Independent Banker - February 2019 - 37

Foreseeing the future
of fraud
Security
Machine learning technology is
advancing to the point that some
card issuers and processors are using it to
predict where fraud is happening and where
it will emerge. Though still in its early days,
community banks are looking at how they
might implement this technology. By Karen
Epper Hoffman
s card crooks grow ever more sophisticated
in how they perpetrate fraud, retail
banks and their providers are upping their own
game in trying to determine where malfeasance
is happening-and even where it might happen
next.
While this sounds like fodder for a science-fiction
film, financial institutions are embracing
machine learning, or artificial intelligence in
its advanced versions, to help more effectively
A
Quick stat
3.6
The average
number of
fraudulent card
transactions
before a fraud
incident is
caught and
stopped
Source: PG Research &
Advisory Services
pinpoint fraudulent card transactions or find
cardholder data that may be for sale on the dark
web, the online black market.
At last August's Black Hat USA conference in
Las Vegas, executives from Royal Bank of Canada
(RBC) and technology partner Terbium Labs presented
on how the Canadian bank had combined
machine learning, predictive analytics and intelligence
gathered from online carding forums with
transactional data organizations to predict future
fraud victims before dubious credit card transactions
had even occurred. During his presentation,
Dr. Cathal Smyth, a machine learning researcher
with the RBC's Vanguard cybersecurity team,
identified that predicting card fraud presents " a
classic big data problem. "
With the vast stores of payment card,
transactional, personal, demographic and historical
fraud data to work from, card-issuing banks
independentbanker.org Q 37

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Independent Banker - February 2019

Table of Contents for the Digital Edition of Independent Banker - February 2019

Table of Contents
Independent Banker - February 2019 - Cover1
Independent Banker - February 2019 - Cover2
Independent Banker - February 2019 - Table of Contents
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Independent Banker - February 2019 - Cover3
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