Viewpoint: The Must-Have Fraud Detection Toolkit for 2016
By Ryan Wilk, NuData Security
The poet Rainer Maria Rilke said it well: “And now we welcome the new year, full of things that have never been.” People like the idea of new beginnings, but we also like to have some idea of what’s coming so we can be prepared. That’s why predictions are so popular—and why they’re necessary.
When it comes to detecting and preventing fraud, the more advance information we can get, the better. So, my prediction is that 2016 will be the year that passive behavioral biometrics for user authentication will increase. Why? There are two reasons. First, we continue to see the weakening of personally identifiable information (PII)-based risk prevention techniques as data breaches flood the market with readily packaged private information, like having the test answers ahead of the exam. Second, more users move to mobile platforms every day, demanding a fast, frictionless transaction experience.
The only way to protect customer data and accounts and offer a painless user experience is with passive behavioral biometrics. In fact, the mobile space is a perfect pairing to biometric and behavioral analytics technologies because of the increased number of biometric measurement tools built into every tablet and every smartphone. Behavioral biometrics can include the way someone holds their device, the speed and rhythm with which they type, or the way an individual navigates a Website, for instance.
Getting Better at Predicting Risk
The report “Future-Proofing Card Authorization” from Javelin Strategy & Research states that fraud costs retailers $9 billion every year. However, the cost of false positives, where legitimate consumer purchases are canceled due to overzealous traditional fraud prevention methods, is upwards of $118 billion in lost revenue, according to that same report. And, as criminals become more adept at successfully jumping knowledge based authentication (KBA) hurdles, legitimate customers push up against ever-greater levels of friction. Risk management leaders need to find a better way to identify their valued customers and identify those who present elevated risk.
That better way is behavioral analytics. It enables merchants and financial services providers to become better predictors of risk by accurately identifying and verifying customers while minimizing the friction legitimate users face. Biometric and behavioral analytics greatly increases industry efforts to devalue stolen data, eventually reducing the number, scale and impact of data breaches worldwide. This greatly benefits users, providing them a frictionless and safe online experience, while continuing to protect their accounts even if their logins and passwords have been compromised. Allowing good customers to continue to interact safely online will be the most important issue in 2016.
Achieving Frictionless Authentication
Consumers are used to the ease, convenience and speed of using mobile devices.
It follows that eliminating false positives and removing friction across the mobile ecosystem will be the key focus going forward. By harnessing the power of behavioral and biometric analysis, organizations can predict fraud with a very high degree of accuracy by identifying the real user behind the device. Focusing on the good users—and decreasing customer abandonment and attrition—can put billions back into merchants’ pockets. The ability to move beyond the machine and truly know your customer will be the differentiator that allows companies to bypass the knowledge-based authentication arms race with fraudsters and leap ahead in terms of customer satisfaction and retention.
In the new year, IT security professionals have three prime directives to achieve this goal of frictionless user authentication:
- Ensure that you’re using an intelligent multilayer risk prevention platform that measures behavior over time and gives you accurate, real-time scoring to let you know exactly who your user is.
- Know the user on the other side of the device through passive biometric and behavioral analytics.
- Strengthen brand loyalty and increase conversion while protecting brand assets at the same time by implementing security based on valid user identification.
The first directive is worth looking at in more detail. A layered approached—using device and connection, analyzing biometrics, measuring and comparing behavior across networks and over time—goes beyond standard fraud detection checks to truly understand the user behind the device. By deploying a continuous evaluation of the user, this empowers organizations to identify high-risk and anomalous activity earlier than ever before and to redirect suspicious users into a different Web experience. Organizations can enable real customers to self-resolve risk triggers in-session and complete their online experience without additional delay. They can decide how to respond in real time with all the necessary context and data to make a better decision.
Better decisions are what merchants and financial services providers need as fraudsters keep getting better at creating new ways to bypass traditional security methods. Better decisions will help prevent an overzealous detection scenario in which good users are turned away along with the bad and millions of dollars are lost. More and better data make for better decisions, and that is what biometric and behavioral analytics delivers. It’s a frictionless process for good users, invisible for all users and offers unparalleled accuracy. For these reasons, I predict a sharp rise in the use of behavioral analytics in the new year.
Ryan Wilk is the vice president of customer success for NuData Security. Previously, he was manager of trust and safety at StubHub and spent eight years with Universal Parks & Resorts in various e-commerce roles. NuData Security predicts and prevents online fraud, protecting businesses from brand damage and financial loss caused by fraudulent or malicious attacks. Ryan can be reached at [email protected]
In Viewpoints, payments professionals share their perspectives on the industry. Paybefore’s goal is to present many points of view to offer readers new insights and information. The opinions expressed in Viewpoints are not necessarily those of Paybefore.