Banks are finding success in efforts to stamp out check and card fraud losses. But, on an enterprise level, the culprits are still finding a way into the house.
Loan-related fraud losses in the past five years have shot up from 19 to 30 percent of total fraud losses, as the share of fraud losses from checks and credit cards has dropped. This seems to cry out for more enterprise anti-fraud solutions for banks. But according to AITE Group's report, "Enterprise Fraud Management-From Silo Integration to BPO," a number of barriers are standing in the way, even as banks admit preferring the sensible path of centralizing anti-fraud solutions.
Although eight of 10 banks surveyed by AITE don't have a single manager handling reports from anti-fraud units, seven out of those 10 agree that their fraud detection efforts should be migrated to a single platform. What's keeping them from buying into their beliefs, of course, is the "de facto" lack of a single vendor with end-to-end solutions, according to AITE. Most product solutions are dedicated to specific account type (DDA or credit), customer relationship (point-of-sale, telephone) or payment method (ACH, loan), and are increasingly embedded as decisioning tools.
Banks haven't increased their fraud management budget enough in the last few years (only four to five percent) to accommodate enough R&D for new multi-area approaches, much less full deployment. And the "solid results" from siloed solutions makes the business case for enterprise investments difficult to justify. Vendors are beginning to spread across silos, but the few vendors that do market an enterprise fraud management platform aren't hitting every area. Carreker and Searchspace, for example, have no plans to expand into the credit card space dominated by Fair Isaac.
