Fighting Fraud with Data

Data-driven technology is helping banks and merchants counter fraudulent transactions and chargebacks.

In October 2017, the European Banking Association closed its consultation on draft guidelines for reporting fraud under revised PSD2. With more than 5,000 cases of fraud reported every day in Britain in the first half of 2017 (according to recent research by Barclays), banking fraud is a mounting problem and one of the most challenging issues facing the industry today. Coupled with the new reporting requirements brought by PSD2, this situation is prompting many banks to rethink their fraud prevention and intervention provisions, and to update their defences against all types of financial fraud.

“Risks are shifting with every new digital banking innovation. As a result of this, banks are turning to digital means to reduce fraud”, says Steve Morgan from Global Business Process Outsourcing firm Intelenet. “Machine learning is increasingly being applied to help speed up the resolution process, resulting in improved customer support for those who have fallen prey to fraud”.

Models like Google search have proven that feeding more data of size and breadth into an algorithm leads to greater performance than simply trying to optimise the model itself. It is no surprise, therefore, that the leveraging of large, diverse and rapidly changing datasets should…