Published by American Banker Online, written by Jeremy Quittner
Monday, March 05, 2012
The fight against fraud is an ongoing one for most banks, particularly as fraudsters figure out increasingly cunning ways to defang the security walls that bankers build.
One institution, Hancock Bank of Gulfport, Miss., was losing the fight against fraud in certain channels. Though it installed a system from ACI Worldwide Inc. in 2007, fraud incidents actually rose by 2010 in areas like the ATM, where crimes such as skimming increased about 25%, the bank says.
Hancock is using a product from ACI called Proactive Risk Manager. In December 2010, "we [called in] professional services from ACI, and they made recommendations which has made our system more robust," says Corinne Buchholz, vice president of card services at Hancock.
Over the past year, Hancock has reduced its false-positive rate by 25%, and Buchholz says the bank is now able to make changes to its own metrics in real time and quickly recalibrate to meet emerging threats.
Hancock, a unit of Hancock Holding Co., has about $20 billion of assets and 300 branches.
Hancock's "story highlights the need for financial institutions not just to buy a solution and plug it in, but make sure they work with the vendor to maximize use of the solutions," says Julie Conroy McNelley, a senior analyst at Aite Group LLC.
Other vendors, like BAE Systems PLC's Detica and Nice Systems Ltd.'s Nice Actimize, offer similar technology, she says.
A common fraud type in Hancock's region occurs at gas station pumps, says Kristi Estay, an assistant vice president of card services at Hancock.
In the past, the bank might have shut down a customer's card after four consecutive pump visits in quick succession, she says.
Now it might apply outside metrics, such as from Visa Inc., which scores all transactions for risk. And it might examine the locations where the card is being used to see if that usage correlates with the customer's typical patterns. "The consultant gave me other alternatives to … write a more robust rule," Estay says.
Hancock is also keeping closer tabs on automated teller machine use. It now uses the PRM product to pull information from the Structured Query Language database to monitor all ATM activity daily. When an ATM is used in a place where the customer does not usually transact, PRM can scrutinize that activity and compare it to watch-list states with high amounts of fraud such as California, Georgia and New York.
Last summer, ACI was locked in a protracted battle with S1 Corp., which was then in merger talks with Fundtech Ltd. (now Fundtech Inc.).
After S1's planned merger fell apart, ACI acquired S1 in February. This bolstered ACI's role as a payments hub.
PRM has grown more robust over the past few years, says Shesh Gorur, vice president and product line manager for ACI. "The latest version of the product especially enables [banks] to look at cross-channel fraud, and at single instances of fraud from multiple angles," Gorur says.
Going forward, Hancock says it plans to use PRM to tackle online banking and possibly ACH transactions. But for now, the card unit's decrease in false positives is good news. "It represents dollars to our bottom line," says Dawn Bastarache, senior vice president for Hancock's retail delivery channel.