proactive fraud monitoring

8/4/2019 Proactive Fraud Monitoring

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Proactive fraudmonitoring for banksin India


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1 Proactive fraud management for banks and nancial institutions

Holistic, intelligent and real-time

The evolving fraud landscape

around banking and the increase in

fraud-related losses requires automated

detection systems and robust fraud

defense processes.

Buying an off-the-shelf system may not

equip the bank with the most effective

technical paraphernalia or strategic

methods to deal with frauds. Selecting

the right framework and a seamless

integration of bank systems with the fraud

monitoring system is integral to safeguard

business and customer interests.

Reputation risk

management

Proactive

and realtime

monitoring

Regulatory

compliance

Loss

protection


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Proactive fraud monitoring for banks in India 2

Why is fraud monitoring imperative?

According to RBI-released data,banking-related frauds have doubled

intheve-yearperiodbetween

2004 and 2009.

In2009,thetotalnumberofbankfrauds was recorded at 23,914,

amounting to a loss of `18.83 billion,

where less than 1% of the fraud

cases amounted to `10 million each

or even more.

Thelastreportedcountofonlinefraud cases was 269, amounting

to`590 million.

Withacquisitionsandexpansionsspurring the growth in size and

customer base, banks are witnessinga substantial rise in the numbers

andcomplexityoffraudscenarios.

As such, there is a stringent need for

robust monitoring.

Theregulatorhasdirectednancialinstitutions to continuously monitor

transactions and establish an integratedfraud risk management framework.

Thereisanincreasingneedtoidentifyearly warning signals to capture frauds

close to their occurrence.

Acentralizedframeworkcanaddressfraud risks associated with various

business units and products and

provide insights to stakeholders to take

preventive action at the right time.

Thisalsoeliminatesuncertaintyaroundlosses due to fraud and helps the

management have a more focused

strategy to address fraud-related risks.

30 20

18

16

14

12

10

8

6

4

2

0

25

20

15

10

5

02004-05 2005-06 2006-07 2007-08 2008-09

Number of Frauds (in thousands)

Number

ofFrauds

Frauds amount (`in billion)

Fraudsa

mount


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Proactive fraud monitoring for banks in India3

How banks are presently impacted?

Current landscapeRBIs directive:

The Reserve Bank of India, in its recent

notication,hasenvisagedtheroleof

Chairpersons/CEOs in implementing

fraud risk management systems.

There are clear directives for banks

to have a 'singular' focus on fraud

prevention and management and have

a 'centralized' distinct operating unit

to own, investigate and follow-up.

Rising trend of fraud acrossproducts/channels:

Financial institutions face an

ever-increasing range of challenges

withinthenancialcrimearena,bothinternalandexternal.

Signicance of fraud riskmanagement:

Heightened focus on utilizing risk

management systems and greater use

of intelligence to effectively respond

to monitor frauds/suspicious activities

Use of 'silo' application levelmonitoring:

Traditionally, systems have been

designedtoaddressspecicfraudrisks,

products or delivery channels; e.g.,

credit card transaction monitoring. As

the need to connect these silos becomes

more apparent, a more strategic and

enterprise-wide approach is needed.

Need for enterprise-wide applications:

Financial institutions are now starting

to address systems at an enterprise

level, apart from having anti-money

laundering monitoring systems.

Implementing systems that operateacross the business and provide greater

exibilitytointegratenewdatasources

and detection models in response to

new threats are increasingly becoming

an imperative.

There are instances of fraud thatadversely impact banks on a regular

basis and go unnoticed or unattended.

All these cases of fraud result in

sizeable monitory losses for the banks

once they go undetected.

Fraudeventsraisequestionsaroundthe credibility of the fraud deterrent

processes and the technological

capabilities of the institution.

Theexternalattacksonrelativelynewer channels such as internet

banking, SMS banking and mobile

banking result in customer losses

and hamper the brand image of the

concerned entities.

Regulatorynon-complianceconstitutes another oft-witnessed

outcome due to the lack of necessary

efforts and capabilities to proactively

monitor frauds.


