ACI Webinar: How Mobile Can Prevent Fraud Using SMS Alerts

Learn how mobile telephony can prevent fraud in the ACI Worldwide Financial Crime webinar or learn more at: http://www.ACIWorldwide.com

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Good morning to this second in the series of webinars, organized by ACI. The title of today's session is "How Mobile Telephony Can Prevent Fraud", and specifically we're looking also at the difference between using text message as a fraud prevention solution versus voice type solutions like IVR.

My name's Gerard Vos. I run Spectrum Messaging Services Proprietary Limited which is a company focusing on interactive SMS and mobile browsing, mobile banking, mobile payment solutions.

One of the areas that we look at on how fraud can [inaudible 00:45] is first to scene the scene on what are the numbers in the industry. So if we look at the theory then we seeing that there are 7 billion people currently in the world, and out of those 7 billion people there are 5 billion mobile phones. A mobile phone seems a very logical way to get in contact people as they normally leave with their wallet and their mobile phone.

In contrast, there are about 1.2 billion PCs in the world. So there is definitely a very high penetration ratio, and in most countries, virtually a one on one ratio between the number of mobile phones and the number of people and card holders.

What we've also seen is a trend is that in the first quarter of this year, for the first time the smartphone and tablet shipments exceeded the number of PC shipments. So especially the advance of social media has definitely created a shift in consumer behavior that many people shift to smartphones with browsers and are expecting to be contacted very much through their mobile phone.

If we now look at what's been happening in the industry for a fair bit, and at the IVR side, we see that it's generally widely disliked. Many people do not like to have to answer a call, interact with a computer not at their request. And basically it takes a lot of their time too, and it's also not a validated call. You don't really know who's calling you.

The fraud impact is debatable, and in many cases it's also used to perpetrate fraud by basically starting a call and asking the cardholder to enter their card data.

On the SMS side, it's in-obtrusive and fast. You can have your phone on silent. You can still quickly look at the messages coming in and if it requires no action you delete the message. It's a very convenient way of contacting your cardholder and for the cardholder.

It's also an easy tool to use in case of mass compromise. You can script in the PRM system that all cardholders that have, for instance, been at the site that was compromised that they receive a higher level of alerts for a certain period for transactions that are deemed associated with that compromise.

You can also send people a text message to warn them to be vigilant on their transactions for a certain period after a breach, which is a lot quicker than trying to call 20,000 people or re-issue 20,000 cards. It's also very cost-effective. Sending a text message's generally a lot less expensive than making a phone call from a call center or making phone contact in another way.

Finally, if you allow the consumer to select their own preferences and to say "Send me an alert when it's an ATM transaction over 200 Euros, for any foreign transaction or for a card not present transaction" then generally they are prepared to pay for it and there are many examples in the world where banks have been able to generate a revenue stream as well as reduce their fraud.

Finally, it's proven to reduce fraud, as we will later show in the case study. In the areas where it has been implemented, it has really significantly reduced to fraud to one of the lowest values in the world.

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  Science & Technology