fortify your enterprise with ibm smarter counter-fraud solutions

Fortify Your Enterprise with IBM Smarter

Counter-Fraud Solutions

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Perficient is a leading information technology consulting firm serving clients throughout

North America.

We help clients implement business-driven technology solutions that integrate business

processes, improve worker productivity, increase customer loyalty and create a more agile

enterprise to better respond to new business opportunities.

About Perficient

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• Founded in 1997

• Public, NASDAQ: PRFT

• 2013 revenue $373 million

• Major market locations:

• Allentown, Atlanta, Boston, Charlotte, Chicago, Cincinnati,

Columbus, Dallas, Denver, Detroit, Fairfax, Houston,

Indianapolis, Lafayette, Minneapolis, New York City,

Northern California, Oxford (UK), Philadelphia, Southern

California, St. Louis, Toronto, Washington, D.C.

• Global delivery centers in China and India

• >2,200 colleagues

• Dedicated solution practices

• ~90% repeat business rate

• Alliance partnerships with major technology vendors

• Multiple vendor/industry technology and growth awards

Perficient Profile

BUSINESS SOLUTIONS

Business Intelligence

Business Process Management

Customer Experience and CRM

Enterprise Performance Management

Enterprise Resource Planning

Experience Design (XD)

Management Consulting

TECHNOLOGY SOLUTIONS

Business Integration/SOA

Cloud Services

Commerce

Content Management

Custom Application Development

Education

Information Management

Mobile Platforms

Platform Integration

Portal & Social

Our Solutions Expertise

Smarter Threats, Smarter Counter Fraud

Aaron Glover, IBM Counter Fraud Management

Consultant & Financial Crimes SME

Agenda

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Speaker Introduction

Defining the Fraud Problem – Scope and Dimensionality

Quantifying the Fraud Problem – Forces, Externalities, and Impacts

Qualifying the Fraud Problem – Barriers and Opportunities

The IBM Smarter Counter Fraud Approach

The IBM Smarter Counter Fraud Results

Closing Remarks and Summary

Big Data Analytics Statistics

Fraud Prevention &

Detection

Information Security

Banking & Financial Services

Anti Money Laundering

IBM Smarter Counter Fraud

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Aaron J. Glover• Joined IBM Counter Fraud Management Software Group in 2014

• Bank Fraud Analytics & Strategies for Large Super-Regional Bank

• Account Take Over (Cyber vs. Non-Cyber)

• Anti Money Laundering (AML)

• Customer Due Diligence (CDD)

• Enhanced Due Diligence (EDD)

• Know Your Customer (KYC)

• Know Your Customer’s Customer (KYC2)

• Sanctions Screening

• Transaction Monitoring

• Check Deposit Fraud / Kiting

• Check Fraud

• Debit / Credit Plastic Card Fraud

• Emerging Technology Schemes (Remote Deposit Capture, Bitcoin)

• Hadoop-based Big Data Super Computing Infrastructure

• Internal / Employee Fraud

• Regulation E Claims Abuse

• Reward Points Program Abuse

• Wire / ACH Fraud

• Analytics Consulting for Nationwide Home Improvement Retailer

• Information Security Consulting for Health Insurance Provider

• Education & Certifications

• Charted Financial Analyst (CFA) Level III Candidate

• Master of Business Administration (MBA), Finance & Operations Management, Georgia Institute of

Technology

• Master of Science (MSc), Financial Engineering, Georgia Institute of Technology

• Bachelor of Science (BSc), Statistics, University of Tennessee

• CompTIA Security+


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Fraud is a deliberate deception or misrepresentation which violates a legal statute and is intended to produce an undue financial gain.

Opportunistic

Organized

Organized Provider

Individual Employee

Staged events

Money laundering

Slip and fall

Arson

Tax fraud

Medical fraud

Improper billing

Improper payments

Procurement

Financial statement

Expense

Scope includes

Financial crime including money

laundering, cyber attack and

illegal security breach.

Abuse which similar to fraud but

not determined to violate the law.

Waste & Error refer to improper

payments which are the result of

over paying due to poor policies or

operational mistakes

Risk includes financial,

operational, IT and security risks

and financial crimes which all

must be identified, monitored and

controlled.


