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Financial Services: A guide to biometric fraud prevention and authenticationJuly 16, 2019

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Today’s speakers

Shirley Inscoe

Senior Analyst, Fraud & AML Practice

Simon Marchand

Chief Fraud Prevention Officer

©2019 Aite Group LLC.

About Aite Group

Aite Group delivers research and guidance to leading institutions and technology providers across the global financial services industry. With expertise in banking, payments, insurance, wealth management, and the capital markets, we guide financial institutions, technology providers, and consulting firms worldwide. We are dedicated to helping our clients make smarter decisions, faster, to strengthen and grow their business.



Nuance Security Suite

500enterprises

400mvoiceprints

5Btransactions

$1Bannual fraud savings

Nuance

Security Suite

Powering:

Contact Center

Authentication

Contact Center

Fraud

Prevention

Digital

Authentication

& Fraud

Prevention


Nuance named a leader in 2019 Opus Intelligent Authentication and Voice Biometrics Intelliview Report

Opus Research, 2019 Intelligent Authentication and Voice Biometrics Intelliview, June 2019

Nuance is the undisputed market share

leader in terms of enrolled voiceprints

associated with IVRs and contact centers

as well as its self-described “multi-faceted,

layered security approach that includes

biometrics, non-biometric prints, anti-

spoofing measures, intelligent detectors

and pattern detection, employing AI

techniques ”


Today’s conversation

• Current environment

• Evolution of identity

• Authentication and fraud prevention

• Technology investments

• Customer experience

• Operational efficiency improvement

• Key takeaways


A pitched battle is underway…


The changing notion of identity: From face-to-face, to

personally identifiable information to digital identity


Current environment

• Our way of interacting with organizations has changed

• Fraud organizations have changed

• Fraud schemes have changed

Authentication strategies

Mostly agree16%

Somewhat agree26%

Neutral/no opinion16%

Mostly disagree36%

Completely disagree6%

Q. To what extent do you agree with the following statement?"My FI’s current authentication strategy is effective."

(n=31)

• Enterprise-wide strategy• All delivery channels

• All products

• Importance of ease of use

• Periodic risk assessments• Identify gaps, failures

• Identify outdated solutions

• Analyze root cause analysis of losses

• What enabled loss to occur?

• Document improvement plan

• Timeline to correct deficiencies


Source: Aite Group survey of 32 financial fraud professionals,September 2018


Advantages of biometrics

• Can’t leave home without it

• Easy to use; sometimes housed on device

• Quick, convenient authentication

• Multiple types can be used – fingerprint, voice, behavioral, etc.

• Behavioral is totally transparent to customer, introducing no friction• Voice may also be transparent, dependent on implementation method• Other biometrics are quick, easy to use, and convenient

• Enable layers of security based on risk of customer’s activity

• Stops identity crimes: account takeover, application fraud, synthetic identities

A single solution provider reduces expense of vendor management


Fraud layered defense

Anti-Spoofing

Intelligent Detectors

Non-Biometric Factors

Biometrics Factors

Detect attacksBOT/RAT, Spoofing,

Account takeover, Playback, Velocity

Detect anomaliesNetwork, Channel, Geography

Detect ownershipDevicePrint

Detect individualsVoice biometrics

Behavioral biometrics

ConversationPrint

Facial biometrics


Fraud management cycle

Prevention

DetectionManagement

Fraud Voiceprints

Conversation Print

Digital Behavior

Device Print

Who are you talking to? Biometrics in use…



Account setup (call center)

“Hi, I’d like to open a new

account”

Call recording

captured

Complete

Credit File

ID cards

“Of course, let me help you”

Real Time

Detection

Information

Match

KBA

Successful

IDs

Valid


New subscriber fraud (online)

Complete

Credit File

ID cards

“Of course, let me help you”

Real Time

Detection

Information

Match

KBA

Successful

IDs

Valid

“Hi, I’d like to open a new

account”

Conversation

Print

Device Print


Account takeover (online/app)

Complete

Credit File

ID cards

Real Time

Detection

Behavioral

Print

Device Print

Credentials

SIM Swap

Money transfer


Technology investments needed to combat fraud

Mostly agree45%

Somewhat agree26%

Neutral/no opinion13%

Mostly disagree10%

Completely disagree

6%

Q. To what extent do you agree with the following statement?"My FI needs to make significant technology investments to catch up

with the pace of fraud."(n=31)

Source: Aite Group survey of 32 financial fraud professionals, September 2018


Effectiveness of technology to combat fraud

20%

28%

33%

57%

55%

43%

20%

17%

20%

0% 20% 40% 60% 80% 100%

Device identity

Behavioralbiometrics

Biometrics (face,fingerprint, voice)

Q. Please rate the effectiveness of the following technologies for mitigating financial crime.

(n=29 to 30)

Extremelyeffective

Highlyeffective

Somewhateffective

Slightlyeffective

Ineffective

Source: Aite Group survey of 32 financial fraud professionals, September 2018


Credit card fraudster life-spanAttack rate following being added to watchlist

Attack rate declines over

time until all attacks stop

Nature of the attack means

prevention success is high.

