Bank Fraud: Using Technology to Combat Losses

CHAPTER 8

The Proof of the Pudding May Not Be in the Eating

I am a fan not only of Leonardo da Vinci's paintings but also the quotes attributed to him. Two quotes come to mind. The first one is: “I have been impressed with the urgency of doing. Knowing is not enough; we must apply. Being willing is not enough; we must do.”¹ The second one is: “Simplicity is the ultimate sophistication.”² When I dug into these quotes a bit more, I discovered that they are actually from Russell C. Taylor and William Gaddis, respectively.

The first quote, though, is extremely relevant to fraud management. We need to know what is important, and also we need to apply our knowledge in a timely fashion. The passage of time between banks learning something and banks implementing this learning in production has to get shorter and shorter. Doing in a timely fashion determines whether fraud can be tackled successfully or not.

Luckily there are technologically advanced fraud detection solutions on the market today that afford the ability to add new data, learn patterns on the fly, incorporate fraud outcome into the production model, keep track of multiple entities simultaneously, and the like. Such solutions will significantly shorten the time between the acquisition of knowledge and using the knowledge in production. The ability to create and deploy rules in production rapidly is also a key requirement. If an ongoing fraud pattern emerges but if it takes several days to create the operational rule, test the ...