Following the implementation of ACI Proactive Risk Manager, the fraud levels on Nationwide’s debit card fraud portfolio dropped by around 80 per cent, with most fraudulent activity being stopped no later than the second transaction.
Situation
Fraud on UK-issued cards has been increasing steadily, and financial institutions are facing an ongoing battle to beat fraudsters whilst protecting their customers. Nationwide Building Society, like all other financial institutions, experienced the impact of the growing problem of fraud across the industry, especially concerning its debit card portfolio.
As such, Nationwide Building Society initially approached ACI to build a database of debit card transaction history to reduce debit card fraud.
After the initial phase of the project was complete, it became clear that ACI Proactive Risk Manager would be able to deliver many more benefits for the building society in terms of detecting and preventing fraud.
In May 2008, Proactive Risk Manager was implemented with a feed from ACI’s BASE24 product that Nationwide uses for processing debit card payment transactions. Proactive Risk Manager is a comprehensive fraud detection solution to help card issuers, merchants, acquirers and financial institutions combat fraud schemes. From strategic user-defined rules to powerful neural network technology using custom modeling techniques, Proactive Risk Manager provides the means to cost-effectively reduce losses and limit an organisation’s risk exposure. Proactive Risk Manager was implemented with the Tieback functionality, allowing selective rules to automatically change card statuses on BASE24, along with card blocking capabilities.
ACI also assisted Nationwide in adding a real time feed to its fraud analysis system, allowing the team to deploy real time rules that are able to decline transactions during the online authorisation process. This element went live in December 2008, following a twelve-week project delivery.
In addition to providing the Proactive Risk Manager solution, ACI also provided project management, business consulting and technical assistance to Nationwide during the integration and implementation of the solution.
Benefits
ACI Proactive Risk Manager was chosen to monitor member accounts for potential fraud and apply preventative measures once fraud is identified for a number of reasons. These include: the solution’s ability to quickly analyse transactions for fraud without impacting response rates; its flexible rules that allow Nationwide to create and deploy on the fly; the sophistication of its rules that allow Nationwide to be accurate in its fraud detection; and its automatic blocking functionality that can free up Nationwide’s employee time for other fraud mitigation tasks.
Using Proactive Risk Manager, Nationwide is now able to accurately identify potential cases of fraud via custom defined rules and apply an automatic block to a card when the rule fires, preventing money from leaving the members’ account. This solution also allows Nationwide to decline card-not-present, Point of Sale, ATM or cross-border transactions, stopping fraud immediately before the criminals have raided an account. Nationwide is thus able to apply prevention measures such as a block without impacting genuine customers.
ACI Proactive Risk Manager at Nationwide
ACI Proactive Risk Manager is a complete fraud detection solution to manage risk in online and offline card environments. It combines the power of expertly defined rules with automatic blocking and decline messages to the authorisation system BASE24 for fast, accurate and flexible response to the evolving and growing nature of issuer card fraud. Through its sophisticated rules technology, Proactive Risk Manager compares the characteristics of each Nationwide member transaction with fraud identifying features, it then assesses and flags the transaction for fraud in real time or near-real time. In real time, once a transaction is identified as fraudulent, a message is automatically sent back to BASE24 via tieback integration to apply preventative blocks.
Results
Following the implementation of ACI Proactive Risk Manager, the fraud levels on Nationwide’s debit card fraud portfolio dropped by around 80 per cent.
In February 2009, Nationwide’s debit card fraud losses were the lowest for over four years and reversed the trend experienced by the industry of 18 per cent year-on-year increases.
Nationwide has been awarded the Banking Technology Magazine Award for Best Use of IT in Retail Banking for its use of ACI Proactive Risk Manager in fraud prevention and detection. In addition, Nationwide’s fight against card fraud has been recognised by Visa as “an incredible story” and puts ACI Worldwide at the forefront of card fraud detection.
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