When it comes to recent security breaches, the numbers tell a distressing story. A Ponemon Institute survey released in September 2014 found that 43 percent of U.S. companies had experienced a security breach in the year leading up to the study, including corporate giants such as eBay, American Express, JPMorgan Chase and Home Depot. According to the Wall Street Journal, the Target breach of December 2013 compromised more than 40 million cards.
With the introduction of new payment technologies all around us, the opportunities for fraudsters to seize credit union member data are quickly multiplying. In fact, Smart Card Alliance estimates that nearly 600 million EMV chip cards will be issued in the U.S. by the end of 2015. Consider also the rapid adoption of Apple Pay, Android Pay, and a host of new P2P payment technologies, and it is clear that credit unions will soon face a fraud detection burden of unprecedented proportions.
“With so many potential points of compromise today, as a credit union you can no longer afford the hours or days it can take to receive fraud-related information from card associations, or the personnel required to pour over these reports by hand,” said Tim Weaver, product manager – core products, for CO-OP Financial Services. “To stay ahead of fraud in this environment and keep your members’ data safe, you need to invest in the right data analytics technology and strategy.”
Using Data Analytics to Answer Vital Questions
With data analytics, credit unions can quickly distinguish members’ purchasing patterns and behaviors, identify at-risk cards and merchant points-of-compromise in their portfolio, and immediately take the right steps to mitigate the fraud. While there are many analytics engines available on the market today, Weaver emphasizes that some are more effective than others.
“Many deployments provide dashboard-only views of your data,” he said. “To address fraudulent activity as quickly as possible, you need a tool that looks at a very wide range of data, including all the data points you need to answer important questions about a given incident.”
Solving the Puzzle Takes Both Demographic and Transaction Data
Weaver recommends solutions that synthesize demographic and transaction data. These more complex solutions identify at-risk cards faster than ever by combining the most pertinent data points for known breaches – including start/end dates, card groups, card entry methods, transaction regions, merchant categories, named transactions and networks – and then connecting this information to actual card holder names and data. In integrating demographics with transaction data, you can also take a single compromised card and then identify other impacted cards simply by filtering for shared purchasing patterns.
“Whenever fraud occurs, time is of the essence,” said Weaver. “The most advanced data analytics tools allow you to uncover points of compromise within minutes, with minimal information up front, and without taking employees away from their primary focus, which is to serve members. The ability to address fraud in its early stages dramatically reduces its impact on both your members and your bottom line.”
Beyond Fraud Detection: How Data Helps Build Member Relationships
While fighting fraud may be the foundation of your data analytics strategy, Weaver notes that fraud detection represents just a small fraction of what these tools can do.
“Data analytics help you understand member behavior in detail,” he said. “So, in addition to helping you pinpoint fraud, you can utilize your analytics engine to gain valuable insights into the needs and preferences of members. This allows you to streamline your marketing efforts, speak to members with more relevant messaging, and introduce them to the products and services best suited for them.”
He concludes, “Cultivating member loyalty starts with safeguarding member data, but it also includes providing the kind of personalized consumer experience that makes doing business with you a pleasure. The right data analytics solution can help protect you and your members, enhance your business processes, and most importantly, deepen member relationships and inspire trust for the long term.” For more information on CO-OP Revelation, a tool to gain deep insight into your portfolio, click here.