in the digital age

On the subject of fraud and how to counter it in the digital age, we propose this article by Giulio Virnicchi (in the photo below), Global Consulting Practice, Experian. Happy reading. Accelerated by the changes imposed on our lives by the pandemic, the conversion of consumers and purchases to digital is a trend in continuous and rapid evolution that poses new challenges for the telecommunications market. It is not just a question of numbers: on the one hand, there is an expansion of the segments of the population that faces the digital, including today also digitally weaker groups, the so-called "newbies" or "niubbi", such as the elderly and the very young. The latter are particularly exposed to "phishing" and "credit muling", a growing phenomenon that sees attackers convince authentic customers to give them their data. Data that is resold in ready-to-use libraries on the darkweb, providing fresh raw material to fraudsters and cybercriminals. On the other hand, a continuous increase in the expectations of consumers, who want simple and fast purchasing processes and therefore do not tolerate complexity and delays typical of traditional approaches to fraud detection. Telecommunications companies are in a paradoxical situation: they must effectively counter the increase in fraud attempts, also and above all to protect their customers and their brand, without weighing down the digital processes of purchase and verification, indeed admmodering them to be in line with the growing expectations set by players such as Amazon, Apple, Netflix... A priority theme Finding a solution, however, is a priority: as revealed by the results of the recent Experian report 'Priorities, challenges and the role of data and analytics as an accelerator of strategy'. According to 67% of respondents, fraud losses in the telecommunications sector have grown or remained stable during 2021, making the fight against fraud one of the top three challenges to be faced in the implementation of their digital initiatives. In addition, 57% say they are dissatisfied with the current fraud prevention strategy in terms of constraints and friction introduced in the design of the ideal customer journey for their customers. Finally, to complicate this already difficult search for a win-win between customer experience and the fight against fraud, there is the highly competitive context in which the sector operates, which imposes continuous cost containment objectives. Analytics and machine learning Technological innovation solves this complex equation: advanced analytics and machine learning models can combine in real time signals from different data sources and anti-fraud solutions such as biometric, behavioral and navigation data, access, device used, email reputation, or feedback with official sources, providing a summary indication that optimizes fraud detection while minimizing false positives and customer impact. 30% of Experian customers surveyed confirm that abandoning the rules-based and static process approach in favor of machine learning has brought immediate benefits on losses: the result is a better onboarding experience that does not sacrifice security. These are results that justify the focus on innovation, with more than half of the companies surveyed increasing their budget for fraud prevention – priority interventions the review of strategies and models, the introduction of digital signals and biometrics. Finally, 30% of respondents, in contrast, do not use and do not have machine learning as an element of innovation in fraud prevention. Positive return on investment A final fact that emerges from the research is that inaction has a cost: the lack of innovation of the experience on digital channels reduces competitiveness and sees a progressive increase in losses caused by fraud. Updating the experience by adopting new data and technologies to support "frictionless" anti-fraud is an investment that offers limited return times and immediate operational efficiency, not to mention the benefit on the conversion rates of its digital channels and brand reputation.