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How Westpac New Zealand Fights Fraud with Analytics and Intelligence

Research predicts that the global cost of fraud will reach $40.62 billion by 2027, 25 percent more than the fraud losses in 2020. With banks, PSPs and merchants racing toward real-time payments adoption, they must also acknowledge the increased risk of fraud that it brings, while further reducing the chances of recovering funds.

There is an urgent need for banks to move at the speed fraudsters do to stop them in their tracks before they can do real damage. This is possible through constantly evolving fraud management strategies and technologies that can bridge the gap between the time it takes to detect instances of fraud and take steps to fix the systems.

Westpac New Zealand: Adopting a proactive approach to fraud detection and prevention

A study conducted by The Bank for International Settlements on operating risks, and supporting the Basel II implementation, found that retail banking operations bear the largest share of external fraud losses incurred by banks, both in terms of magnitude and frequency.  

For Westpac New Zealand, the report came at an opportune time when the world’s banking systems were confronted with the rising threat of real-time payments fraud and ransomware attacks. The findings of the report further underlined the urgency for the bank to reevaluate and upgrade its fraud prevention capabilities.

To fight the growing volumes and complexity of fraud, Westpac New Zealand sought the expertise of ACI Worldwide and undertook a large-scale transformation with ACI’s Real-Time Payments Solution. Along with this, it put in place a real-time fraud detection system enabled by ACI Proactive Risk Manager, part of the ACI Fraud Management solution.

What sets ACI Fraud Management apart from other solutions that rely on scores to determine risk profiles is that the solution combines predictive analytics and complex, pre-defined rules for rapid, accurate and flexible response to changing fraud patterns in real time.

This has helped Westpac substantially improve its agility and become more proactive in identifying and neutralizing emerging fraud tactics. By infusing advanced intelligence into its fraud detection capability with ACI Fraud Management, the bank has been able to detect fraud schemes before they can be understood—by which time the damage is already done in most cases.

“Protecting ourselves and our customers requires us to stay one step ahead of a threat that’s always changing,” says Patrick Cattermole, manager of the Card Fraud team at Westpac New Zealand. “The intelligence and flexibility we gained with our new fraud solution has dramatically improved the bank’s ability to identify — and ultimately neutralize — new fraud schemes as they emerge.”

ACI Fraud Management: Advancing built-in intelligence with evolving threats

ACI Fraud Management uses proprietary and patented “incremental learning” technology — a substantially enhanced version of existing machine learning models (that typically need to be frequently retrained as fraud patterns evolve). Incremental learning models are able “to think for themselves” and make small adjustments on a continuous basis to ensure they remain relevant, even as fraudsters and authentic consumers change their behaviors.

By lowering fraud-related losses, strengthening customer trust and retention, as well as reducing the administrative costs involved in rectifying compromised accounts, financial institutions can reduce their reliance on specialized resources and adopt a business-led machine learning strategy to match today’s fast-paced fight against fraud.

Improve customer service and prevent fraud with ACI Fraud Management. Learn more.

Head of Payments Intelligence & Risk Solutions

Cleber Martins joined ACI Worldwide in 2001 and has 20 years of experience in implementing industry-leading enterprise fraud prevention solutions and anti-money laundering strategies. Cleber’s enthusiasm for driving innovation in fraud prevention stems from the pride he takes in protecting both his banking customers, and the people and communities they serve. Throughout his career Cleber has been at the forefront of the evolution of machine learning: from a focus on inputting human experience into machines, to its modern form that empowers fraud experts to combine their real intelligence with AI. Cleber calls this trend toward business users wielding new models, the democratization of machine learning. Cleber’s key areas of expertise include helping payments leaders to develop multi-faceted fraud prevention strategies that combat modern threats, as well as creating actionable intelligence in payments data, and the evolution of fraud prevention into a Customer Experience differentiator for organizations.

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