The cost of fraud to the UK economy today is conservatively estimated at around £20 billion per year, with some facets of fraud experiencing aggressive growth. A number of high profile and significant security lapses with the personal and banking data of consumers have also grabbed the attention of the public, as well as that of regulators around the world.
Over the past few years the financial services industry has taken various steps in an attempt to address this issue. These include a number of product and service enhancements (e.g. the introduction of Chip and PIN to address plastic card counterfeiting), combined with the introduction of various initiatives and organisations with specific remits to target fraudulent activity.
Despite these and other measures adopted around the world, criminals are becoming increasingly creative and sophisticated in their approach to financial services-related crime and fraud.
Further, walking the tightrope between healthy product and customer growth and effective credit strategy and risk management is a challenge that all lending institutions face on a daily basis.
How can Accourt help?
Accourt has extensive experience of working with financial institutions and others on both fraud and credit risk management topics. We have led a number of innovative initiatives to assist financial services organisations to develop more proactive, integrated and effective approaches to managing credit risk and to reducing fraud. These initiatives have been both with individual organisations and cross-industry.
Key areas of expertise along with example projects are set out below.
Fraud Management - Portfolio Analysis and Benchmarking
Accourt undertakes analysis of the operation and performance of portfolios against appropriate and relevant industry and regional benchmarks. We follow this analysis and benchmarking with insights and pragmatic recommendations to address any sub-standard performance and/or issues.
Example
- For a Tier 1 UK Retail Banking Group – undertook a detailed analysis of the fraud management performance of the portfolio and benchmarked this against its peers and the broader industry. Accourt then developed a detailed, road-mapped, executable set of recommendations to help the client address the issues.
Multi-Discipline Fraud Management
Accourt's team of specialist consultants advise on best-in-class approaches to all significant fraud management disciplines (e.g. deterrence, authentication, detection, incident/case management, etc.).
Example
- For a top tier International Payment Scheme – supported the client to understand and design a fraud management strategy and supporting operational capability for a new product.
Fraud Intelligence Strategy Development and Delivery
Accourt has a deep and clear understanding of fraud intelligence and appropriate strategies to develop this capability – and to maximise benefit and value from it. We are able to help drive organisational understanding of this discipline and to develop the appropriate strategy and implementation roadmap to enable our clients to maximise this key fraud management opportunity.
Example
- For the UK retail banking industry – in support of UK Payments (formerly APACS) and the UK retail banking industry, Accourt developed and successfully delivered all aspects of the industry's Fraud Intelligence Sharing System (FISS). This included supporting and driving the strategy development that underpins this initiative.
Please refer to our Fraud Intelligence Sharing System "white paper" for further information. (Click here to download PDF)
Fraud Management Information Strategy and Execution
Effective fraud management is underpinned by the availability and use of accurate, fit-for-purpose, dynamic and timely fraud Management Information (MI). There are two high-level classes of fraud MI:
- Executive MI (EMI): Executive level MI that enables the management team to monitor portfolio fraud performance and make effective strategy decisions based on these performance indicators
- Operational MI (OMI): Management level MI that enables portfolio managers to monitor fraud operations on a day-to-day basis, enabling operational decisions to be made as and when required.
Accourt is able to provide practical and executable advice and direction on MI strategy development and implementation, as a direct consequence of our detailed understanding of the entire fraud management discipline, its challenges and associated organisational implications.
Example
- For the UK retail banking industry – in consultation with the UK retail banking industry (in association with UK Payments – formerly APACS), developed a fraud MI strategy, coupled with an effective delivery roadmap which enabled the industry to implement the strategy.
PCI DSS Strategy Development and Execution
The Payments Card Industry Security Standards Council is an open global forum for the ongoing development, enhancement, storage, dissemination and implementation of security standards for account data protection.
The Payments Card Industry Data Security Standard (PCI DSS) is a versatile security standard that includes requirements for security management, policies, procedures, network architecture, software design and other critical protective measures.
