This document summarizes key points about credit card issuer fraud management from a report by Mercator Advisory Group. It finds that while direct credit card fraud losses for issuers have remained relatively stable at around $1 billion annually, total costs of fraud related to credit cards in the US may exceed $16 billion once indirect costs are accounted for. Purposeful data breaches that steal payment card information present ongoing challenges as they fuel a black market for stolen card data. While enterprise fraud management solutions aim to address fraud across multiple products, organizational barriers remain for issuers in implementing more holistic fraud prevention strategies.
1. Credit card issuer fraud losses remain well-contained at around $1 billion annually despite rising volumes, though total card-related fraud costs may exceed $16 billion due to additional stakeholders like merchants and consumers.
2. Purposeful data breaches targeting payment card data are a major challenge, driving a thriving secondary market in stolen card information and products.
3. Enterprise fraud management solutions aiming to leverage data across multiple products may provide improved detection, but organizational barriers remain as issuers seek added value from multi-product implementations.
This document provides an industry report on payments trends in Q1 2018. It discusses recent developments including the gradual adoption of open banking APIs by large US banks, continued growth in POS volume driving credit card delinquency rates higher, and plans by large retailers like Amazon to potentially offer checking accounts. It also provides updates on various industry predictions for 2018 and quarterly stock performance for major payments companies. Neobanks expanding from Europe to the US and cryptocurrency firms forming a self-regulatory group are highlighted as interesting news items.
A42 banks race to defend from further reputational damageFreddie McMahon
The next wave of billion dollar fines is underway
as authorities are coming to the banks, already
armed with evidence of KYC, AML and CFT
systemic failings due to the way international
money transfers flow through correspondent
banks. This growing evidence shows how
money launderers’ businesses are successfully
laundering over a trillion dollars a year by
circumventing the controls of banks across the
world.
This document summarizes a student paper that analyzes the causes of adverse performance in collateralized debt obligations (CDOs) backed by asset-backed securities (ABS CDOs). Using data from 735 ABS CDOs, the paper finds: 1) CDOs with exposure to subprime and Alt-A mortgages from 2006-2007 significantly underperformed, 2) The identity of the CDO underwriter was a predictor of performance, with some banks having higher quality underwriting, 3) Original credit ratings assigned to CDOs failed to capture the true risks and were inflated. Overall, the collapse of the CDO market was caused by poorly constructed CDOs, irresponsible underwriting, and flawed
External Meeting for Proposed Rule 79 FR 59898 (May 12, 2015 with William J. ...William J. Harrington
1) ABS issuers are high-risk end users of swap contracts as they cannot readily raise new funds or adjust their capital structure to pay termination payments, unlike corporations or municipalities.
2) During the financial crisis, interest rate rallies left ABS issuers owing 10-20% of swap notional amounts in termination fees, which would have caused firesales of illiquid assets without bailouts.
3) Requiring ABS issuers to post full margin against all swaps would simplify contracts and help resolve issues caused by flip clauses that allow ABS issuers to subordinate termination payments owed to bankrupt counterparties.
The document discusses the role of credit rating agencies in the financial crisis. It provides context on how the agencies are meant to assess risk but gave high ratings to many subprime investments. This led to increased profits for the agencies but also contributed to the crisis. As the housing bubble burst, the agencies were forced to mass downgrades but only after misleading investors and failing to properly acknowledge the growing risks despite internal warnings. Their conflicting business models and cozy relationships with Wall Street compromised their ratings and exacerbated the crisis.
This document discusses current topics in mergers and acquisitions (M&A). It notes that while M&A activity has increased since 2009, significant financial uncertainties remain. As a result, M&A deals face risks related to financing, economic downturns, buyer's remorse, and undisclosed issues. The document highlights five topics for buyers and sellers to consider: the importance of confidentiality agreements; bridging differences between purchase price and company value through earnouts; hedging deals through holdbacks; employment issues during acquisitions; and compliance with foreign anti-bribery laws.
1. Credit card issuer fraud losses remain well-contained at around $1 billion annually despite rising volumes, though total card-related fraud costs may exceed $16 billion due to additional stakeholders like merchants and consumers.
2. Purposeful data breaches targeting payment card data are a major challenge, driving a thriving secondary market in stolen card information and products.
3. Enterprise fraud management solutions aiming to leverage data across multiple products may provide improved detection, but organizational barriers remain as issuers seek added value from multi-product implementations.
This document provides an industry report on payments trends in Q1 2018. It discusses recent developments including the gradual adoption of open banking APIs by large US banks, continued growth in POS volume driving credit card delinquency rates higher, and plans by large retailers like Amazon to potentially offer checking accounts. It also provides updates on various industry predictions for 2018 and quarterly stock performance for major payments companies. Neobanks expanding from Europe to the US and cryptocurrency firms forming a self-regulatory group are highlighted as interesting news items.
A42 banks race to defend from further reputational damageFreddie McMahon
The next wave of billion dollar fines is underway
as authorities are coming to the banks, already
armed with evidence of KYC, AML and CFT
systemic failings due to the way international
money transfers flow through correspondent
banks. This growing evidence shows how
money launderers’ businesses are successfully
laundering over a trillion dollars a year by
circumventing the controls of banks across the
world.
