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Combating Fraud in the World of Open Banking and Immediate Payments: Lessons From Australia

In fact, the arrival of faster payments and the subsequent launch of services such as Request-to-Pay will both increase and lessen fraud rates depending on adoption and mitigation initiatives taken by Australia’s financial community. A matter of excitement and fear in equal measure, if like me, you are a financial crime specialist.

NPP has been designed to support innovation and competition in digital commerce and payments services, now and into the future. Having the benefit of observing faster payments system implementations in other countries, enhancements to existing systems have been incorporated from the outset with the mindset of “security by design.” The platform will revolutionize the Australian payments industry and fuel the digital economy.

However, no new technology is watertight. Fraudsters have historically been excellent beta testers for any new payment instruments and channels—looking for vulnerabilities to exploit the larger, cross-border transaction volumes and new overlay services that the new platform will offer in the future.

That said, Australian financial institutions are well placed to manage risks from financial crime. Apart from taking the lessons learned from similar initiatives in other markets, they are actively sharing intelligence around attempted criminal activity and working closely with industry bodies on raising consumer awareness of scams and identity takeover fraud. Many have taken the opportunity to ramp up security for online and mobile payments, including use of multi-factor authentication and enrolling the customer in account control, as well as verification and authorization through text and—increasingly—in-app notification.

Any one approach by itself will not do the trick, but rather a combination of agile, flexible strategies is needed to adapt and identify emerging and increasing sophisticated fraud trends. In my experience, this is where machine learning capabilities are is becoming the differentiator in a fast, digital payments ecosystem… and this is where things get exciting!

You see, the NPP utilizes a new global standard for electronic data exchange between financial institutions, known as ISO 20022. This standard has enabled banks to access a whole new, more comprehensive dataset for use in covert, frictionless authentication – such as device and browser fingerprinting based on geolocation, IP address, time zone, language, operating system settings and even more sophisticated behavioral biometrics. Those institutions that can ingest these diverse and voluminous datasets to quickly and accurately weed out the relatively small fraudulent activity from genuine payments will provide customers with a superior service experience. And this will make all the difference for NPP transactions that are meant to be quick, easy and convenient.

Want to improve customer service and reduce fraud? Download our guide: The Six-Step Guide to Leveraging Machine Learning for Payments Intelligence 

Principal Fraud Consultant

Giselle's career in financial crime has spanned the public sector, banking and insurance, over a period of nearly two decades for a number of institutions in Australia. She has a postgraduate qualification in Criminal Intelligence, has held a board position with the Australian Institute of Professional Intelligence Officers, and has been a member of the Australasian Card Risk Council, APCA Fraud Committee and Fraud in Banking Forum. When not fighting financial crime, Giselle can be found down on the family farm.