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Over the last few years, we’ve seen the level of data really take off. Globally, the amount of data estimated for 2020 is 59 Zetabytes, 30 times more than in 2010! Banking and payments are no exception to this increase, so what is driving it?
Future-Proof Fraud: Huge Data Increase
Firstly, we have a range of channels. No longer are we limited to branch, telephony and web, but now a mobile app is the channel of choice. Digital channels produce more data, and much of this is particularly useful in fraud prevention, such device data. With the use of biometrics increasing, we are even seeing the extra data come to telephony, too. There is also the rise of Open Banking. This brings many more players into the payments ecosystem, requiring increased verification and authentication steps, and therefore more messages to make it all work.
We are also seeing other new channels like Chatbots, Alexa and payments moving into chat apps. These all offer customers different ways to interact with their FI. However, what we’ve seen in the past is that these channels often don’t completely cannibalise the previous channels, but instead lead to overall increases in transactions. When I could only check my balance at an ATM, I used to do it once a week; now I might check my balance multiple times a day via the app.
All these changes in channels lead to large increases in volumes of payments and overall transactions. With this will usually come an increase in alert volumes, and therefore the staff that need to manage these. This is not a scalable solution if the speed and efficiency benefits of digital payments are to be realized.
Future-Proof Fraud: Real-Time Payments
Secondly, there is the increasing use of real-time payments throughout the world. This includes Faster Payments and Instant SEPA in Europe and Zelle, RTP, FedNow in the U.S. and the RTR in Canada, to name a few. But it’s not only national payment schemes that are going faster, but also cross-border.
The combination of these new channels and the speed of real-time payments (and COVID) means that genuine customer and fraudster behavior are changing faster than ever before. Fraud is also increasingly moving to identity fraud and authorized fraud, bringing new challenges for consumers and banks alike.
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