This document summarizes a student paper that analyzes the causes of adverse performance in collateralized debt obligations (CDOs) backed by asset-backed securities (ABS CDOs). Using data from 735 ABS CDOs, the paper finds: 1) CDOs with exposure to subprime and Alt-A mortgages from 2006-2007 significantly underperformed, 2) The identity of the CDO underwriter was a predictor of performance, with some banks having higher quality underwriting, 3) Original credit ratings assigned to CDOs failed to capture the true risks and were inflated. Overall, the collapse of the CDO market was caused by poorly constructed CDOs, irresponsible underwriting, and flawed
External Meeting for Proposed Rule 79 FR 59898 (May 12, 2015 with William J. ...William J. Harrington
1) ABS issuers are high-risk end users of swap contracts as they cannot readily raise new funds or adjust their capital structure to pay termination payments, unlike corporations or municipalities.
2) During the financial crisis, interest rate rallies left ABS issuers owing 10-20% of swap notional amounts in termination fees, which would have caused firesales of illiquid assets without bailouts.
3) Requiring ABS issuers to post full margin against all swaps would simplify contracts and help resolve issues caused by flip clauses that allow ABS issuers to subordinate termination payments owed to bankrupt counterparties.
The document discusses the role of credit rating agencies in the financial crisis. It provides context on how the agencies are meant to assess risk but gave high ratings to many subprime investments. This led to increased profits for the agencies but also contributed to the crisis. As the housing bubble burst, the agencies were forced to mass downgrades but only after misleading investors and failing to properly acknowledge the growing risks despite internal warnings. Their conflicting business models and cozy relationships with Wall Street compromised their ratings and exacerbated the crisis.
This document discusses current topics in mergers and acquisitions (M&A). It notes that while M&A activity has increased since 2009, significant financial uncertainties remain. As a result, M&A deals face risks related to financing, economic downturns, buyer's remorse, and undisclosed issues. The document highlights five topics for buyers and sellers to consider: the importance of confidentiality agreements; bridging differences between purchase price and company value through earnouts; hedging deals through holdbacks; employment issues during acquisitions; and compliance with foreign anti-bribery laws.
Big Data, analytics, and behavioral analysis can help combat financial crime by:
1) Identifying hidden relationships and detecting anomalies across large volumes of structured and unstructured data.
2) Analyzing both financial and non-financial transactions to better understand customer behavior.
3) Using predictive models, social network analysis, and other techniques to surface emerging threats and reduce false positives.
The major credit rating agencies, Moody's, Standard & Poors, and Fitch, bear a heavy burden of responsibility for the financial meltdown. It was their seal of approval that enabled Wall Street to develop a multi-trillion-dollar market for bonds resting on a foundation of tricky loans and bubbly housing prices. Institutional investors around the world were seduced into buying these high-risk securities by credit ratings that made them out to be as safe as the most conventional corporate and municipal bonds.
The document discusses the causes of the financial crisis and solutions to prevent future crises. It argues that the financial system is too important to leave unregulated and that mistakes were made during the crisis that went unpunished. It identifies three main challenges regulators face: 1) increasing capital requirements for financial institutions, 2) increasing regulation and transparency of credit derivative markets, and 3) regulating credit rating agencies to address conflicts of interest. Nationalizing credit rating agencies and increasing clearinghouse requirements are proposed as solutions.
An in-depth discussion of the key trends driving card-not-present transactions and the subsequent increase in demand for smart transaction security solutions; includes a detailed review of the various transaction security technologies and solutions available for merchants and issuers
The purpose of this directory, which the FSB has delivered to the April 2019 G20 Finance Ministers and Central Bank Governors meeting, is to provide information on the relevant regulators and other authorities in FSB jurisdictions and standard-setting bodies who are dealing with crypto-assets issues, and the aspects covered by them. Contacts information with regard to the below functions has been shared among the authorities mentioned.1.
Https://digitalis.id
The failure of credit ratings agencies to accurately rate structured financial products like mortgage-backed securities and collateralized debt obligations contributed significantly to the 2008 financial crisis. While some reforms have been implemented, the ratings process remains opaque and problematic. This paper proposes establishing a single, public numerical scale for rating structured credits as a better way to standardize risk measures, increase transparency, and empower investors to evaluate risk more accurately. Such a benchmark scale, treated as a public good, should be developed and supported by a federal financial regulator.
The financial industrial arts are not in economics but rhetoric. They have no proof, no science and even actuarial subject products have only shown failure. We continue to demonstrate proof in real markets as the herd turns and mooing increases. Here is a timeless article from our vaults.
This document summarizes a white paper about recognizing and addressing first-party fraud (FPF). Some key points:
- FPF occurs when individuals commit fraud using their own identities, intending not to pay their debts, and costs financial institutions billions annually. However, it is often misclassified as regular bad debt rather than fraud.
- Rates of FPF are estimated to be between 5-20% of losses classified as bad debt. Total annual uncollectible revolving consumer credit in the US is about $85 billion, so FPF costs between $4-17 billion per year.
- The white paper outlines different types of FPF behaviors and profiles, such as "bust-out fraud
Goldman Sachs provided a summary of its risk management practices and position in the residential mortgage market during the financial crisis. It states that it did not have a significant net short position in 2007-2008 and lost $1.7 billion due to its mortgage-related products. It also notes there was internal debate about shorting positions and uncertainty around the housing market collapse. Goldman Sachs worked to reduce its risk exposure by selling positions and trying to achieve a balanced portfolio.
Financial institutions were slow to adopt business intelligence technology and lowered lending standards, contributing to the spread of toxic loans. Bringing data together through business intelligence can help institutions make better decisions by providing visibility into loan quality, risk exposure, and package contents. Clean, integrated data is needed to power these analytics and help the financial industry avoid similar crises in the future through improved data management, governance, and decision making.
