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Managing fraud in an omnichannel environment

Retail is no longer what it used to be, and neither is the payment landscape that has undergone drastic changes to adapt to this ever-evolving environment. But as this payment landscape evolves, so does fraud which can now take different shapes and forms.

Consumers’ expectations have changed, with user experience now becoming an absolute priority for the customers and is expected to overtake price and product as the key brand differentiator by 2020 (source: walkerinfo). Customers want to access information seamlessly from any device and at any time, and irrespective of the device used, they want a smart, frictionless and personalized user experience. This seamless user experiences requires “traditional” anti-fraud systems to become invisible and yet ensure maximum security for the consumer. 

With the rise of Open Banking and PSD2, fintechs are disrupting the market by delivering financial services using digital technologies which enhance the overall user experience. New business models are emerging, forcing the hand of Financial Institutions that now need to rethink their strategies and open their systems through APIs, exposing them to more risks. Those new business models need to manage fraud regardless of the device used to perform different activities on the consumer’s behalf (Alexa, Google Home, etc.).  As banks are expected to open their systems, they will be exposed to a higher risk.

With the growth of e-commerce, the volume and the value of money being transferred through digital channels is increasing. The risk has changed with those digital channels, and card-not-present fraud is on the rise. According to the European Central Bank (ECB), there is an ongoing shift of fraud from the card-present to the card-not-present environment in SEPA countries and territories. Even if card-not-present fraud grows at a lower rate year after year, the data from ECB shows a slight but steady rise.

Source: Aite Group, PSD2 : Advent of the New Payments Market in Europe

In addition to that, the payment landscape presently finds itself having to deal with more and more channels. While each channel provides more efficiency and streamlined access to financials, it also creates potential security vulnerabilities.

The market has responded with several innovations in fraud detection and prevention, such as 3-D Secure, risk-based authentication, tokenization of sensitive data, advanced risk analysis sytems, etc.

Traditional fraud protection, as simple as presenting an ID at the teller window or entering a PIN at an ATM, is now outdated. As of today, fraud management is a big deal for Financial Institutions: all their technology solutions to prevent fraud are operating as an independent silo, for each one of their channels. It is expensive, inefficient and increasingly unsustainable.

Financial Institutions need to face these disruptions to deliver a frictionless yet secured digital experience to their customers. To do so, they need to move from a channel-driven fraud view, to a single omnichannel fraud view, where all channels (online, cards, digital, branch, ATMs, MOTO, etc.) offer an agnostic customer view. To help Financial Institutions overcome their challenges, HPS developed PowerCARD-Fraud. The extensive and stand-alone fraud solution monitors in real-time or near real-time authorisations coming from any systems.

Fraud can also be reduced by empowering customers to control their payments through a digital and secured experience (limits by amount, channels, territoriality, change PIN, etc.). Giving more control to their customers enables Financial Institutions to optimize fraud management and back office resources and activities. This digital user experience, however, requires F.Is to open their systems through APIs: with PowerCARD Connect’ APIs, HPS helps financial institutions to digitalize and optimize their operations in a smart, modular and highly automated way by providing a rich set of APIs allowing the management of entire customer lifecycle.

To know more about PowerCARD-Fraud solution, PowerCARD Connect’ APIs and how HPS helped several Financial Institutions to manage their fraud, please contact sales@hps-worldwide.com