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Fico case study


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Fico case study

  1. 1. fraud FICO Fraud Testimonials: Lenders Worldwide Turn to FICO in the Fight Against Fraud Make every decision countTM On the surface, fraud attacks can often look similar, but they’re always somewhat distinct—by region, portfolio, channel, degree or by the nature of fraud’s evolution. In FICO’s more than 20 years of developing new fraud technology, we’ve worked with businesses worldwide in fighting many variations of fraud, and in considering the unique needs and objectives of individual operations. Our technology development, and our staff expertise, reflect our ongoing experience in detecting nuances of new fraud attacks as they emerge. As the six testimonials presented here demonstrate, FICO approaches every fraud challenge as unique. But the accumulation of our experience—built into our technology and staff insight—provides a solid foundation to detect fraud and quickly prevent losses with minimal customer impact. Royal Bank of Scotland curbs fraud threat with consulting support Client: Royal Bank of Scotland Challenge: Stop accelerating card fraud trend without negatively impacting good customers Solution: FICO fraud reduction partnership Results: Fraud losses dramatically reduced in two months, resulting in an annual reduction greater than initially targeted—without negatively impacting sales. Losses now in line with US market. When UK card issuers saw three consecutive years of card fraud increases—first by 25%, then another 28% and then 41% more—Royal Bank of Scotland took steps to be at the forefront of a response. RBS was concerned with resulting losses—especially should the trend continue—and equally troubled by the negative impact it would have on its customer base. Although RBS developed its own strategic initiatives to combat the problem, it also called on FICO consulting. The two companies agreed to a goal to reduce fraud by 50% in 12 months. After evaluating RBS’s initiatives and determining that they would not meet objectives, FICO developed a new strategy and agreed to a results-based fee structure. Within four months, losses were dramatically reduced. The strategy—moving from rules-based to a score-based detection at the point-of-sale—led RBS to earlier detection, more precise referrals and more fraud detected. Learn more about RBS’s success with FICO fraud consulting by reading the complete case study. “The fraud reduction partnership was successful above and beyond our initial expectations, reversing the growing fraud trend the industry had experienced in recent years.” —Alasdair Grant, Director, Risk Royal Bank of Scotland
  2. 2. ©2014 Fair Isaac Corporation. All rights reserved. page 2 “FICO Falcon Fraud Manager has proven to be adaptable over time, and has allowed us to focus on true fraud and respond more quickly than ever before. This has allowed us to stay focused on what’s most important: growing our business.” —Liberto Ferrer, Country fraud risk officer at Banamex/Citigroup Intesa Sanpaolo Card improves fraud detection of post-merger banks Client: Intesa Sanpaolo Card, a member of Intesa Sanpaolo Group, dedicated to developing and managing card businesses on an international level Challenge: Consolidate fraud protection operations for credit and debit cards for 11 international banks under one fraud center of excellence Solution: FICO® Falcon® Fraud Manager Results: A singular view of fraud-related activity across all banks; an 85% reduction in gross fraud losses in first year in Canadian market and 44% in Brazil; a 400% improvement in the fraud analyst team’s performance Following a major merger, finding process disparity across new member banks is typical. When Intesa Sanpaolo Card examined the fraud operations of 11 new holdings across Eastern Europe, it found ma- jor disparities and profit-bleeding inefficiencies. The challenge for Intesa Sanpaolo Card—again, typical of mergers—was not only to develop a stronger, uniformed system, but also one that would quickly gain the support of new member banks. Intesa Sanpaolo Card responded by developing a fraud center of excellence across the 11 new banks. After evaluating five vendors’fraud solutions, Intesa Sanpaolo Card selected FICO® Falcon® Fraud Manager as the technology foundation of the center. Within nine months of Falcon Fraud Manager going live, Intesa was able to identify fraud compromises taking place in Canada and Brazil, and reduce losses by 85% and 44% respectively. Intesa Sanpaolo Card also has improved its fraud team’s productivity by 400%. Learn more about Intesa Sanpaolo Card’s success with Falcon Fraud Manager by reading the complete case study. Banamex overcomes fraud spike and stays ahead of trends Client: Banamex/Citigroup, Mexico’s largest financial group Challenge: Address skyrocketing fraud losses further burdened by low and slow detection and recovery rates Solution: FICO® Falcon® Fraud Manager Results: Fraud losses dropped from 100 basis points to 8. False positive ratio reduced from 50:1 to 