An in-depth understanding of the workings of the payments industry, and the inter-relations of the stakeholders within it, enables Accourt to deliver pragmatic business and commercial advice on how best to approach the challenges relating to PCI DSS and other data security related challenges. Accourt understands the assessment and compliance regime and is able to rapidly develop a roadmap to move clients from understanding their shortcomings in this area through to addressing and resolving these in a commercially aware and acceptable manner.
Example
- For a significant multi-billion pound turnover Merchant – designed and delivered an approach to understanding the impact of PCI DSS (the Payment Card Industry Data Security Standard) on their business, and subsequently developing a roadmap to address their shortcomings in complying with PCI DSS.
Fraud Data Sharing
Multi-industry and sector collaboration has, and continues to prove extremely successful as a complementary fraud management strategy. Accourt is actively involved at the forefront of the most significant and ground-breaking of these initiatives in the UK and is able to provide clients with appropriate insights and advice on how to best leverage opportunities in this space – from data sharing strategy, right through to design and successful delivery of such initiatives.
Example
- For the UK retail banking industry (in association with UK Payments – formerly APACS) – now in its fourth year of operation, Accourt was responsible for supporting and driving the UK retail banking industry in defining, business-casing and implementing an approach – the Fraud Intelligence Sharing System (FISS) – for industry-wide fraud intelligence sharing. A detailed understanding of this rapidly evolving environment and the key stakeholders across the public and private sectors in the UK places Accourt in a unique and envied position to assist clients in rapidly articulating and addressing their requirements in this space.
Rapidly decreasing levels of tolerance by the UK Information Commissioner for security breaches, combined with severe punitive action against the organisations and bodies responsible for these, have meant that most organisations have begun to institute additional layers of control and monitoring to guard against these and similar eventualities. Accourt's active and successful engagement of the Information Commissioner's Office during this initiative ensures that it is well placed to advise, not only on measures to monitor fraud instances arising as a result of data compromise and best practice for the avoidance of these risks, but also the regulatory and compliance aspects and their implications.
Please refer to our Fraud Intelligence Sharing System "white paper" for further information. (Click here to download PDF)
Credit Strategy Development and Management
Increasing pressure on unsecured lenders to vet and decision credit applications in near real-time continues to encourage organisations to seek best in class risk management and technology support – and thereby help to achieve effective and positive credit risk management. Accourt's broad and deep industry-leading knowledge and experience in this field is second to none. Furthermore, Accourt's product and technology independence ensures that organisations receive truly unbiased and realistic support and advice.
Accourt's range of services in this sphere include credit risk management strategy and roadmap development; business case development; facilitation of multi-stakeholder buy-in; business and operational solution design; independent vendor and technology analysis, evaluation and selection; implementation planning and support.
Example
- For a blue chip Credit Card Issuer – developed and managed high-performance credit strategies for all consumer segments within a broad consumer card portfolio. This included measuring the potential performance and impact of candidate strategies prior to implementing them, as well as designing, developing and implementing balanced credit management strategies for previously unbanked consumers with little or no credit history.
Insolvency Prediction and Consumer Management
Walking the tightrope between healthy product and customer growth and effective credit strategy and risk management is a daily challenge that all lending institutions face. Key drivers for positive and effective credit risk management include increases in personal insolvencies, significant exposure in a number of sectors – not only the sub-prime sector – for some organisations, as well as the inescapable threat of fraud.
Examples
- Accourt has led a number of innovative, unique and market-leading initiatives to assist financial services organisations in developing a more pro-active, integrated and effective approach to managing credit risk on a number of fronts, including insolvency and risk event prediction. These initiatives have either been focused within individual organisations or targeted at a wider industry-level approach. In each case however, the principle remains the same: enabling organisations to reliably and accurately predict the likelihood of a risk event occurring, sufficiently far in advance of its occurrence to support the application of pro-active measures.
Such measures should not only eliminate the likelihood of the risk exposure materialising, but also be applied in such a manner as to support customer retention – enabling the organisation to foster the customer relationship with the support of effective risk management, prior to adverse action against the customer being required.