Fraudsters eventually stop

attacking.

They can recruit new voices,

but this increases their costs,

reducing their profit.

We are disrupting their

business model

Prosecution removes the bad

guys from future attacks…

In the past, identity crimes were low risk, high reward

Biometrics enable prosecution so they can’t continue their attacks

• One financial institution has prosecuted over 50 criminals

Organized crime rings are stealing to fund:

• Terrorism

• Human trafficking

• Purchasing weapons, etc.



• UK "Big 4" Bank deployed Nuance

Security Suite to fight fraud in contact

center

• In 12 months, Security Suite screened

~18M calls, produced 23,000 alerts

• 1/3869 calls is fraud

• 1/4 calls investigated is found to be from

a fraudster


Importance of customer experience

36%

29%

30%

4%

38%

45%

38%

4%

25%

20%

23%

30%

18%

5%

30%

30%

5%

34%

48%

Every new business case isexamined for its potential impact on

the customer experience

We have multiple independentprojects underway to improve the

customer experience

We have a cross-functional projectteam working to improve the

customer experience

Management talks about improvingthe customer experience, but I see

no signs of anything being done

Improving the customer experience isnot regularly mentioned in my FI

Q. When thinking about how to improve the customer experience, to what extent do you agree or disagree with the following statements?

(n=56)

Agree strongly Agree Neither agree nor disagree Disagree Strongly disagree

Source: Aite Group’s survey of 83 U.S. FI executives, March and April 2017


Authentication

score increases

With Nuance Security Suite

Customer

VoicePrint

Match

Customer

Conversation

Print™

Behavioural

biometrics

WEB

Customer forgets credentials and fails

authentication

SmartAdaption

Agent

Customer account credentials reset Ongoing

performance improvement

of credentials for next interaction

Expected

Channel ID

Geo

ID Match

Network

ID Match

ANI

Device

Print Match

IVR

Customer requests agent and bypasses

ID&V


Operational efficiency improvements (business case)

• Reduction of average handle time in contact centers

• Reduction of identity-related fraud losses and cases to be worked

• Reduction of use (and cost) of outdated, underperforming authentication methods

Improvements in operational efficiency, fraud losses, authentication, customer experience, and demonstrated regulatory compliance (KYC) may all be components of a successful business case.


ROI in record

time

– Design-to-deployment in under 6 months

– Make authentication faster, easier and

more efficient

– Improve caller experience while

identifying fraudsters

– Improve speed of innovation

2 FTEsavings per

month

37seclower AHT


– Security Suite detects more attacks than any of the other fraud detection systems

– Security Suite tracks the human behind the fraud

– Alerts generated are more “fraud rich” than other systems

– Organisations using Security Suite re-allocate investigators to Security Suite

alerts over other systems

Increase operational efficiencies

1.2:15:112:1

False Alert to True Alert Ratio

Offline rangeReal-time range

Our best

performing client

operates at 1.2:1


Key takeaways

• Using biometrics (and combining them with other key capabilities) across all delivery channels can lead to improved authentication results, significantly lowering both identity crime incidents and fraud losses.

• Authentication performed quickly with the customer’s collaboration can better protect their accounts, leading to operational efficiency gains and reducing customer attrition due to fraud incidents.

• Shortening the time it takes to authenticate a customer is a win-win situation, particularly in the contact center, where reducing the average handling time per call can result in substantial operational efficiency gains.


Key takeaways

• Combining transparent fraud prevention capabilities with the use of biometrics (in one solution) can enable lower false positives (leading to budget savings) as well as lower fraud losses.

• Eliminating or reducing the use of knowledge-based authentication questions can improve authentication while making the customer experience much more pleasant.


Q&A


Shirley Inscoe

Senior Analyst

[email protected]+1.617.398.5050www.aitegroup.com

Aite (pronounced “eye-tay”) Group is an independent research and advisory firm focused on business, technology, and regulatory issues and their impact on the financial services industry.

Visit us on the web and connect with us on Twitterand LinkedIn.


http://www.aitegroup.com/

https://twitter.com/AiteGroup

https://www.linkedin.com/company/aite-group

33

Thank you!

Reach out for more information:www.nuance.com/[email protected]


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