This document discusses trade receivables and their associated risks from the perspective of an expert in the field. Trade receivables represent a mixture of credit risk from buyers' inability to pay and operational risks like contractual disputes, fraud, and errors. Technological advances have improved transparency but issues remain around underwriting criteria, transparency, and risks becoming conflated. Credit insurance provides a good hedge against credit risk but involves operational risks. New platforms aim to capture both buyer and seller data to better finance and mitigate risks in receivables.
The document discusses Bank of America's online banking services and strategies for growth. It summarizes that BofA has the largest market share in online banking and bill pay in the US. It outlines strategies like expanding affinity partnerships, improving the online customer experience, lowering costs through digital channels, and addressing security threats to continue growing its e-commerce business. The document also highlights some of BofA's innovations like budget tools, $0 Trades, and ATM opportunities to engage customers online.
Captive insurers have traditionally generated revenue through premiums and investments, but many are missing out on recovering paid claims through subrogation. Commercial insurers invest heavily in subrogation and recover over a billion dollars annually, while few captives pursue this avenue. Pursuing subrogation could recover millions for captives, but many lack dedicated staff and data collection systems. Outsourcing subrogation to specialized lawyers on a contingency basis provides a cost-effective option for captives to start recovering losses paid to third parties.
Captive insurers have traditionally generated revenue through premiums and investments, but many are missing out on recovering paid claims through subrogation. Commercial insurers invest heavily in subrogation and recover over a billion dollars annually, while few captives pursue this avenue. Pursuing subrogation could recover millions for captives, but many lack dedicated staff and data collection systems. Outsourcing subrogation to specialized lawyers on a contingency basis provides a cost-effective option for captives to start recovering losses paid to third parties.
This document summarizes Fifth Third Bancorp's 2006 annual report. It discusses:
1) 2006 was a transition year that positioned the company well for the future, with new leadership and actions to address interest rate challenges. However, reported results were impacted.
2) Core businesses saw loan and deposit growth, but earnings declined from interest rate pressures and balance sheet actions to reduce sensitivity.
3) Going forward, the company is well positioned for growth with strong leadership, capital levels, and local market positions in its core Midwest region.
Fund Admin: the Zoo of Data & the Data Science SolutionInvestCloud Inc.
The collection and analysis of data has expanded significantly in recent decades across various industries such as social media, news, and financial services. Merging public and private data sources complicates ensuring data quality, which directly impacts reporting quality and reliability of decision-making tools. Fund administrators play a key role in managing this complex data from multiple sources and systems, but typically do so using error-prone manual processes like Excel. InvestCloud's Purple product helps administrators address these issues by allowing structured and unstructured data to coexist, eliminating the need to access multiple systems, and providing powerful reporting and client portal tools to improve operational efficiencies, decision-making, and client experiences.
The document is a 2016 cybersecurity report on the financial industry produced by SecurityScorecard. Some key findings include:
- The bank with the weakest security posture among the top 20 largest US commercial banks has one of the top 10 largest financial organizations by revenue.
- Network security and patching cadence were areas of weakness across many financial institutions. Nearly all had vulnerabilities from unpatched SSL/TLS issues.
- Malware was detected on the networks of nearly half of the largest 20 US commercial banks in the past 30 days. Legacy systems and acquisitions can increase security risks for large banks.
This white paper discusses best practices for implementing an enterprisewide fraud management system. It notes that traditional fraud management is fragmented across business units and channels. An integrated approach is needed to detect cross-channel fraud patterns and relationships. The paper recommends a three-step approach: 1) Create an enterprisewide view of customer patterns and perpetrators using data analysis and visualization tools. 2) Prevent and detect fraud across the enterprise in real-time using predictive analytics. 3) Investigate and resolve fraud cases in an integrated environment using case management systems. Adopting these analytics-driven best practices can help financial institutions better manage fraud.
IRJET- Credit Card Fraud Detection using Hybrid ModelsIRJET Journal
This document discusses credit card fraud detection using hybrid models. It begins by introducing the problem of credit card fraud and how billions of dollars are lost to fraud each year. The document then discusses how standard models and hybrid techniques using AdaBoost and majority voting are used to detect fraud. Experimental results on a public credit card dataset and a private dataset from a financial institution show that the majority voting technique achieves good accuracy in detecting fraud cases. The key challenges in credit card fraud detection are also summarized, such as imbalanced data, different costs of misclassification, overlapping data patterns, lack of flexibility, and fraud detection costs.
Visa Inc. is a leading global payments technology company that processes over $7 trillion in transactions annually. The document analyzes Visa's business, industry, and financials. It recommends a bull call spread strategy for Visa due to its strong fundamentals and leadership position, though notes increasing regulation, technology changes, and macroeconomic uncertainty could impact performance. Visa is expected to grow revenues and earnings in the coming years driven by its global network expansion and new payment solutions.
Big Data, analytics, and behavioral analysis can help combat financial crime by:
1) Identifying hidden relationships and detecting anomalies across large volumes of structured and unstructured data.
2) Analyzing both financial and non-financial transactions to better understand customer behavior.
3) Using predictive models, social network analysis, and other techniques to surface emerging threats and reduce false positives.
The major credit rating agencies, Moody's, Standard & Poors, and Fitch, bear a heavy burden of responsibility for the financial meltdown. It was their seal of approval that enabled Wall Street to develop a multi-trillion-dollar market for bonds resting on a foundation of tricky loans and bubbly housing prices. Institutional investors around the world were seduced into buying these high-risk securities by credit ratings that made them out to be as safe as the most conventional corporate and municipal bonds.