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How can we help you establishan enterprise-wide fraudmonitoring system

Key questions to consider

while evaluating a 'fraud

management' strategy

Howwelldoexistingfraud

identicationandmonitoring

methods control current andemerging risks and are they

commensurate with the size/

operations of the organization?

How effective have they

been in preventing frauds

before/at occurrence?

What is the vision for fraud

monitoringinthenextveyearsto

overcome challenges?

How responsive are they to

new threats and how quickly canthey be adapted to detect new

fraud patterns?

Do they allow the management

to make changes to detection rules

without the need for the involvement

of IT?

Does it provide a comprehensive

MIS for the senior management for

oversight and supervisions for the

organization as a whole?

Transaction

monitoring

Data analytics

and optimization

Proactive

due diligence

Investigation

cell

Dashboard for

management

oversight

FMS

Both offsite and real-time monitoring of frauds based on learning insights

from historical fraud instances and the current industry landscape

Centralized system for fraud monitoring and management of alerts across

different systems and data sources

Intelligent system along with designed case management to suit the needs ofthe bank, and thus, prioritize on alerts and areas of greater risk alerts

Management oversight through real-time dashboard/MIS to track operational

efciencyandmonitorfraudinvestigationndings

Make optimum use of the past and current transaction data and fraud

database to make continuous improvements in the dynamic market sphere


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Our value proposition Real-time dashboardsfor key stakeholders

Review, software

selection and

implementation support

Post-implementation

monitoring and tracking

Data analytics and

scenario building

and customization

Training on relevant

application concepts

and workflows

Formulate the fraud

monitoring strategy

based on growth plan

EY differentiatorsAbility to team globally

Recognizedindustrythoughtleadership

Dedicatedindustryexperience

Multi-disciplinaryteam

Globaldomainknowledgeand credentials

Enterprise-classinfrastructure

Dedicatedforensictechnologyteamfor fraud data analytics and implement

management dashboards

Flexiblepricingmodels

0

50

100

150

200

250

Alertcount

Daily top 25 high risk customers/branches

Amount(inbillion)

0

2

4

6

8

10

12

0

5

10

15

20

25

30

35

Customer wise alerts and amount

0

50

100

150

200

250

300

Alertcount

Customer wise alerts trend for past month

13%

11%

10%

10%

10%

10%

9%

9%

9%

9%

Top 25 branches and alerts


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Team credentials

*Theseareteamcredentialsandmaynotbermcredentialsentirely

Summary Situation What we did Beneft

Enhancingtheexisting

fraud monitoring system

andexpandingintoan

enterprise-wide system

for one of the largest

private banks in India

(in progress)

Theexistingsystemwasproviding irrelevant alerts

and false positives.

Thesystemwasworkingin a silo and most of

the bank products

were not covered.

Therewasanabsenceofarobustworkow.

Conductedfrauddataanalyticsto identify appropriate alert

scenarios and risk thresholds

Integrating other bankproducts and system apart

from current and savings

Addressingfraudalertsandprovide investigation support

Enterprise-widedashboardsand MIS console for

management oversight

ArobustFIUinsidethebankthat keeps strict vigilance on

frauds and addresses risks

Comprehensivesystemwith enterprise-wide case

management systems

Processintegrationwithvarious business units and

user groups

Increaseefciencyinaddressing fraud alerts

Developing a fraud data

analytics framework and

compliance software for

the RBI

RBIinspectorsconductedinspections to review

transactions and accounts

of the target to identify red

agsandanomalies.

Theinspectorswerechallenged due to the

volume of transactionsandthecomplexity

of transactions.

ProvidedRBIwithacomplianceapplication

to identify transactions and

alerts based on intelligent

fraud rule sets

TrainedRBIinspectorsinfraud data analytics and

issue management

In-housecapabilitytogather fraud intelligence

using data analytics

Frameworktoidentifyregulatory compliance

andredags

Implementing the

internet gateway

monitoring framework

Thegovernmentconstantly strives to

regulate information

transmission on the

internet, which could be

anti-social or fraudulent.

