Until now, Australian banks and credit providers have had the advantage of 24 hours or more to stop fraudulent transactions before they clear. Now, after a long wait, NPP Australia Ltd launched its New Payments Platform (NPP) this month, facilitating immediate, inter-bank transactions.
The benefits of NPP are indisputable: real-time payments will allow customers of different banks to make digital payments within seconds, without the cumbersome need for BSBs and account numbers. Instead, a PayID (such as a mobile number, ABN or email address) will enable transactions – which can now include longer descriptions and won’t be limited by weekends or public holiday shutdowns. The NPP is set to make cheques (and perhaps cash) redundant and help streamline payments in all industries, no matter their scale.
But while NPP is a clear winner for consumer convenience, it also opens the door for fraudsters, with real-time transactions removing that 24-hour buffer on which many fraud detection strategies rely. Without the window of monitoring time to pick up on suspicious activity, a proactive approach to cyber threats must be taken – and quickly.
The proof is in the past
In 2008, the UK was the first country to transition to immediate payments. Following the launch, online banking fraud jumped by around 132 per cent to £52.5m as the new system gave fraudsters faster access to money and afforded banks much less time to intervene. This type of fraud then increased a further 14 per cent in 2009 to £59.7m.
If this level of fraud is mirrored in Australia, it’s quite possible we could see the losses from online banking fraud rise to approximately $1bn. What can Australian banks and credit providers do to keep their customer’s bank accounts safe?
Innovative anti-fraud technologies are available
Australia is relatively lucky to have access to several technologies that have already undergone years of evolution and adaptation, from machine learning to device authentication and behaviour biometrics that banks can utilise to better protect their customers. For example, technologies that take advantage of neuro-embedding or natural language processing techniques are using powerful predictive analytics tools to better understand credit card data, both eliminating false fraud warnings and picking up on suspicious behaviours in more detail.
Artificial Intelligence provides a proactive approach with self-learning algorithms that make sense of all that big data coming from consumers. An intelligent computer can look at vast amounts of information, 24/7, at incredible speeds, and detect even the subtlest aberrant patterns in transactions and other-user behaviour. Incremental transactional data, including detailed device information, can enable real time risk segmentation. Solutions currently available in this market are at the forefront of advancements in this area and are helping customers all over the world identify and prevent fraud.
Our first-hand experience means we know a holistic fraud prevention approach can enable businesses to be nimble and reactive to emerging fraud threats, without impacting genuine customer experience.
As Ilkay Altintas, the San Diego Supercomputer Centre’s chief data science officer once said on the matter, “we are going now from the monitoring era to really anticipating what is about to happen at that moment, or what will happen in the next hour or two hours so we can plan for it.”
Tried and tested leads the way
It’s not all doom and gloom, however. By blending separate anti-fraud products or services through a single program, banks and credit providers can build a tailored fraud defence that will adapt effectively and hopefully faster than the cyber criminals manage to evolve their attacks.
Let’s see if the banks have done their homework and can protect their most valuable assets (their customers), their information, their data, and their reputation during this critical time of transition.
By Jon Malone, Head of Fraud & Identity at Experian