The document discusses the causes of the financial crisis and solutions to prevent future crises. It argues that the financial system is too important to leave unregulated and that mistakes were made during the crisis that went unpunished. It identifies three main challenges regulators face: 1) increasing capital requirements for financial institutions, 2) increasing regulation and transparency of credit derivative markets, and 3) regulating credit rating agencies to address conflicts of interest. Nationalizing credit rating agencies and increasing clearinghouse requirements are proposed as solutions.
An in-depth discussion of the key trends driving card-not-present transactions and the subsequent increase in demand for smart transaction security solutions; includes a detailed review of the various transaction security technologies and solutions available for merchants and issuers
The purpose of this directory, which the FSB has delivered to the April 2019 G20 Finance Ministers and Central Bank Governors meeting, is to provide information on the relevant regulators and other authorities in FSB jurisdictions and standard-setting bodies who are dealing with crypto-assets issues, and the aspects covered by them. Contacts information with regard to the below functions has been shared among the authorities mentioned.1.
Https://digitalis.id
The failure of credit ratings agencies to accurately rate structured financial products like mortgage-backed securities and collateralized debt obligations contributed significantly to the 2008 financial crisis. While some reforms have been implemented, the ratings process remains opaque and problematic. This paper proposes establishing a single, public numerical scale for rating structured credits as a better way to standardize risk measures, increase transparency, and empower investors to evaluate risk more accurately. Such a benchmark scale, treated as a public good, should be developed and supported by a federal financial regulator.
The financial industrial arts are not in economics but rhetoric. They have no proof, no science and even actuarial subject products have only shown failure. We continue to demonstrate proof in real markets as the herd turns and mooing increases. Here is a timeless article from our vaults.
This document summarizes a white paper about recognizing and addressing first-party fraud (FPF). Some key points:
- FPF occurs when individuals commit fraud using their own identities, intending not to pay their debts, and costs financial institutions billions annually. However, it is often misclassified as regular bad debt rather than fraud.
- Rates of FPF are estimated to be between 5-20% of losses classified as bad debt. Total annual uncollectible revolving consumer credit in the US is about $85 billion, so FPF costs between $4-17 billion per year.
- The white paper outlines different types of FPF behaviors and profiles, such as "bust-out fraud
Goldman Sachs provided a summary of its risk management practices and position in the residential mortgage market during the financial crisis. It states that it did not have a significant net short position in 2007-2008 and lost $1.7 billion due to its mortgage-related products. It also notes there was internal debate about shorting positions and uncertainty around the housing market collapse. Goldman Sachs worked to reduce its risk exposure by selling positions and trying to achieve a balanced portfolio.
Financial institutions were slow to adopt business intelligence technology and lowered lending standards, contributing to the spread of toxic loans. Bringing data together through business intelligence can help institutions make better decisions by providing visibility into loan quality, risk exposure, and package contents. Clean, integrated data is needed to power these analytics and help the financial industry avoid similar crises in the future through improved data management, governance, and decision making.
This document discusses trade receivables and their associated risks from the perspective of an expert in the field. Trade receivables represent a mixture of credit risk from buyers' inability to pay and operational risks like contractual disputes, fraud, and errors. Technological advances have improved transparency but issues remain around underwriting criteria, transparency, and risks becoming conflated. Credit insurance provides a good hedge against credit risk but involves operational risks. New platforms aim to capture both buyer and seller data to better finance and mitigate risks in receivables.
The document discusses Bank of America's online banking services and strategies for growth. It summarizes that BofA has the largest market share in online banking and bill pay in the US. It outlines strategies like expanding affinity partnerships, improving the online customer experience, lowering costs through digital channels, and addressing security threats to continue growing its e-commerce business. The document also highlights some of BofA's innovations like budget tools, $0 Trades, and ATM opportunities to engage customers online.
Captive insurers have traditionally generated revenue through premiums and investments, but many are missing out on recovering paid claims through subrogation. Commercial insurers invest heavily in subrogation and recover over a billion dollars annually, while few captives pursue this avenue. Pursuing subrogation could recover millions for captives, but many lack dedicated staff and data collection systems. Outsourcing subrogation to specialized lawyers on a contingency basis provides a cost-effective option for captives to start recovering losses paid to third parties.
Captive insurers have traditionally generated revenue through premiums and investments, but many are missing out on recovering paid claims through subrogation. Commercial insurers invest heavily in subrogation and recover over a billion dollars annually, while few captives pursue this avenue. Pursuing subrogation could recover millions for captives, but many lack dedicated staff and data collection systems. Outsourcing subrogation to specialized lawyers on a contingency basis provides a cost-effective option for captives to start recovering losses paid to third parties.
This document summarizes Fifth Third Bancorp's 2006 annual report. It discusses:
1) 2006 was a transition year that positioned the company well for the future, with new leadership and actions to address interest rate challenges. However, reported results were impacted.
2) Core businesses saw loan and deposit growth, but earnings declined from interest rate pressures and balance sheet actions to reduce sensitivity.
3) Going forward, the company is well positioned for growth with strong leadership, capital levels, and local market positions in its core Midwest region.
Fund Admin: the Zoo of Data & the Data Science SolutionInvestCloud Inc.
The collection and analysis of data has expanded significantly in recent decades across various industries such as social media, news, and financial services. Merging public and private data sources complicates ensuring data quality, which directly impacts reporting quality and reliability of decision-making tools. Fund administrators play a key role in managing this complex data from multiple sources and systems, but typically do so using error-prone manual processes like Excel. InvestCloud's Purple product helps administrators address these issues by allowing structured and unstructured data to coexist, eliminating the need to access multiple systems, and providing powerful reporting and client portal tools to improve operational efficiencies, decision-making, and client experiences.