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1 The 2013 Norton Report2 United Nations Office on Drug and Crime, Comprehensive Study on Cybercrime, February 20133 The Fiscal Times, Feds Blow $100 Billion Annually on Incorrect Payments, Jan 15, 2014, amount in US $4 Reuters, Dec 11, 2012, amount in US $5 Brand Index, Company perception falls after data breach, Dec 23, 2013, Brand Index ranges from -100 to 100 pts6 Entersekt-sponsored Harris Interactive US survey conducted May 14-16, 2013

Increasingly frequent and complex fraud

schemes

12 cybercrime victims per second1

80% of schemes are perpetrated by organized criminal groups2

The explosion in global connectivity has escalated the vulnerabilities of individuals, enterprises and nations to cybercrime

Fraud no longer acceptable as “cost of

doing business”

$100 billion annual improper payments by US Fed Agencies3

$1.92 billion largest fine to-date in money laundering case4

Intensifying regulatory enforcement and operational losses apply significant pressure on profitability

Customer expectations are on the rise

45point drop - retail store brand perception index change one week after data breach5

71%customers who will switch banks due to fraud6

Customer convenience, satisfaction and trust drive brand choice and must be earned on an ongoing basis

Converging forces are escalating fraud risk, exerting significant downward pressure on an organization’s bottom line.

http://www.google.ca/url?sa=t&rct=j&q=&esrc=s&source=web&cd=3&ved=0CFMQFjAC&url=http://www.unodc.org/documents/organized-crime/UNODC_CCPCJ_EG.4_2013/CYBERCRIME_STUDY_210213.pdf&ei=JkwKU_n1AcafyQHvqIGoDw&usg=AFQjCNFoJTRP-PIsyx__BHuRMx7J-JPBvQ&

http://www.thefiscaltimes.com/Articles/2014/01/15/Feds-Blow-100-Billion-Annually-Incorrect-Payments

http://www.brandindex.com/article/target-perception-plummets-after-data-breach


Claims

Underwriting

Analytics

Legal

Risk

Special Investigative Unit (SIU) – Analysts &

Investigators

Management

Narrow observation space

Isolated Data

Reactive versus Proactive

Accepted cost of doing business

Departmental band-aides

The challenges:

Dept A Dept B Dept C Dept D

Advantage to the fraudster: isolated data, point solutions and corporate silo culture play into the fraudsters hands – especially in emerging markets


• Elevate to board-level responsibility • Manage fraud risk to improve business impact • Establish cross organizational leadership to counter

fraud and financial crimes

1 | Elevate the agenda

• Expand the observation space• Apply deep and layered analytics at each

level of fraud lifecycle• Act upon suspicions as they are identified

2 | Act with insight superiority

`• Leverage technology to automate response • Implement a lifecycle management approach to

continuously adapt to evolving threats• Tap into and engage with industry-wide, global intelligence

networks

3 | Adapt with agility

IBM’s Point of View is based on advances in technology that can enable organizations to stay ahead of the threats, improve the bottom line and enhance customer / citizen engagement


Detect

Investigate

Respond

Discover

Detect fraud within a business process

Turn fraud intelligence into action with investigative analysis

Apply fraud insights to take action in real time—when it matters

Uncover hidden fraud within Big Data

IBM Smarter Counter Fraud Management addresses each phase of

an enterprise fraud approach.


IBM Smarter Counter Fraud framework defines our recommended structure for both Technology and Services to reduce fraud.


A comprehensive set of integrated market-leading software and services capabilities designed to combat today’s new threats.

Counter: Fraud management

Detectdecision time

Respondstop or proceed

Investigatesuspicious activity

Discoverretrospective

Prevent: Fraud defense

Cybercrime Protection

Security Intelligence

Controls, Policies and

Processes

Go

ve

rna

nc

eInte

llig

en

ce


IBM Counter Financial Crimes software plus services delivers a holistic solution.

Detect

Predictive analytics

Entity Analytics

Rules

Decision

management

Respond

Operational system

integration

Action

Guidance

Rules

Discover

Selection

Evaluation

Anomalies

Identification

Investigate

Case management

Content analytics

Relationship

visualization

Forensic analysis

Expanded observation space

Report

Dashboards

Operational

reporting

Case briefing

Feedback

Operational systems

Advanced industry librariesData models | Predictive models | Rules | Reports | Process | External fraud data and more

Back-office analyticsReal time | In-line

Information

domains

External

sourcesBig data

Evolving unstructured

sources

Internal

sources

Target operating model

how you run and operate

Enablement

standing up the capabilities

Strategy and roadmap

what you should do and when

Se

rvic

es


Business Rules

Entity Analytics

PredictiveModel

OptimizeDecisionManager

AnomalyDetection

DetectionTransactions

(Financial)

Forensic InvestigationReporting and Dashboards

Entity Analytics

Case Management

Real Time Alert

New Investigation

Customer

Criminal

Discovery

Emerging model library

SelectionEvaluation

Identification

Observation Space

Customer

Actions ?

Detect Prevent Discover Investigate ReportDetect Respond Discover Investigate Report


Entity Analytics – Resolving Who’s Who and Who’s Related to Who

• There are no consistent standards for names. Some countries mandate certain standards but they differ from country to country, and most countries have no standards.