11:1. Lower fraud loss amount per account, faster fraud detection, increased detection rate In the mid-1990s, Grupo Financiero Banamex was hit by a sudden spike in fraud losses of over 100 basis points. With its proprietary fraud systems, losses mounted due to low, and slow, fraud detection rates. High false positive ratios also jeopardized customer relations. In response, Banamex incorporated FICO® Falcon® Fraud Manager into its fraud prevention platform. Almost immediately, Banamex saw fraud losses plunge. But in addition to addressing its immediate fraud problem, the bank also selected Falcon Fraud Manager for its ability to keep pace with evolving fraud trends. That paid off. In Mexico, fraud grew in sophistication over the years—from simple, individuals’perpetration in the‘90s to organized schemes into the new millennium. Over a nine-year span, Falcon Fraud Manager helped the bank reduce losses down to 8 basis points, lower false positive ratios from 50:1 to 11:1 and improve detection rates from 25% to 80%. Learn more about Banamex/Citigroup’s success with Falcon Fraud Manager by reading the complete case study. “As we phased in a processor in Germany, we identified cards skimmed and used on POS devices in Canada and saw fraud losses per case reduced by 85% in this region. It really has made an impact and we continue seeing successes like these going forward.” — Dean Gračak, Head of fraud management, Intesa Sanpaolo Card
  3. 3. “What has impressed us most about Falcon Fraud Manager was how accurate it is in detecting legitimate fraud.” — James John Head of Fraud Management, Hong Leong Bank  “Fraud is constantly evolving—both in terms of fraud trends and the tools available to fight it—and they knew that if they weren’t evolving as well, they risked falling behind.” —Andrew Manuel, FICO  Hong Leong Bank adjusts system to counter rising internet fraud Client: Hong Leong Bank Challenge: Defending against rapidly changing credit card fraud tactics Solution: FICO® Falcon® Fraud Manager Results: Increased total fraud detected by 143% and achieved an extremely low fraud-to-sales ratio of 2 basis points When Malaysia instituted new chip-and-pin secure payment card standards in 2005, like most Malaysian banks, Hong Leong Bank saw a welcome drop in card fraud, and then a disconcerting, rapid rise in internet fraud. Specifically, Hong Leong’s counterfeit card fraud dropped to 2.6%, while internet fraud soared to 85% of its total fraud. Facing the threat of severe losses, Hong Leong needed to quickly boost its internet fraud detection rate, without negatively affecting customer service. Having FICO® Falcon® Fraud Manager already in place for its card operations—including a FICO regional detection consortium model—gave Hong Leong an advantage in combating internet fraud. Once Hong Leong staff was able to determine the correct fraud detection score thresholds to apply to internet transactions (versus card-at-present transactions), the bank was able to prevent more fraud attempts and cut losses. In a year, the bank increased its fraud detection by 143%, while cutting investigations by 20%. The bank’s low false positive ratio of just 2.6% (for most score ranges) also ensured superior customer service. Learn more about Hong Leong’s success with Falcon Fraud Manager—read the complete case study. Leading bank proves value of voluntary fraud solution testing Client: Large North American bank Challenge: Needed to improve the accuracy of fraud detection Solution: FICO® Falcon® Fraud Manager, FICO fraud consulting Results: Improved detection rate by 33%; false positives dramatically reduced; account fraud rate went from 1,500:1 to more than 1,800:1 A leading North American bank was seeing satisfactory results from its fraud detection and recovery operations. But, with its strong focus on remaining an industry leader, it wanted a third-party opinion. The institution realized that fraud schemes and trends are in a state of constant change, and that technology also evolves to keep pace. In addition, the rules-heavy fraud technology it currently relied on presented a resource challenge. The bank partnered with FICO on a fraud consulting engagement. It decided to perform a comparison test between its current fraud solution and FICO® Falcon® Fraud Manager. With the FICO solution, the bank found that it could rely more confidently on scores versus rules and detect more fraud. After implementing Falcon Fraud Manager, the bank increased its detection rate by 33%, cut its false positive ratio significantly and reduced fraud portfolio rates from 1,500:1 to 1,800:1. Learn more about the bank’s success with Falcon Fraud Manager by reading the complete case study. FICO, Falcon and“Make every decision count”are trademarks or registered trademarks of Fair Isaac Corporation in the United States and in other countries. Other product and company names herein may be trademarks of their respective owners. © 2010–2014 Fair Isaac Corporation. All rights reserved. 2716FS 03/14 PDF For more information North America toll-free International email web +1 888 342 6336 +44 (0) 207 940 8718