The document is a 2016 cybersecurity report on the financial industry produced by SecurityScorecard. Some key findings include:
- The bank with the weakest security posture among the top 20 largest US commercial banks has one of the top 10 largest financial organizations by revenue.
- Network security and patching cadence were areas of weakness across many financial institutions. Nearly all had vulnerabilities from unpatched SSL/TLS issues.
- Malware was detected on the networks of nearly half of the largest 20 US commercial banks in the past 30 days. Legacy systems and acquisitions can increase security risks for large banks.
This white paper discusses best practices for implementing an enterprisewide fraud management system. It notes that traditional fraud management is fragmented across business units and channels. An integrated approach is needed to detect cross-channel fraud patterns and relationships. The paper recommends a three-step approach: 1) Create an enterprisewide view of customer patterns and perpetrators using data analysis and visualization tools. 2) Prevent and detect fraud across the enterprise in real-time using predictive analytics. 3) Investigate and resolve fraud cases in an integrated environment using case management systems. Adopting these analytics-driven best practices can help financial institutions better manage fraud.
IRJET- Credit Card Fraud Detection using Hybrid ModelsIRJET Journal
This document discusses credit card fraud detection using hybrid models. It begins by introducing the problem of credit card fraud and how billions of dollars are lost to fraud each year. The document then discusses how standard models and hybrid techniques using AdaBoost and majority voting are used to detect fraud. Experimental results on a public credit card dataset and a private dataset from a financial institution show that the majority voting technique achieves good accuracy in detecting fraud cases. The key challenges in credit card fraud detection are also summarized, such as imbalanced data, different costs of misclassification, overlapping data patterns, lack of flexibility, and fraud detection costs.
Visa Inc. is a leading global payments technology company that processes over $7 trillion in transactions annually. The document analyzes Visa's business, industry, and financials. It recommends a bull call spread strategy for Visa due to its strong fundamentals and leadership position, though notes increasing regulation, technology changes, and macroeconomic uncertainty could impact performance. Visa is expected to grow revenues and earnings in the coming years driven by its global network expansion and new payment solutions.
Using Advanced Analytics to Combat P&C Claims FraudCognizant
P&C insurers need to embrace predictive and advanced analytics -- as well as analytics as a service -- to combat the growing complexity and sophistication of claims fraud.
Payment fraud is a persistent threat in today's digital world. Even some of these fraud events were found connected with the best credit card payment companies to top credit card payment processing. Visit us at: https://webpays.com/best-credit-card-payment-companies.html
NEC Public Safety | Facing the Odds in Gaming IndustryNEC Public Safety
For casino gaming operators, facial recognition is a tool that can empower them to transform how they operate and find new answers in a complex environment. This paper aims to present how the technology can answer some the most pressing challenges facing a global casino gaming market. Brought to you by NEC. To find out more, do visit http://www.nec.com/safety
This white paper discusses challenges that financial institutions face in managing enterprisewide fraud. It notes that fraud is increasing in volume and sophistication, targeting the fastest growing channels like online and mobile that are most vulnerable. Traditionally, fraud has been managed within business unit silos rather than taking an enterprisewide view. This allows fraudsters, who view the institution holistically, to exploit inconsistencies. The paper recommends analyzing patterns and perpetrators across the entire enterprise to better prevent, detect, and investigate fraud.
This document provides a stock analysis report on Visa by Birkey Investment Group. It summarizes the payment card industry, analyzes Visa's financial performance and position within the industry, and recommends purchasing Visa stock. Visa dominates the global payment processing market with over 50% of transactions. It has strong financial trends in revenue, earnings, and margins that distinguish it from competitors like MasterCard. Visa's recent acquisition of Visa Europe will help it grow further in the European market. Based on this analysis, the report recommends Visa as a solid investment opportunity.
IRJET- Credit Card Fraud Detection using Random ForestIRJET Journal
This document discusses using random forest machine learning algorithms to detect credit card fraud. It begins with an abstract that outlines using random forest classification on transaction data to improve fraud detection accuracy. The introduction then provides background on credit card fraud and how machine learning has been used for detection. It describes random forest as an advanced decision tree algorithm that can improve efficiency and accuracy over other methods. The paper proposes building a fraud detection model using random forest classification to analyze a transaction dataset and optimize result accuracy. Key performance metrics like accuracy, sensitivity and precision are evaluated.
This report analyzes the worldwide markets for number of Debit Cards in Use (Million Units). The report provides separate comprehensive analytics for the US, Canada, Japan, Europe, Asia-Pacific, Latin America, and Rest of World. Annual estimates and forecasts are provided for the period 2009 through 2015. A six-year historic analysis is also provided for these markets. The report profiles 171 companies including many key and niche players. Major debit card issuers profiled in the report include Bank of America Corporation, Barclays Bank Plc, China Merchants Bank Co., Ltd, Citigroup, Inc., Citibank Inc., Cr
Here are the key legal requirements for a sole trader business like Patel Supermarket in Australia:
- Business Name Registration - The business name (e.g. Patel Supermarket) must be registered with ASIC unless it includes the owner's personal name. This helps identify the sole trader.
- Australian Business Number (ABN) - An ABN must be obtained and quoted when conducting business. It is used for tax and dealing with government.
- Insurance - Appropriate insurances like public liability, professional indemnity etc. must be taken depending on the business activities.
- Licenses and Permits - Licenses may be required from local councils for activities like selling food, medicines etc. Other
This report analyzes card payment fraud trends from 2012. It contains 67 pages analyzing types of fraud, examples of fraud in different countries/regions, and strategies used by banks and organizations to combat fraud. The report examines challenges in reducing fraud and discusses technologies and initiatives used to detect and prevent fraud into the future.
