ABA Banking Journal - November/December 2016 - 50


>>> RISK MANAGEMENT

How to Pinpoint a Data
Breach More Efficiently
BY TINA OREM

F

raud costs banks $1.9 billion
a year, but a three-year-old
Chicago-based company
named Rippleshot-recently
endorsed by ABA for card
breach detection-is helping banks
take a major bite out of that by using
big data, machine learning and
predictive analytics to detect card
fraud weeks or even months before
traditional methods sound the alarm.
Using an algorithm that compares and
combines merchant and card issuer
data on hundreds of millions of card
transactions and fraudulent activity
reports, Rippleshot's Sonar product
finds common points of compromise-
the places cardholders shopped at
before their cards were suddenly used
fraudulently somewhere else. This
reveals which stores-even which
point-of-sale terminals-might be
compromised, as well as which cards
were used there during the suspected
breach and which cards are most likely
to report fraudulent use soon.
The approach is dramatically different
from how many banks currently get a
heads up about a breach, Rippleshot
CEO Canh Tran said.
Today, "it's pretty much sort of like a
little telephone chain," he explained.
"Word gets passed around. People
make calls to colleagues at other banks
and pretty soon somebody sends an
anonymous post to [cybersecurity
reporter Brian] Krebs and he hits
publish. Then they're calling the

processors and saying 'Hey, are you
seeing anything here? We're seeing a
lot of customers having debit or credit
card fraud. We can't pinpoint it.' The
processor will say something like 'I'm
working on that. We'll get back to
you.' It's a very manual, reactive type
of process."
However, Tran says Rippleshot can
warn clients of a suspected breach
an average of 46 days before a
Compromised Account Management
System alert goes out, thus helping
banks avoid unwarranted mass
reissues, thereby reducing fraud
costs by 20-30 percent and shrinking
card reissuance costs by as much
as half. "Sonar provides insights into
cards less likely to be breached and
therefore enables the bank to make
more informed decisions re-issuing
cards," says Bryan Luke, president
and COO at Hawaii National Bank
in Honolulu. "This alone has the
potential to save the bank significant
costs in unnecessary reissuance."
Tran also noted that CAMS alerts tend
to focus on large breaches; far fewer
go out for smaller local breaches
associated with ATM skimmers, local
independent restaurants or even
e-commerce sites.
"Thirty percent of all data breaches
are from smaller retailers, and
87 percent of those are from
merchants who have five stores or
less," he explains. Plus, the average
compromised card passes through

not one but three compromised
merchants.
Now more banks have access to
technology that gives them more
flexibility in the face of fraud and
allows them to make more intelligent
decisions around whether a card needs
to be reissued, according to ABA
SVP Lisa Gold Schier. "Our bankers
have been continually talking about
the issues that are involved with card
fraud, and how difficult it is for them
if there is card fraud. That's why we
made this endorsement."
TINA OREM is a frequent ABA Banking Journal
contributor.
aba.com/BankingJournal | ABA BANKING JOURNAL

51


http://www.aba.com/BankingJournal

Table of Contents for the Digital Edition of ABA Banking Journal - November/December 2016

Chairman’s View
Upfront
Picture This
Banking’s ‘Amazon Moment’
Special Report on Innovation and Technology
Building an ‘Internet of Value’
Do You Do What the Data Tell You?
Innovation in the Bank
Core Exercises
Cover Story Pillar of Her Community
Maintaining a Commitment to Ag Customers
Who You Gonna Call?
Anti-Money Laundering
Power Up Profile
Compliance ‘When Can I Call My Customer?’
Risk Management
ABA Compliance Center Inbox
From the States
Corporate Social Responsibility
Index of Advertisers
ABA Banking Journal - November/December 2016 - bellyband1
ABA Banking Journal - November/December 2016 - bellyband2
ABA Banking Journal - November/December 2016 - cover1
ABA Banking Journal - November/December 2016 - cover2
ABA Banking Journal - November/December 2016 - 3
ABA Banking Journal - November/December 2016 - 4
ABA Banking Journal - November/December 2016 - 5
ABA Banking Journal - November/December 2016 - 6
ABA Banking Journal - November/December 2016 - 7
ABA Banking Journal - November/December 2016 - Chairman’s View
ABA Banking Journal - November/December 2016 - 9
ABA Banking Journal - November/December 2016 - 10
ABA Banking Journal - November/December 2016 - Upfront
ABA Banking Journal - November/December 2016 - 12
ABA Banking Journal - November/December 2016 - 13
ABA Banking Journal - November/December 2016 - 14
ABA Banking Journal - November/December 2016 - 15
ABA Banking Journal - November/December 2016 - Picture This
ABA Banking Journal - November/December 2016 - 17
ABA Banking Journal - November/December 2016 - 18
ABA Banking Journal - November/December 2016 - 19
ABA Banking Journal - November/December 2016 - Special Report on Innovation and Technology
ABA Banking Journal - November/December 2016 - 21
ABA Banking Journal - November/December 2016 - 22
ABA Banking Journal - November/December 2016 - Building an ‘Internet of Value’
ABA Banking Journal - November/December 2016 - 24
ABA Banking Journal - November/December 2016 - 25
ABA Banking Journal - November/December 2016 - Do You Do What the Data Tell You?
ABA Banking Journal - November/December 2016 - 27
ABA Banking Journal - November/December 2016 - insert1
ABA Banking Journal - November/December 2016 - insert2
ABA Banking Journal - November/December 2016 - Innovation in the Bank
ABA Banking Journal - November/December 2016 - 29
ABA Banking Journal - November/December 2016 - 30
ABA Banking Journal - November/December 2016 - Core Exercises
ABA Banking Journal - November/December 2016 - Cover Story Pillar of Her Community
ABA Banking Journal - November/December 2016 - 33
ABA Banking Journal - November/December 2016 - 34
ABA Banking Journal - November/December 2016 - 35
ABA Banking Journal - November/December 2016 - 36
ABA Banking Journal - November/December 2016 - 37
ABA Banking Journal - November/December 2016 - Maintaining a Commitment to Ag Customers
ABA Banking Journal - November/December 2016 - 39
ABA Banking Journal - November/December 2016 - 40
ABA Banking Journal - November/December 2016 - Who You Gonna Call?
ABA Banking Journal - November/December 2016 - 42
ABA Banking Journal - November/December 2016 - 43
ABA Banking Journal - November/December 2016 - Anti-Money Laundering
ABA Banking Journal - November/December 2016 - 45
ABA Banking Journal - November/December 2016 - 46
ABA Banking Journal - November/December 2016 - Power Up Profile
ABA Banking Journal - November/December 2016 - 48
ABA Banking Journal - November/December 2016 - Compliance ‘When Can I Call My Customer?’
ABA Banking Journal - November/December 2016 - 50
ABA Banking Journal - November/December 2016 - Risk Management
ABA Banking Journal - November/December 2016 - ABA Compliance Center Inbox
ABA Banking Journal - November/December 2016 - 53
ABA Banking Journal - November/December 2016 - 54
ABA Banking Journal - November/December 2016 - From the States
ABA Banking Journal - November/December 2016 - 56
ABA Banking Journal - November/December 2016 - Corporate Social Responsibility
ABA Banking Journal - November/December 2016 - Index of Advertisers
ABA Banking Journal - November/December 2016 - cover3
ABA Banking Journal - November/December 2016 - cover4
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