News

Survey: Banks less confident in ability to detect cross-channel fraud

October 25, 2011

A new report on the current state of fraud detection and prevention at U.S. banks finds that while most banks have invested heavily in securing communications channels and validating customers' identities, few have made sufficient investments to detect cross-channel fraud patterns or overcome organizational silos.

"Fraud Detection and Prevention at U.S. Banks," published today by Novarica, the technology and strategy research division of Novantas LLC, includes data from a survey of CIO members of the Novarica Banking Technology Research Council, a community of nearly 100 senior IT executives at U.S. banks and credit unions. The report also contains a review of recent publicly-disclosed bank initiatives and a round-up of solution providers, according to a press release.

"The proliferation of channels and the accompanying increased expectations for speed and convenience means that fraud detection and prevention relies heavily on information technology capabilities," said Matthew Josefowicz, partner and managing director at Novarica and lead author of the report. "As fraud patterns get more sophisticated and cross more organizational silos, banks need to invest in analytics as well as traditional channel security."

Key findings of the report include:

• Card, check and ATM fraud are the most common types of fraud encountered by banks, and banks see themselves as well prepared in these areas. Few banks have experienced much fraud through the emerging channels, but banks also feel prepared to face these threats as well.
• The majority of banks have already deployed multiple fraud detection and prevention technologies, but sizable minorities remain that have not yet fully deployed common methods like knowledge-based authentication and fraud alerts, let alone more advanced methods like out-of-band authentication.
• A full third of banks in the survey are not confident in their ability to detect cross-channel fraud. This may be related to the 41 percent of banks citing organizational silos as a top barrier to effectiveness. Lack of resources was the most commonly cited factor.

The report also includes profiles of offerings from selected solution providers in this space, including CA, FICO, First Data, FIS, Fiserv, IBM, Intuit, Jack Henry, Microsoft, NICE Actimize, RSA, SAS, Symantec, Wolters Kluwer, Andera, Cyveillance, Entrust, Guardian Analytics, iovation, IronKey, Maxmind, ORCC, Quova, ThreatMetrix and VASCO.

For more information on this topic, visit our security research center.