Experian runs the largest application fraud detection system in the country, with over 50 per cent of retail banking applications screened for potential risks and frauds every month, says Mohan Jayaraman, Managing Director, Experian India, in conversation with Arpit Gupta of Elets News Network (ENN)
Experian India offers fraud detection solutions for the BFSI sector. Can you elaborate the role of these products in the sector?
Financial service providers are constantly facing rising fraud incidents, or fraudulent applications. At Experian, the strategy is to prevent fraud at the point of application. It requires authentication of genuine customers and detection of potentially fraudulent applications before the customer is accepted, without adversely affecting the customer service and speed of decision making. With ‘HunterTM’, a premium fraud detection technology, we screen and highlight potentially fraudulent applications and enable organisations to identify fraudsters before they become their customers.
Experian India plays an active role in fraud detection via the Experian Fraud Bureau – a closed user group of industry members (47 banks and 17 life insurance companies). We run the largest application fraud detection system in India, with over 50 per cent of retail banking applications screened for potential risks and frauds. The system has been able to save an estimated Rs.4,002 crore in FY16 by preventing frauds at the credit application level.
Our ‘Hunter Fraud Score’ measures the probability of fraud in a credit application. With this, the offering businesses will be able to prioritise applications with a high probability of being fraudulent. It helps clients lower their losses substantially by working on minimum per cent of the population.
Our latest offering for India is ‘CrossScore’, an innovative new platform for fraud and identity services and the industry’s first smart plug-and-play platform that allows companies to connect their own solutions with Experian products and third-party vendors in one place to protect their customers from fraud threats better. The CrossCore’s open platform enables organisations to manage services via a common access point that supports a layered approach to manage risks across providers.
How does Experian help businesses manage credit risk, prevent fraud, target marketing offers and automate decision-making?
Experian India provides data and analytical tools to clients globally. Data is a critical and strategic tool powering our business. We’ve spent over 30 years refining our expertise in interpreting data, be it a credit bureau or a client’s customer data, and leveraging it to create more valuable and profitable customer relationships for clients. This expertise in data analytics helps us offer our clients an innovative range of products and solutions; to manage credit risk, prevent frauds, target marketing offers and automate decision making.
We provide products to help customers in underwriting their consumers when on-boarding, ongoing management, for example, portfolio benchmarking, account review, triggers, etc.
We have launched ‘FraudNet’, a solution for online fraud detection. Experian India also offers a decisioning solution for a flexible and intuitive graphical-user environment. It can be used to create and administrate winning business management strategies.
We also offer a range of decision tools and products designed to raise precision, speed and agility of decision management process, so that users can respond rapidly and cost-effectively to market changes. For example, ‘PowerCurve’ is a unified platform for strategy design and execution, which connects the analytics and operational environments for all customer decisions. This allows development and implementation of the customer management strategies.
With the advancement of technology, risk management in BFSI seems crucial. How does Experian India view it?
Protecting one’s business from fraudulent activity, while also managing credit risk, has posed challenges for many organisations. As more consumers access and apply for financial products across multiple channels, including online and mobile, fraud also continues to evolve, increasing relevance of risk management in BFSI industry. It’s a trend that’s being underpinned by a combination of ID theft and false identities, and organised gangs are carefully developing fraud networks and account takeovers when a fraudster steals data to hijack an account. The financial services sector is fighting back with innovative methods.
India has already started to build on this framework by learning from developed countries. The policies and structures set up by the RBI have been progressive and ahead of the curve. One of the best examples is the two-step verification set up for card transactions, causing reduced frauds arising from cards. However, given the frequency and number of channels used by customers, forming an industry consortium on fraud/ risk management is required. We are working on it.
What are your plans for the near future?
We constantly innovate and work with clients, helping them solve business challenges and help clients with insights from vast data, enabling them manage their customers across the lifecycle, besides a strong focus on Fraud and Identity management solutions, and we are looking to have value-added services in this space.
What is Experian’s Fraud Report 2016 about?
It’s an annual feature for Experian, globally. This report, launched earlier this year, analyses various types of loan account frauds observed in the Indian financial sector from Q1 2014 to Q1 2015 and classifies them into four categories – incidences arising from fraudulent contact information, fraudulent organisations, identity theft or fictitious identity and repeated attempts from already identified individuals. Of these, Identity Theft causes maximum fraud cases.
Experian India plays an active role in (financial) fraud detection… We saved an estimated Rs.4,002 crore in FY16 by preventing frauds at the credit application level
Frauds through financial products within the retail and commercial sector have also seen an uptake. Consumer loans continue to have the highest fraud incidence rate. The number of fraudulent cases for these loans has increased annually from 219 frauds detected per 10,000 cases in Q1 2014 to 265 cases per 10,000 in Q1 2015. Credit cards are the second-most targeted product by fraudsters after consumer loans.