Payments Risk Management for Postilion for Issuer - Acquirer - Retailer Webinar

ACI Worldwide Podcast Series

As indicated previously, please send those questions to us as soon as you have them throughout the webinar, and we'll address those as time permits at the end. This session is intended to be a primer for ACI payments risk management solution for Postilion customers, as we begin to release a solution, [A3], at the end of this month which will address the integration between the two products.

So let's begin with some market challenges faced by financial institutions today. We recognize that managing fraud is much more than identifying risky transactions. Obviously reducing fraud losses is key. But doing so in a manner that impacts your good customers less is equally important, and some in your organization may say is more important. Additional challenges that we're facing may include integration to other products, disparate or siloed risk management solutions employed today, lack of cross-channel views within your organization, and overall flexibility within your fraud management solution.

Now it seems we've become a little numb to the articles that have come out in the news, things related to compromises. But it's clear that card fraud continues to make headlines across the globe. As long as there's money to be stolen and the FI's have sub-par fraud management solutions in place, this trend is going to continue to occur.

Card fraud trends that we've been battling for years remain consistent. But as new regions look to adopt the chip and PIN methodology, this fraud will migrate to paths of least resistance. Similar to fraud managers, [inaudible 00:02:20] in their own right have ROIs tied to their investments that they've made in stolen card stock. Until that chip and PIN is universally adopted across the globe, counterfeit will continue to be top of mind for risk managers. That's going to be our greatest exposure of risk.

ACI conducted a fraud survey aimed at understanding the concerns and attitudes of consumers towards fraud. This annual survey which looks primarily at card fraud was developed with our customers, which include both the banks, processors, and retailers to understand where their mindset is in terms of fraud. What we found was that a quarter of all customers have experienced fraud in the last five years. I'm not immune to this as well. As a fraud manager myself, I've had multiple fraud attempts against my business card or my debit card over the past.

Over half of the customers have used alternative methods once they've had a fraud incident occur, whether it be cash or whether it be another form of payment, maybe by check or by using a credit card instead of a debit card. Also 21% of our customers who experienced fraud have left their provider. We're not immune to attrition.

So as customers see fraud, they obviously think that there is the potential that the fraud is not necessarily being perpetrated just by the [fraudster]. They feel that maybe there's poor business practices being performed at their financial institution. So they're always looking to find a more secure way to protect their assets.

Finally, 74% of the customers prefer to be involved in the fraud detection practice. What this means is they want to be notified when a fraud or when a risky transaction has been identified. This could be in means of an email. Traditionally, phone calls are made to the customer, as well as we're starting to get more involved in doing SMS text to customers to have them either approve or decline whether or not the transaction is legitimate or not.

Now, you might imagine on the last few slides, we're finding that fraud initiatives are amongst the top ten areas in which banks are investing their time and efforts. This is seen from the graphic from CEB TowerGroup. Financial institutions are looking to strengthen their risk management practices, find better ways to protect their data, and look for ways to expand their product offerings to NFC, EMV, and eventually mobile.

So for our first polling question, "Do you currently have a fraud management solution today?" The options are "No." "Yes, but we have a homegrown solution." "Yes, but we have a purchased solution that we're running on premise." "Yes, we have an outsourced solution that's hosted." Or, "No, I don't know or this is not my area of responsibility."

http://www.aciworldwide.com/products-and-services/retail-payments/payments-processing/postilion-for-banks-and-processors.aspx