John Marsden, identity and fraud expert at Equifax

It’s estimated that fraud costthe British economy between £52bn* and £80bn in 2013. Identity theft is a significant part of this, posing a huge risk to the security of banks across the world. As an industry, one of the biggest challenges we face is to better understand the scale of fraud and how to keep up with criminals who develop new techniques to get around the system, no matter how innovative or advanced we make it.

Many organisations invest in risk assessors who analyse in-house data to determine whether a customer is genuine or not. Although this is a step in the right direction, the insight it provides will remain fairly limited as it is based purely on the data held by the institution,and doesn’t providecross-analysisfromother financial organisations.Credit reference agencies have access to data from 99% of the finance community and being able to use this information enables banks to have deeper, more extensive and therefore more valuable insight into each existing and potential customer.

Traditional data held such as previous addresses, names and the number of accounts held can also contribute to getting a complete picture of customers. There is also the potential to now also use an individual’s online social footprint – where they visit, how they browse and where they purchase – to allow us to get to know the customer better. This level of insight can play an important role in identity validation and authentication of a customer as well as during the on-boarding and screening process.

Access to and analysis of all this information is vital for banks in order to identify and recognise patterns among their customers and which may highlight any potential risk to fraud.

Know your customer

John Marsden
John Marsden

UK consumers expect a positive and relatively instant service when applying for credit or other financial services and, unless managed correctly, maintaining that speed of service can expose organisations to fraud. The vast majority of customers arelaw-abiding citizens, but the remaining 1% are reaping havoc and playing a system that is struggling to get to grips with fraudulent activity.

With so much competition in the market, and with customers using newer technology such as mobile banking to engage with organisations, there must be a balance between keeping the customer happy during the screening, on-boarding and transaction process and tackling fraud. One way for banks to reduce the cost of fraud is to be more intelligent about the way customer data is collected and analysed. This should include both in-house data combined withanalysis from credit reference agencies. The level of insight this provides allows banks to detect whether they are dealing with an authentic consumer or not, and helps them to adjust their authentication processes accordingly to avoid impacting the experience for genuine customers.

This insight can be used throughout the customer journey and can also help banks better identify the right sales and marketing opportunities for the right customer at the right time. Doing so helps them to understand the potential revenue of each customer at each life stage, enhancing their relationship and aiding retention.


Biometrics represent the next step in protecting against fraud.  Fingerprints, face and voice recognition are becoming more widely used and may soon be common place across payment platforms, phones and NFC Payments (contactless cards). Many banks will look to enroll devices at interaction points and use fingerprints to authenticate whether the person is who they say they are. This protects the consumer without the need to remember multiple passwords and PINs.

Voice biometrics will do the same for call centres, lowering security challenges while putting in place additional barriers to fraud.Institutions need to make it easier for customers they recognise as genuine by reducing unnecessary checks.The key is to improve security checks while maintaining a level of efficiency to avoid frustrating legitimate law-abiding customers with unnecessary questions. How data is recorded in the first place and ensuring that you have the genuine identity at application will of course still be critical to ensuring ongoing security.

The challenge we face is understanding the scale of fraud, keeping up with criminals who are continuously developing new techniques, and working together to develop solutions to aid prevention and detection. The number of people involved in this type of crime around the world means that investigation into the criminals is not always economically viable for businesses and so the focus must be firmly on prevention, alongside the overwhelming desire to provide excellent customer service for the good, profitable customers. If the industry works together, we can improve systems and make life tougher for today’s fraudsters while enriching the experiences of the genuine customers.

*Action Fraud

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