With online scam cases at an all-time high and the upcoming PSR changes on the horizon, banks are looking at new solutions to help prevent fraud and protect consumers. This has created innovation and collaboration in the market whereby banks, telco operators and solution providers are working together to test and release new solutions into the market.
A great example of this is Scam Signals provided by telco operators.
Scam Signals is the ability to detect impersonation fraud at a point in time – a useful indicator for scams as it offers the ability to detect if a customer is being socially engineered by a fraudster in real-time while in the process of sending money from the account.
Having worked for a number of years in banking myself and working closely with UK telcos (O2, Vodafone, EE and H3G) on services such as sim swap, I believe Scam Signals is an innovation idea that makes sense given the telco's prime position to glean real-time network data for fraud purposes. At Callsign we've combined Scam Signals with our own intelligence and the results have been impressive, in some cases seeing a fraud detection rate of 70%.
We have also been able to take this a step further at Callsign. Using our own mobile intelligence we can identify other phone threat signals such as WIFI calls (e.g. whether a customer is on a WhatsApp call during a mobile banking transaction).
As with any fraud solution, there are things to consider when rolling out Scam Signals. It’s important to use this data effectively and leverage insights across the entire journey to better detect fraud and prevent false positives.
In this article I'll take a look at the benefits it can bring including:
Detection across channels – 360 customer visibility
Most banks have multiple channels & journeys for customers to carry out their banking across web, mobile and 3DS. Each of these channels present an opportunity for fraudsters to scam customers and therefore it is important to have controls to cover all bases. Otherwise, fraudsters will work out the weak points in a bank's chain.
Intelligence should be more than a point-in-time check. Data signals need to be leveraged across channels and journeys, to offer greater insight. Managed via our Orchestration Layer, Scam Signals and telco data can be combined with our web and mobile intelligence across all journeys to provide end-to-end coverage across all banking channels & journeys and maximize the protection for your customers.
Layering of Data – preventing false positives
Scam Signals as a single indicator can detect fraud, however when used in isolation it can create false positives. For example, if you are on the phone to a friend booking a holiday and send them the money online – how would a bank differentiate this as genuine vs social engineering?
As with most fraud products, layering data is key to strengthening your fraud decisions and minimizing false positives. As we discuss in our Psychology of Fraud report, businesses should build their approach on the Swiss cheese model, with more barriers rather than fewer. For example, we have found that layering additional behavioral intelligence with Scam Signals, has increased the fraud detection rate and importantly decreased the false positives.
To truly leverage Scam Signals and mitigate the risk of false positives, banks should consider having an Orchestration layer with rules that allow control over when Scam Signals are required or deployed.
Orchestration & Rules – maximizing data application
When it comes to deployment, a Swiss cheese approach is best, and an Orchestration Layer is fundamental for managing results optimization, cost control and user experience. For example, running a Scam Signal check on every log on journey may not be the best use of the data and increases costs.
This level of flexibility is vital as fraud vectors evolve and new solutions are procured. Through our Orchestration Layer, you can deploy actions depending on the journey and event. Take how this layering could work on a typical payment flow:
- A device check would verify the device being recognized and prevent ATO
- Behavioral intelligence would identify anomalies such as in typing behavior
- If these scores are below a threshold a Scam Signal can act as an additional data point to further understand the risk.
This allows you to choose the most appropriate action, whether it’s a dynamic fraud warning or step-up authentication (dependent on the fraud taking place). These rules can be created & updated by the banks in real-time to adapt to the fraud and business risk appetite – across multiple journeys and channels.
Managing costs – streamlining operations
With a significant number of telco providers globally, it’s a challenge for any business to manage these services and validate the data provided back.
Banks should look for a partner who has existing integration across telco operators and can therefore simplify the integration approach and consolidate services. Otherwise, banks will have to connect into each individual telco which creates technical debt.
This approach isn’t just about fraud reduction, it’s about cost optimization and improving the customer experience.
In summary it is great to see industry collaborating in the fight against fraud. Scam Signals and other phone-based intelligence will help tackle fraud scams and, if combined with layering of data and Orchestration, will maximize it's value.