Towards the Next Generation Financial Crimes Platform - How Data, Analytics, ...Molly Alexander
Towards the Next Generation Financial Crimes Platform - How Data, Analytics, & ML Are Transforming the Fight Against Fraud, AML & Cybersecurity -Nadeem Asghar
Credit Card Fraud Detection System Using Machine Learning AlgorithmIRJET Journal
This document discusses using machine learning algorithms to detect credit card fraud. It begins with an abstract that introduces credit card fraud as an increasing problem and machine learning as a solution. The introduction provides more background on credit card fraud and detection methods. It then discusses several machine learning algorithms that can be used for credit card fraud detection, including logistic regression, decision trees, random forests, and XGBoost. It concludes that hybrid models combining individual algorithms performed best on a publicly available credit card dataset, with the highest Matthews correlation coefficient of 0.823. References are provided on related work in credit card fraud detection techniques.
The document discusses the future of payments in the 21st century and how new technologies and business models are disrupting traditional payment systems. It analyzes trends like real-time payments, use of unique identifiers like phone numbers and emails, push-based systems like PayPal versus pull-based card networks, improved security and fraud controls, lower processing costs, and the transition away from paper checks and plastic cards to digital and mobile-based payments. PayPal is highlighted as an example of a company leveraging these 21st century innovations to build a highly successful new payments platform.
The document discusses the competitive environment and new business development strategies of several large banks in 2011. It notes that banks are focusing on growing lending while reducing commercial real estate exposure. Specific banks' plans mentioned include PNC growing lending and treasury management services, Flagstar emphasizing commercial, small business, and retail lending, and 5/3 expanding in small business, private banking, and treasury management. The document recommends that banks bundle solutions to meet operational needs of prospective business clients.
Study: Identifying Fraud and Credit Risk in the Smallest of Small Businessesclaytonroot
XOR conducted a study analyzing nearly 6 million small business applications from 2011-2014 to identify patterns in small business fraud and credit risk. They developed models to predict fraud and credit risk by matching applications across industries and incorporating alternative data sources. The study found that cross-industry data sharing improves risk predictions and that small business fraud patterns are becoming more sophisticated over time. XOR's new risk models can help reduce $1 billion in annual losses for small business accounts.
This document discusses disruption in the wealth management industry through three papers. The first paper discusses how major disruption is inevitable due to long periods of inertia in the industry and changing client needs. The second paper emphasizes the importance of institutionalizing data sharing across departments to improve client experiences and business strategy. The third paper discusses how technology can help facilitate more holistic advisory approaches to better meet client needs over time.
Kidnap and ransom insurance at an inflection pointCognizant
By gathering and distilling meaning from the metadata that exists in the digital world, insurance carriers can mitigate risk for companies that have globe-traveling executives.
Global Corporate and Investment Banking President Gene Taylor presented on the division's strategy for growth between 2006-2011. The goals are to increase revenues by $10 billion and earnings by $3 billion through deepening client relationships, increasing market share internationally, and strategically deploying capital. Global Investment Banking Head Brian Brille then discussed the strategic themes of integrated delivery of Bank of America's capabilities, capturing largest fee pool opportunities including becoming a top 3 investment bank in the US, and growing the international presence including becoming a top 10 investment bank in Europe.
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Credit Card Issuer Fraud Management (Excerpt)
1. Credit Card Issuer Fraud Management
Report Highlights
December, 2008
Principal Analyst
Ken Paterson
(781)-419-1715
kpaterson@mercatoradvisorygroup.com
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2008, Mercator Advisory Group, Inc.
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2. TABLE OF CONTENTS
Introduction…………………………………………………………………………………..……3
I. Market Dynamics
And Now Back To Our Issuer Fraud Story……………………………...…….……....4
Not My Loss—But Everyone Suffers………………….…………………...…....……...5
II. SAS Fraud Management..………………………………………………………………10
III. Shaping The Fraud Management Marketplace……………………………………..…12
The Enterprise Vision……………………………………………….………………….12
Cardholders Are People Too (And They Vote With Their Feet)…………..….…….12
TABLE OF FIGURES
Figure 1: Bank Card Issuer Fraud Loss Expenses Still Remain In A 40BP Cost Range …..……..4
Figure 2: Fraud Losses Remain A Minor Direct Contributor To Card Issuer Expense ….…….…5
Figure 3: Bank Card Fraud Expenses Rise With Volume …………………………....…….………....6
Figure 4: Total Credit Card-Related Fraud Losses: Probably $16B And Counting ……………...7
Figure 5: Data Breaches: Intentional And Looking For Cards………..……...………………….......8
Figure 6: Mass Card Data Thefts Drive A Thriving Secondary Market In Card Products …...…. 9
Figure 7: SAS Fraud Management: Bridging The Silos………………………………………………10
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3. Introduction
Report Highlights:
As we discussed in our 2006 report on the issuer fraud
1. Credit card issuer losses remain
solution topic, technology providers are increasingly focused
surprisingly well-contained despite
on the vision of enterprise-level fraud solutions, and more the continuing evolution of card
broadly on enterprise financial crimes and risk management. fraud.
