First line of defence – enhancing security with a robust comprehensive Fraud Management System

The digital revolution has undeniably revolutionised the banking sector, bringing convenience and accessibility to millions. However, it has also exposed financial institutions to an increasing number of risks and vulnerabilities, including fraud and cybercriminal activities. Fraud has become a pervasive threat in the banking industry, impacting not only financial institutions but also customers who entrust them with their hard-earned money. Cybercriminals employ increasingly sophisticated techniques, making it essential for banks to stay one step ahead in the battle against fraud.

In March 2022, the Bangko Sentral ng Pilipinas (BSP), the central bank of the Philippines, took a significant step towards bolstering cybersecurity and combating fraud by issuing BSP Circular No. 1140.

Key Requirements of Circular 1140
Circular 1140 is an important amendment to the ‘148 Information Technology Risk Management’ policy and framework and requires Banking, Financial Services, and Insurance (BFSIs) to implement Fraud Monitoring and Detection Systems with the following features, functionalities and capabilities:

• FMS must be automated and supports real-time fraud monitoring, detection and prevention of fraudulent, suspicious or high-risk online transactions across all channels (multi-channel)
• Integrate FMS with AML systems to provide a holistic and comprehensive financial crime prevention platform
• Ability to processing surges in transactions, employ behavioural analytics and profiling (across customers, accounts, devices, etc) and support detection of new fraud trends/patterns
• Invest in consumer education programs to promote awareness on fraud, scams and associated security risks in financial services

To address the pressing need to strengthen the country's banking sector in the face of evolving threats, this circular mandates banks to promptly adopt robust fraud management systems to minimise potential losses resulting from fraudulent activities and cybercrimes. 

The Challenges
Despite the urgency and the BSP's mandate, many banks in the Philippines have faced obstacles in implementing an effective fraud management system. The task of identifying a suitable solution can be daunting, as banks must consider factors such as system compatibility, cost-effectiveness, and compliance with regulatory requirements. Moreover, the rapidly evolving nature of fraud techniques and cyber threats demands a solution that can adapt and stay ahead of malicious actors.

The Solution
Amidst the search for an optimal fraud management system, banks in the Philippines are seeking a solution that is designed to minimise fraudulent activities and enhance security across various banking processes, whilst empowering them to meet the BSP's requirements effectively.

Let's explore some of the key benefits of GBG's fraud management solutions for banks in the Philippines.

• Automated and real-time detection
  GBG’s fraud management solutions help banks to detect and take action to prevent fraudulent behavioural patterns by identifying threats before their customers are compromised. By providing a holistic view, you can benefit from a faster and improved investigation process with inbuilt shortcuts. Block fraud, highlight transactions as genuine or suspicious, and create or edit a case within the management system effortlessly.
• Prevent transaction fraud across channels
  In line with BSP’s requirement, BSFIs' fraud monitoring systems (FMS) should be commensurate with the risks associated with their digital financial and payment platforms. GBG fraud management solutions enable you to implement sufficient safeguards for internet banking, mobile banking, devices, ATMs, and credit cards to protect against fraud so you can launch new channels readily with financial crime protection. Additionally, Predator allows you to leverage data from different channels to build distinctive user behaviour profiles to gain insight and detect transaction fraud.
• Detect emerging fraudulent transactions
  Employing sophisticated algorithms and machine learning techniques helps identify unknown and new fraud patterns effectively by analysing vast amounts of data, including transactional patterns, customer profiles/ behaviour, and historical data. GBG's fraud management solutions can identify anomalies and suspicious activities (MITM, transaction fraud, Malware, phishing, bots, use of Proxy/VPN/TOR, use of remote access tools (RAT), use of device emulators, compromised accounts or device information) with a high degree of accuracy. This proactive approach enables banks to mitigate risks before significant losses occur.
• Enhanced Customer Authentication
  Customer authentication lies at the heart of preventing fraud in the banking sector. Solutions that provide multi-layered verification methods, includes authenticating mobile sessions and users, financial and non-financial transactions, geolocation, account number, device fingerprinting, and behavioural analytics, to ensure the legitimacy of transactions and safeguard against unauthorised access. By streamlining authentication processes and minimising false positives, our fraud management solutions create a secure yet seamless banking experience for customers, instilling their confidence whilst helping banks build trust.
• Comprehensive Risk Assessment
  Incoming transactions are assessed based on past behaviours to detect suspicious/ irregular patterns and financial fraud risks. By leveraging factors such as transaction amounts, geographic location, and historical patterns, the system analyses the spending behaviour and pattern to spot any anomalies, then assign risk scores, enabling banks to prioritise and respond effectively to potential threats.
• Seamless Integration and Customisation
  One of the key challenges faced by banks is the integration of new systems with their existing infrastructure. GBG's fraud management solutions are designed to seamlessly integrate with a bank's IT ecosystem, minimising disruption and simplifying the implementation process. Furthermore, these solutions can be customised to suit the unique requirements and risk profiles of individual banks, ensuring optimal fraud prevention strategies.
• Compliance with Regulatory Requirements
  Adhering to the BSP's regulatory guidelines is paramount for banks in the Philippines. Our fraud management solutions are designed with compliance in mind, providing features such as centralized management and alert aggregation, logs, audit trails for investigation and forensics, data security in storage and transmission (encryption), and fraud reporting capabilities. These functionalities ensure that banks can meet regulatory obligations seamlessly, avoiding penalties and reputational damage.

The BSP Circular No. 1140 highlights the Philippines Central Bank's commitment to fortifying the country's banking sector towards mitigating the rising threats of fraud and cybercrime. Banks embracing a robust fraud management system, are taking a step towards regulatory compliance but also an investment in safeguarding the trust and confidence of customers. As the banking industry evolves in the digital age, the importance of robust fraud management systems cannot be overstated.

By leveraging GBG's fraud management solutions for advanced fraud detection, enhanced customer authentication, comprehensive risk assessment, compliance features, and continuous adaptation capabilities, banks in the Philippines can strengthen their security posture, minimise financial losses, and safeguard the trust of their customers in an increasingly digital and interconnected world – protecting their customers' financial well-being.

For more information visit https://www.gbgplc.com/apac/fraud-compliance-management/.