• Names can contain a variety of OPTIONAL information that can make the same name

appear very differently.

Typos, Misspellings: SMITH~SIMTH, JOHNSON~JPHNSON

Noise THOMPSON~TH9MP2ON

Concatenations: Andrews~AndrewsJR

Truncations/Initials: Ivanov~Ivanovsky, Patrick~P Abdul ~ Abdul Rahman

Name Order (parsing): George Michael ~ Michael George Maria del Carmen Bustamante de la Fuente

Qualifiers, Titles, Suffixes, Prefixes:

Jr., Dr., Hajj, -oglu, Fitz, Rev., Abdul…

Nicknames/Shortened Names:

Dave Young / David Young.

Francisco Garcia / Paco Garcia.

Mhd Al-Fadhil / Muhammed Al-Fadhil.

GPE Sanchez / Guadalupe Sanchez.

Phonetics:

Leighton ~ Layton

Variant Spellings

Mohammed ~ Imed

Transliteration

Mohammed Omar ~ “محمد عمر عايد على جادهللا

Ayed Ali Jadallah


Entity Analytics – Resolving Who’s Who and Who’s Related to Whom


Detect – Rules and Analytics

Graphical UI makes it easy to integrate multiple data sources and multiple different

types of analytics into a single flow without coding.


Detect – Content Analytics powered by Watson

Watson Content Analytics are seamlessly integrated into Counter Fraud

Management to mine, search and analyze unstructured data.

• Automatically enrich information

so analysts can focus on

decision making, not research

• Often, the links between things

are buried in unstructured

information (e.g. how do you

know that Joe works with Bill?

From email or website.)

• Search across all cases,

documentation, claims, policies,

web pages, lists, public records


Respond – Case Management and Investigation

Graphical UI makes it easy to investigate, triage, and reach actionable decisions.


Investigate – Social Network Analysis

Graphical UI makes it easy to investigate and uncover non-obvious interconnected

relationships through social network analysis techniques.


Discover – Business Intelligence and Reporting

Reporting seamlessly leverages the data from detection and investigation to

manage the business and visualize patterns.

Timelines

Fraud risk heat maps

Money flowsProgram Efficiency & Effectiveness

Exposure by Type by Geo


Discover – Business Intelligence and Reporting

Management Summary Reports Examples


The IBM Smarter Counter Fraud Results for a Large North American Bank

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• Identification of $9.4M in fraudulent ATM deposits annualized, that had not been flagged for investigation by the Bank’s existing alerting system

• 10% reduction in false positive alerts, which translated to a doubling in accuracy when identifying truly fraudulent deposits

• 130% increase in detecting of ATM fraud

Results achieved at a leading Bank

• Leverage Big Data/Analytics capabilities to enhance algorithmic and models

• High speed storage

• Ability to understand and apply unstructured data

• Real-time or near real-time decision making

• Increased data linkage

• Risk Scoring of customers and transactions

• Predictive analytics

IBM’s capabilities that achieved these results

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Business Challenge: Money Services Business (MSB) faced pressure to keep up with

fraud and compliance regulations affecting the international business landscape.

The Solution: Understanding who its clients are is helping the business identify and

stop fraudulent, unauthorized money transfers, thereby addressing a common problem

for financial institutions worldwide. Using a powerful, algorithms-based software

platform, the company has new insight into “who’s who?” “who knows whom?” and

“who does what?” as it analyzes transactions to identify known and unknown people

attempting to move money.

With the solution, the business can quickly identify questionable patterns, proactively

enact processing rules, and quickly become compliant with new regulations, preventing

thousands of customers from losing funds to fraud.

40% increasein ability to identify fraudulent transactions

72% reductionin consumer fraud complaints in

one year

$37.7 million haltedin fraud in one year


Aaron Glover, IBM Counter Fraud Management

Consultant & Financial Crimes SME

[email protected]

Closing Remarks and Next Steps

Counter Fraud Partner

Joel Thimsen

Director, IBM Smarter Cities Consulting, Perficient

Perficient and IBM

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IBM Counter Fraud

• Perficient SMEs in Financial Services,

Healthcare, and Retail/Consumer

Goods to ensure your success

• Dedicated delivery team focused on

Counter Fraud solutions

• Perficient’s fraud experts have

experience turning intelligence into

action through investigative analytics

• 15+ year history of partnering with IBM

IBM i2

Also experienced in i2 solutions:

• i2 Analysis Notebook Premium

• i2 Enterprise Intelligence Analysis

• i2 Intelligence Analysis Platform

• and more

As a reminder, please submit your

questions in the chat box.

We will get to as many as possible.

12/9/2014

Thank you for joining us today.Please fill out the survey at the close of this session.

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fortify your enterprise with ibm smarter counter-fraud solutions

Technology

fraud analytics consulting

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