Enterprise fraud management (EFM) began as a compelling vision — a vision that many banks walked away from, due to implementation challenges. Today, finding a better way to combat fraud across the enterprise has become an urgent need, propelled by technological advances and economic pressures changing retail banking markets all over the world. The same forces are dramatically shifting the way the banking industry is thinking about and undertaking EFM.

Fraud represents a bigger threat to banks today than ever before. Many companies are dangerously exposed, and not only to the risk of rising fraud losses.

The potential for losses is considerable. As always, fraudsters are shifting their attentions from more defended to less defended targets, and today there are plenty of fresh opportunities.

New channels for engaging customers are also multiplying potential entry points for schemes that reach across banking channels, accounts and products to increase the “take” of customer information and funds. Traditional siloed fraud defenses are largely blind to such maneuvers, which is why they’re on the rise.

However, the threat extends further. Fraud management inadequacies expose banks to the risk of undercutting their own efforts to build the valuable customer relationships they need to increase portfolio profitability and return on equity.

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In tight markets where banks are trying to earn back customer trust and loyalty, uncoordinated calls or transaction denials that show the company just doesn’t understand its customer could endanger success.

In growth markets where banks are wooing new customers, such failings could erase a big slice of market share. In all markets, a major fraud outbreak would expose banks to the risk of media excoriation and damage to their reputations. It could also attract increased scrutiny from regulators and raise compliance hurdles.


Taking a new approach

The banking industry has been talking about enterprise fraud management for a decade. But the initial vision of a monolithic system performing integrated fraud management across all channels, products and lines of business may be impractical from today’s vantage point.

Few banks are in a position in today’s business environment to make the investment it would require, especially in markets where capital has become a scarce resource and lean operating budgets are the norm. Also, many banks are unwilling to abandon their current investments in existing fraud solutions that have delivered proven value.

Monolithic solutions don’t fit the plans of many bank IT organisations, which are trending toward more flexible architectures with standardised components and service-based functionality.

Today, banking leaders are embracing a new approach to fraud management — one that’s as comprehensive as the original EFM vision, but can be implemented in stages that deliver faster rewards. The goal is still to integrate fraud defenses across channels and products in ways that improve both fraud detection and customer service.

But this goal is achieved using a combination of existing and new analytics-based systems that address specific fraud management needs, linking and potentially replacing legacy systems as needed to provide centralised insight and control.

This new approach combines agility for accomplishing what needs to be done right now to solve a diverse range of fraud problems, with continuity for building in a structured, incremental way toward larger objectives. Our clients tell us they want:

Agility to

  • accelerate time to market for innovative new services protected against fraud;
  • quickly shore up the defenses of weak channels that could be exploited by fraudsters seeking out points of vulnerability;
  • thwart the growing number and variety of cross-channel, cross-product fraud schemes;
  • adapt detection to new and morphing fraud patterns;
  • flexibly address a diverse range of fraud management needs in the ways that make the most sense for each purpose: build own solution with sourced components and tools;
  • implement fully sourced on-site solution; access hosted solution; extend existing solution;
  • adjust fraud management solutions to changing organisational structures and IT architectures.

Continuity to

  • leverage existing systems that have proven successful and increase returns from these investments;
  • gradually integrate focused solutions to improve detection by enabling analytics to see more angles of legitimate and fraudulent behavior patterns;
  • move toward customer-level fraud management strategies that consider the value of the entire customer relationship and coordinate contacts;
  • standardise on common solution components across diverse business units and geographic markets, creating economies of scale while supporting unique local requirements;
  • establish centers of excellence that enable shared learning and propagate best practices across the enterprise.


Case study: Garanti Bank

Turkey’s second-largest private bank has been an early mover in EFM. While fraud rates in Turkey are still relatively low, the bank’s board and senior management made the decision, as a matter of good corporate governance, to commit to EFM.

In addition, the bank, which is known for being ahead of its sector in terms of using the most advanced technologies, regards EFM as a source of competitive advantage. Garanti aims to do a better job of protecting customer assets and information, while reducing fraud management impact on customers, than its larger rival.

At Garanti, anti-fraud monitoring is one consolidated fraud management organisation, reporting directly to the board of directors.

Garanti’s current scope of EFM encompasses:

  • Application fraud detection for all lines of credit
  • Credit card portfolio
  • Debit card portfolio
  • Deposit accounts
  • Online banking
  • Merchant monitoring
  • Anti-money-laundering (AML)

No company can make the instant jump to EFM. Garanti has a roadmap that involves four key elements:

1. Organisational structure:

  • reporting to the board;
  • covering possible fraud risks of all business areas in a single department

2. Integration of all channels in customer level

  • unique customer identifier linked to all channels and products

3. Customer-level and product-based rules and scores

  • cross-channel detection regarding customer behaviour

4. Common case manager

  • using operational costs

Enterprise fraud management is finally in reach for many banks like Garanti. Better fraud protection can help lenders not only cut losses but restore what many have lost – the trust of their customers.