Solution provider interest and capabilities are certainly 2. On the other hand, total fraud
growing in this regard. The enterprise vision could in theory costs in the U.S. broadly related to
credit cards alone is conservatively
address the “balloon effect” of fraud head-on, that is,
estimated to exceed $16 billion
watching for the inevitable shift in criminal activity from
annually.
one product or business line to another under pressure from
3. Purposeful data breaches are
improved detection.
providing particular challenges to the
And why not stick with the siloed approach? Our overview industry, as criminals target easily-
monetized payment card information.
shows that from an issuer’s viewpoint, bank credit card fraud
4. The enterprise fraud management
losses remain surprisingly well-contained at around $1
vision may have significant value,
billion in the U.S., thanks to the effective solutions and
but organizational barriers remain
services on the market. Unfortunately, cardholders might
high as issuers seek added detection
not agree. Both the headlines and market studies show that lift from multi-product
data breaches in particular are driving a thriving market in implementations.
stolen card data. Secret Service/ Visa data actually put a
market price on different combinations of stolen data. And then there is the vast array of other
card-related and other account-based frauds. We take a SWAG that the direct costs of fraud
attributable in some way to US credit cards could easily exceed $16 billion, without even taking
in to account the financial institution’s solution, staffing, and management costs.
No wonder major issuers are now advertising the fraud-fighting capabilities of their card services
to potential cardholders—it is a high visibility issue, and banks have invested a lot. But it is a
dynamic battle that extends well beyond the credit card product, and is nothing short of a battle to
retain the consumer’s trust.
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4. I. Market Dynamics
And Now Back To Our Issuer Fraud Story…
When we last looked at card fraud losses, it was a relatively minor expense line for issuers. And
the good news is that it still is. At about 1.2% of issuer expenses, and constrained to a narrow
expense range over this decade, bank card fraud losses can be seen as a relative success story. In
fact, after peaking over 18 basis points of volume in the early ‘90s, general purpose credit card
losses have been at 7 basis points or lower during the present decade. Of course, a lot of work
has gone in to engineering this stable performance, but more on that later.
Figure 1: Bank Card Issuer Fraud Loss Expenses Still Remain In A 40BP Cost Range
Comparatively, fraud losses dwarf in comparison with the big three cost categories of operations,
cost of funds, and charge-offs (see Figure 2). But to anticipate our discussion of hidden costs,
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5. there are certainly hidden fraud costs in these numbers. Most notably in the $34.8B Operations
and Marketing line item, there is surely a minimum of $2 billion in fraud solutions expense, IT,
staffing, outsourcing, and outside data/investigation expenses embedded in this total. Plus, there
is a literally unknowable component of Charge-offs that are misclassified fraud losses.
Figure 2: Fraud Losses Remain A Minor Direct Contributor To Card Issuer Expense
Plus, as an industry, total fraud losses escalate with growing payment volume. As Figure 3
illustrates, bank card fraud losses are up 55% since 2000, essentially parallel with card volume
growth. But considering the escalating fraud challenges in the marketplace, these results have to
be considered a glass half-full from the issuer viewpoint.
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6. Figure 3: Bank Card Fraud Expenses Rise With Volume
Not My Loss—But Everyone Suffers
Taking the credit card issuer’s viewpoint for losses understates the magnitude of the problem, and
understates the risk to all the stakeholders associated with credit cards. The stakeholders tend to
see different parts of the fraud elephant, some experiencing actual losses, while others experience
virtual losses such as lost consumer spend. Figure 4 makes a stab at some of the major
categories. Issuer losses (in this case all general purpose credit cards) come in close to the
familiar $1B number and represent primarily card-present fraud, with online merchants absorbing
perhaps twice that amount in card-not-present losses attributable to credit cards. Lost card usage-
-attributable to declined legitimate transactions, consumer substitution of other alternative
payment types perceived to be safer, lost volume due to card cancellation and reissue—is an
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7. opportunity cost certainly borne by credit card issuers and perhaps by some merchants. And lost
usage is linked to potentially tarnished consumer perceptions of credit cards and/or their issuers.
Consumer frauds peripheral to credit cards such as unneeded credit card insurance, advance-fee
loan scams, and illegal credit repair could contribute to over $7B in direct expenses to consumers,
not to speak of indirect costs, mental anguish, and potentially more damage to the reputation of
credit cards.
Figure 4: Total Credit Card-Related Fraud Losses: Probably $16B And Counting
In total, the unknown and unknowable costs (the “dark numbers” of fraud) are surely the largest,
even after aggregating these estimated $16 billion in costs. In all likelihood, costs related to data
breaches are significant in their own right, both in terms of remedial and legal expenses to the
breached company, and in terms of the damaged reputations of these firms.
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8. In fact, a recent Verizon study of over 500 data breaches reported between 2004 and 2007 is
staggering in its implications. Of first concern is the deliberate and technologically sophisticated
nature of the most frequent attacks. While some breaches are in fact opportunistic (abetted by
lost or stolen laptops, thumb drives, paper copies, etc.), hacking and malicious code are the most
frequent contributing causes. Second, the most frequent target of these attacks is in fact payment
card data, often the most immediately monetized type of stolen data targets. While there is value
to be had by criminals in broader identity information types such as those shown in Figure 5, card
information has immediate market value and usability.
Figure 5: Data Breaches: Intentional And Looking For Cards
And speaking of the ability to monetize stolen card data, Visa and the Secret Service have
recently published estimates of the market value of stolen card data. Value increases with the
availability of track and PIN data, reaching its peak with a fully functioning counterfeit plastic.
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9. The value of card data is apparent, and the motivation to pursue intentional breaches is certainly
powerful.
Figure 6: Mass Card Data Thefts Drive A Thriving Secondary Market In Card Products
Beyond these grim pictures is the reality that similar frauds affect debit cards and other payment
products, as well as bank deposit and loan products. As the mere inconvenience of a stolen card
number morphs into the more threatening label (and sometimes reality) of identity theft in the
public’s mind, no part of the FI is immune from financial or reputation risk.
