Westpac New Zealand gets proactive in fighting fraud

Fraud is a large and growing problem in the global banking industry, costing banks billions of dollars in losses every year. While fraud affects every line of business, the brunt of its impact continues to fall on retail banking. In the face of a realized threat, Westpac New Zealand responded quickly and chose ACI Proactive Risk Manager, part of the ACI Fraud Management solution, to put in place a real-time fraud detection system that spanned all lines of business and channels.

The challenge

Westpac New Zealand, one of the country’s largest full-service banks, found itself on the wrong side of growing fraud volume and complexity. The bank’s fraud losses had been roughly in line with the rest of the industry, contributing to the prevailing sentiment that its existing point-based fraud detection system kept the bank adequately protected. When, in the span of weeks, Westpac New Zealand’s fraud volume suddenly spiked, the adequacy of its fraud prevention solution became a top priority for the bank’s senior management, which was determined to act fast. But the bank wasn’t starting from scratch. Prior to the fraud spike, Westpac New Zealand had been engaged in a running discussion with its long-time payment processing vendor, ACI Worldwide, about the merits of adopting a more flexible and proactive alternative to its current point-based fraud detection system.

The solution

In adopting ACI Fraud Management deployed on IBM System z, Westpac New Zealand fundamentally changed the way it identifies and acts to reduce fraud risk. The difference is intelligence. In contrast to the static nature of point-based fraud solutions, ACI Fraud Management is designed to first identify patterns in the behavior of banking customers and, by extension, to use subtle deviations in these patterns as a real-time trigger for identifying potential fraud before it happens.

In addition to identifying changing fraud patterns, the solution also enables Westpac New Zealand to respond with more agility and speed. It does so by making it easy for the bank’s employees to update the rules engine at the heart of the ACI Fraud Management solution to reflect the parameters of the new threat.

The results

Unlike systems that rely solely on a score, the bank’s anti-fraud solution combines predictive analytics and expertly defined rules for the fast, accurate and flexible response to changing fraud patterns in real time. As a result, Westpac has dramatically improved its ability to identify and neutralize new fraud schemes as they emerge leading to strengthened customer relationships and retention. Westpac New Zealand experiences fraud-related savings, including the reduction in administrative costs associated with rectifying compromised accounts, that significantly exceed its most optimistic expectations.