There's tremendous emphasis on increasing customer centricity in banking these days, and indeed a big focus of my fraud analytics team is developing “customer-focused” innovations. These analytic models go beyond focusing solely on the characteristics of typical fraud events; they’re also built to improve learning of what typical customer behavior... Continue reading

Many banks have automated rules in place that decline card transactions indicative of high fraud risk. In so doing, they block a large portion of fraudulent transactions. But they are also declining legitimate purchases from high-spending cardholders, who may decide to take their card business elsewhere. A FICO study found... Continue reading

The internet has opened up virtually unlimited opportunities for entrepreneurs and zealous shoppers alike. On the flip side, it unfortunately has also opened up opportunities for crooks, especially credit card thieves. Recent fraud trends show card-not-present (CNP) fraud—and predominantly online fraud—taking up an increasingly greater percentage of total credit card... Continue reading

Those of you who follow this blog know that I regularly discuss analytic innovations that boost fraud detection. One such innovation is adaptive analytics, so-called because these models continually "adapt" traditional neural network fraud models in response to real-time fraud tactics that were not present at the time of model... Continue reading

Today’s buzz around Big Data is bringing renewed attention to the need for streaming analytics—a focus that, if you ask me, is long overdue. In the payment card space, we at FICO are celebrating the 20th anniversary of using streaming analytics for fraud detection. Our FICO® Falcon® Fraud Manager models... Continue reading

We've just released new research from our FICO® Falcon® Fraud Consortium in the US. It revealed some intriguing credit and debit card fraud trends in the data snapshot we studied, from January 2010 to September 2011. Here were the key fraud trends we saw for credit cards: Online, mail and... Continue reading

A major implication of Big Data, as I discussed in my last post, is that analytics must rely less on persistent (historical) data and instead adjust dynamically in the stream. This is particularly true for fraud analytics, given the ever-changing nature of fraud. Here's an example. Development of the traditional... Continue reading

Big Data is a hot topic today that stems back to the early days of high-performance computing and parallel computing, which I worked on during my time in theoretical physics at Duke and Los Alamos. These days, Big Data tools facilitate the ease in applying these concepts. Interestingly, much of... Continue reading

I recently returned from giving the keynote address at the 2012 Financial Cryptography and Data Security conference. The event draws crypto/data security/privacy experts, researchers, and practitioners across the world to focus on the latest advances in this space. During this week-long deep technical conference, a central theme was how to... Continue reading

I'm proud to announce that FICO® Falcon® Fraud Manager 6 Analytics was named a finalist in the CONNECT Most Innovative New Product Awards, in the software category. This accolade was driven by the analytic innovations that I often blog about here, including: Adaptive Analytics, which are reducing account false positive... Continue reading

Increasingly banks are looking to leverage the full breadth of data related to customers to make better decisions, and fraud is no exception. There is a strong desire to break down silos, so fraud/risk behaviors in one area of the customer’s interaction with the bank can be utilized in other... Continue reading

Payment cards are changing. Whereas a plastic card used to access a single funding account, now we increasingly see cards—and very soon, mobile phones—that can access multiple funding accounts. This trend not only increases personalization options, but also fraud detection capabilities, if you leverage a cardholder’s history of what funding... Continue reading

The traditional credit/debit card has become passé—at least in terms of having a single device with access to only one funding account. Today, a single card can, at the point of sale, access different accounts to fund the payment transaction. Likewise, a mobile device has the capability to make payments... Continue reading

Fraudsters are continually adjusting their strategies to circumvent fraud detection systems. In my last few posts, I've been discussing how adaptive analytics are built to counter this problem. Because of this, the latest version of FICO™ Falcon® Fraud Manager leverages adaptive analytics. The adaptive model adjusts the base neural network... Continue reading

Financial institutions are always looking for ways to combat newer fraud schemes—schemes that arise between fraud model developments and are not well-represented in the historical data. As I discussed in a recent post, one way to boost performance is to add analytics that are adaptive or self-learning. Deploying adaptive models... Continue reading

The fight against payment card fraud resembles an arms race. Card issuers are deploying ever more sophisticated anti-fraud measures, and fraudsters are continually evolving strategies to evade those measures. Typically, issuers rely upon neural network fraud models trained on huge historical datasets to recognize recurring fraud patterns and reduce fraud... Continue reading

In an earlier post, I discussed vulnerabilities associated with mobile devices that drive up fraud risk for banking and payments made through these devices. These range from malicious apps, to network security issues, to targeted man in the middle attacks. So, what can be done to counteract these vulnerabilities? One... Continue reading

Mobile devices are changing the payments landscape. More mobile devices are becoming equipped with near-field contactless capabilities and apps that allow for the purchasing of goods and services. While this provides a number of conveniences for consumers, mobiles also come with greatly increased risks related to payments. Case in point,... Continue reading

Central to developing and evaluating an analytic model is the definition of what constitutes a “good model.” At FICO, we view it as the dimensions of good. Let’s take fraud models as an example. What makes one model look high-performing may be misleading if that performance degrades quickly. A model... Continue reading