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10. II. SAS Fraud Management
SAS, the well known business intelligence software provider with some 3,000 FI clients, made
headlines in the fraud management world with its announced signing of HSBC in 2005 with
delivery in 2007 for its SAS Fraud Management solution. Driven in part by its acquisition of
Household International and its corresponding large card presence in the U.S., HSBC was seeking
enterprise fraud detection capability that could be deployed globally, and within secured
administration tiers. And, the goal was to detect fraud early, within 1-2 hits. HSBC represents a
key client to illustrate SAS’ enterprise focus and strengths, leveraging their Universal SAS
Connector technology to access and link multiple account systems, making real the potential to
detect fraud based on data across multiple product types.
Figure 7: SAS Fraud Management: Bridging The Silos
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11. In terms of real-time fraud scoring, the solution uses a combination of neural net and rules-based
technologies, incorporating both consortium and issuer-customized models. Efficiency and
scalability of the scoring solution are positioned as key sales points, with the claim that 100% of
transactions can be scored during in-stream process, or “real time,” and typically with less
commitment of system resources. HSBC has published that they have seen a 12% decrease in
mainframe processing overhead, while at the same time increasing their processing volumes by
87%. HSBC is said to be running several hundred rules in its implementation to complement the
analytic models. Volumes of several hundred transactions/second are common. The ability to
deploy and manage multiple fraud models across products and markets is featured, as well as the
ability to conduct champion/challenger tests against competing models.
In addition to a case management module designed for managing suspicious accounts and triage-
based alerts across multiple business lines, SAS has a unique Network Investigation & Analysis
tool to support the users’ ability to reveal and analyze network connections among all a
cardholder’s accounts and relationships. The main benefit is to help analysts visualize cardholder
connections via network maps across product lines, although it can also generate customer risk
scores—particularly useful in assessing account applications in real time. SAS notes particular
success for this capability in identifying “bust-out” fraud and fraud mis-classified as credit
losses—a real window into some of the “dark numbers” of credit card fraud we discussed in
Section I.
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12. III. Shaping The Fraud Management Marketplace
One of the problems in writing a report on the topic of fraud solutions is that we are not
interviewing criminals regarding their development plans. So our viewpoint is by definition one-
sided and reactive. But from our side of the fence, here are issues that will shape the credit card
fraud management space:
• The enterprise vision
As mentioned earlier, the vision of enterprise fraud and/or financial crimes management is logical
and appealing. It may in fact be more powerful in its fraud reduction capabilities within credit
cards when additional product relationships are considered. We are definitely in the early days of
enterprise fraud detection, where for some banks, “enterprise” may mean just the credit and debit
product lines. Given the product similarities and their common processors, this should not be
surprising. Data on the incremental detection lift of enterprise implementations—even if only for
two product lines versus one—will be key motivators for firms considering this approach. But
the potential value extends beyond fraud detection; the benefits to cardholders and retaining their
business could be material.
• Cardholders are people too (and they vote with their feet)
As we commented earlier, it is all too easy to get caught up in the realities of risk management
and keeping the losses of all stakeholders in check, and to ignore the viewpoint of the cardholder.
The ultimate risk is: if cardholders are too concerned about fraud, or too confused about how it
might impact them personally, they will switch cards, go back to cash, alternative payment
systems when they are available, or switch entire retail banking relationships. As with all
financial businesses, customer trust is at the heart of the business, and mixed, confusing, or
threatening messages with regard to fraud could certainly affect that trust. The following issues
will strongly affect consumer actions:
Fraud management as a marketing tool: Issuers are already marketing their fraud
management capabilities, including recent TV advertising from major issuers. It will be
interesting to see if issuers begin to tout specific fraud detection capabilities, policies, or
service guarantees. There is a fine line to tread between scary and reassuring, and
consumer testing of features and advertising will be a critical developmental stage.
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13. But for many consumers, the bottom line will be their experience when they call in to
report an unauthorized charge or other suspicious activity. Just like auto insurers who get
a bad reputation when they fumble claims servicing, issuers risk losing both a fraudulent
transaction and a customer if the cardholder experience is not top-notch. The distance
from top-of-wallet to back-of-wallet is not very far. And negative effects may jump from
the wallet to the bank account as well, if consumers are angered both by the occurrence
of fraud as well as how it is handled by their bank.
An issuer able to establish brand equity in consumer fraud protection could have a real
advantage—reinforced every time a consumer reads a new report on identity theft or
mass data breaches.
The double-edged sword of alerts: we commented earlier that with the escalating alert
capabilities of issuers, alerts could easily move from a valued featured to a liability if
consumers are overwhelmed. Cardholder control can provide part of the solution, with
the user empowered to throttle the volume of information that is appropriate to his or her
level of tolerance. But with multiple credit and debit cards in the wallet, each with
varying control capabilities and alert policies, alert volume to any one consumer could
become significant. The danger is that this new capability ultimately encourages
consumers to turn off alerts, ignore alerts, or induces an unnecessarily high level of
cardholder paranoia to the detriment of card usage.
Ultimately, industry consensus must emerge around the right types of alerts to push out,
and standard consumer interfaces to control them. And of course, if the detection
technologies are highlighting real fraudulent transactions (not false positives), issuers will
be simultaneously minimizing consumer awareness of their false positives. In the
immediate future, issuers will have the added complexity of managing both their fraud
detection parameters and their communication parameters for cardholders. And driving
alerts to consumers also means the potential for higher call center volumes and the need
to carefully manage the handling of these calls.
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2008, Mercator Advisory Group, Inc.
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