New data says defending fraud depends on enterprise case management solutions

Fraud and Financial Crime

Mohammad Al Zraiqat scaled

Mohammad Al-Zraiqat

Aug 24, 2022

If an effective fraud protection strategy in the current landscape could be boiled down to three words, the following would suffice: Prevention, detection, and resolution. Those words are made operative by another word: investigations. It all adds up to what I see as the most important issue in the fraud landscape today, and that’s enterprise case management (ECM).

There are lots of definitions for ECM. For me, it’s simple. Businesses must know that there is a holistic view of anti-fraud initiatives, tracking closely to the three words mentioned above, adding in an investigation, and closing with a resolution. My opinion is supported by a research report we recently wrapped with anti-fraud consultancy Themis.

One of the key outputs from the report highlights the point that effective fraud protection and case management solutions can help banks and businesses address minimal human and technological resources, inadequate employee training, and inefficiencies in their investigation and reporting processes. Done properly, ECM will allow investigators and analysts to manage, track and report all suspicious activity and fraud cases within a single automated system.

By the numbers, our report shows that 71% of survey respondents currently have a case management solution in place in their company, with 39% having a commercial off-the-shelf solution and 32% having a home or custom-built solution. Of those without a solution, 71% said they plan to invest in one within the next two years. I would suggest doing so with some urgency. A lot of damage can happen in a year while you’re waiting to upgrade your ECM capabilities. If you’re looking for evidence, the report states that 42% of all companies encountered fraud during the past year, and 27% lost more than $1 million in the process.

That’s a big number and certainly worth chasing the people responsible for fraud, whether they come from inside your business or outside. However, the two things that respondents identified as their biggest challenges were lack of personnel resources and adequate employee training or awareness. If companies are potentially seeing a decrease in budget or simply struggling with resources, ECM helps them make the most of what they have.

For me, it comes down to investigations, and those depend on data. Contrary to perception, ECM investigations rely heavily on data, and that data needs to be updated in real-time for the automated process and workflows to be effective. Consolidated data enables businesses to concentrate on analysis and reviewing alerts rather than manually collecting and processing this information.

Data also enables a team to forecast potential losses if fraud threats are not actively mitigated. If you can project losses over three or even five years, it helps management understand where the company is heading regarding policies and processes. For example, a bank could be onboarding a specific type of client vulnerable to APP fraud. Or on the cusp of identifying new threats like insider fraud and needing to justify the expenditure for technology to stop it. A bank can’t do any of this without reliable and accurate data.

Back to the survey. One data point that jumped out was that most respondents said it takes more than two weeks to conclude an investigation. That's quite a long time and risky, to say the least. The fix: again, processes, technology, and data. Without those things in place, it will take two weeks or more to investigate a fraud case. I believe resolution time is the heart of any financial crime compliance program. It is the most crucial line of defending any FI or business.

ECM is the most important section for me in this report, but it certainly isn’t the only critical set of findings. As per my partner Eliza Thompson, an analyst at Themis, highlights:

  • Increasing speed and volume of payments stood out as two key risk factors – with 51% of respondents identifying these as their greatest risk.
  • Building off this, 59% of respondents identified real-time capabilities as the most important factor when selecting a payment fraud solution. This response shows how demand for faster, more digital payment options creates a rugged terrain for FIs to navigate. What’s needed is real-time solutions to respond to real-time threats effectively.
  • In terms of selecting ECM systems, self-empowerment and no-coding configurability were the most important factors identified by respondents.
  • The report’s survey found that satisfaction with case management solutions was reasonably neutral. On average, respondents said they had a 6 out of 10 satisfaction rate.
  • 21% of respondents said their anti-fraud spending budget decreased over the last year, and 30% said it stayed the same. Only 23% saw an increase, even though the financial losses associated with payment fraud are increasing in key markets such as the US.

For more insight, you can read the report or listen to the podcast recording.

Related topics

Fraud Prevention Fraud ECM
Mohammad Al Zraiqat scaled

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Mohammad Al-Zraiqat

Mohammad Al-Zraiqat, Global Senior Product Manager at Bottomline, has 14+ years’ experience in fraud and financial crime compliance. Working with corporate and financial services sectors, law enforcement intelligence and investigations, sanctions consultancy, he's a subject matter expert in financial crime prevention technologies. Mohammad holds a master’s degree in financial crime investigations.
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