How to reduce fraud by using mobile networks to protect your customers
Mobile networks can provide location data to trusted providers to enable additional levels of security for financial transactions. Correlation of factors helps banks and providers of financial services protect their businesses from fraud – and protect their customers.
The use of big data in communications networks has accelerated rapidly in the last couple of years. It seems there’s no limit to what can be learnt from sorting through the large volumes of data that are available from networks, but it’s not all about quantity. Quality and correlation matter too and creative use of these aspects have led to the emergence of some very interesting applications that help protect businesses and their customers.
This is because things like context can be used to validate or verify identity, so as to provide additional forms of authentication for certain kinds of transaction. Take credit card payments or cash withdrawals, for example. Clearly, it’s in the interests of the service provider to be able to validate user identity, so that fraud can be reduced. Fraud has high costs and, usually, the law is on the side of the user.
Banks and financial institutions have large teams dedicated to verifying transactions and use data analytics to try to spot attempted transactions that do not fit typical behaviour patterns. Sometimes, manual intervention is required, such as when a bank calls a customer to check if they really meant to make a certain payment. This can be inconvenient for the customer (they may not be reachable and hence the transaction may be denied) and it increases the costs to the provider.
However, data analytics also provides ways to use new sources of information that can help validate such transactions: context. Most people take their mobile phone with them wherever they go. The location of the mobile is known at all times by the mobile service provider – it must be, otherwise, it wouldn’t be possible for the phone to work on the cellular network. Mobile service providers protect this information to safeguard their customers but trusted partners can obtain it on request.
Thus, if a bank knows the mobile number of the customer concerned and if they can obtain a real-time location update when a transaction is attempted, they could use the information to confirm that the mobile is in the same location as the card being used for the payment or cash withdrawal. If it’s not, additional questions can be asked or the transaction declined. That data, combined with the usual information provided at the point of sale can be used to enable an additional level of authentication and security, protecting both the customer and the provider.
To give a concrete example, someone we know was once called by their bank to enquire if two cash withdrawals had been made on one Saturday afternoon. The first was made in Belgium, the second a short while after just over the border in the Netherlands. Our friend was happily at home in the UK at the time and had clearly been the victim of a cloned card. The bank acted in good faith and returned the money to the customer – which meant it incurred relatively high costs (the transaction was for a few hundred Euros). Had the bank been able to use mobile location information to verify that the customer was in the same location as the card being used for the transaction, then this could have been avoided.
So, there’s a compelling case for banks and other financial service providers to incorporate more data checks into their security procedures and to correlate it with other information to deliver a more secure experience. At the same time, there’s also a need not to incur significant additional costs. Mobile location data already exists, is obtainable and can provide an additional level of security that could save such providers significant sums – without significantly increasing their overheads. The question is, how?
Well, talk to us. At Partitionware, we can provide secure access to mobile networks and can enable the location of subscriber devices to be obtained via lookup techniques. This information allows the location of the subscriber to be derived by proxy and in real-time – if they are in the same location, at the same time, as the attempted transaction, the chances of it being fraudulent are reduced. If the device is not in the vicinity, then additional security checks can be initiated, helping reduce fraud and protecting all stakeholders.
And, that’s exactly what happened recently when a bank that was using our API via one of our service provider partners obtained a location update when a transaction from a client was attempted in the Caribbean. By doing so, it was able to verify that the subscriber was connected to the mobile network and so obtain relevant information that confirmed the context of the transaction and allowed it to be authorised instead of blocking it or raising an alert indicating possible fraudulent activity.
This saved time and money (as it was an automated process) and ensured that both the client account holder and the bank were protected. At Partitionware, we work only with trusted partners, to protect valuable data and provide network-grade security and reliability, so our processes can be relied on to enable new levels of automation and confidence through service provider partners.
Get in touch to find out how we can help you to protect your business and your customers – and enable you to offer secure authentication services to your partners. So, if you are a service provider and wish to offer such services to the financial services industry or if you are a bank and wish to access such capabilities, talk to us!