Aframeworkwasrequiredto help the governmentto regulate unwanted and

anti-social information to

be captured and treated

just like any other

Implementinganinternetpacket monitoring

framework and solution to

monitor transactions and

information packets

Trainingtheinvestigationteam to deal with captured

information and pass onsensitive alerts to the

enforcement teams

Abilitytoformarapidresponse team against

threats emerging through

the internet

Abilitytoidentifyaforthcoming event through

a series of related internet

communications

Conductasocialnetworkanalysis to identify linkages

and teaming

*Theseareteamcredentialsandmaynotbermcredentialsentirely


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Notes


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Notes


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Mitigating risks of license non-compliance 6

Contact us

Our ofcesAhmedabad

2nd oor, Shivalik Ishaan

Near CN Vidhyalaya

AmbawadiAhmedabad - 380 015

Tel: + 91 79 6608 3800

Fax: + 91 79 6608 3900

Bengaluru

UB City, Canberra Block

12th & 13th oor

No.24 Vittal Mallya Road

Bengaluru - 560 001

Tel: + 91 80 4027 5000

+ 91 80 6727 5000

Fax: + 91 80 2210 6000 (12th oor)

Fax: + 91 80 2224 0695 (13th oor)

Chennai

TPL House, 2nd oor

No. 3 Cenotaph Road

Teynampet

Chennai - 600 018

Tel: + 91 44 6632 8400

Fax: + 91 44 2431 1450

Gurgaon

Golf View Corporate Tower B

Near DLF Golf Course

Sector 42Gurgaon - 122002

Tel: + 91 124 464 4000

Fax: + 91 124 464 4050

Hyderabad

205, 2nd oor

Ashoka Bhoopal Chambers

Sardar Patel RoadSecunderabad - 500 003

Tel: + 91 40 6627 4000

Fax: + 91 40 2789 8851

Oval Ofce, 18, iLabs Centre

Hitech City, Madhapur

Hyderabad - 500081

Tel: + 91 40 6736 2000

Fax: + 91 40 6736 2200

Kolkata

22 Camac Street

Block C, 3rd oorKolkata - 700 016

Tel: + 91 33 6615 3400

Fax: + 91 33 2281 7750

Mumbai

6th oor & 18th oor, Express Towers

Nariman Point

Mumbai - 400 021

Tel: + 91 22 6657 9200 (6th oor)

Fax: + 91 22 2287 6401

Tel: + 91 22 6665 5000 (18th oor)

Fax: + 91 22 2282 6000

Jalan Mill Compound

95 Ganpatrao Kadam Marg

Lower Parel

Mumbai - 400 013Tel: + 91 22 4035 6300

Fax: + 91 22 4035 6400

Block B-2, 5th Floor

Nirlon Knowledge Park

Off. Western Express Highway

Goregaon (E)

Mumbai - 400 063, India

Tel: + 91 22 6749 8000

Fax: + 91 22 6749 8200

NewDelhi

6th oor, HT House18-20 Kasturba Gandhi Marg

New Delhi - 110 001

Tel: + 91 11 4363 3000

Fax: + 91 11 4363 3200

Pune

C-401, 4th oor

Panchshil Tech Park

Yerwada (Near Don Bosco School)

Pune - 411 006

Tel: + 91 20 6603 6000

Fax: + 91 20 6601 5900

Arpinder Singh

Partner and National Director

Direct Tel: + 91 22 6665 5590

Email: [email protected]

Sandeep Baldava

Partner

Direct Tel: +91 40 67362121


Jagdeep Singh

Associate Director

Direct Tel: +91 20 6603 6119


Vivek Aggarwal

Director

Direct Tel: +91 124 464 4551

[email protected]

Anurag Kashyap

Associate Director

Direct Tel: +91 22 67498064

[email protected]


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EYIN1011-129ProactivefraudmonitoringforbanksinIndia(India).

Artwork by Rashi Sinha.

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