The Financial Services Authority (FSA) is advocating a new ‘fighting fraud in partnership’ policy – based on the need for financial companies to work together to tackle the issue.
While many organisations are concerned that sharing customer information means sharing competitive advantage, specialist IT consultancy, Detica, claims that it can be done without helping rival organisations.
"The FSA estimates the financial sector is losing £11billion per year to economic crime and fraudsters recognise that the best way to disguise their activities is to spread them across multiple organisations," says Imam Hoque, Head of Technology Innovation at Detica. "That’s why the industry has to share information on customers to make it easier to spot criminal activity."
One approach advocated by Detica is to use modern technology to convert structured customer data into a ‘signature’, which doesn’t hold the original information. Instead it contains a representation of enough data to match records with similar names, addresses and descriptions, without the need to reveal any sensitive details.
Basic rules could be put in place to identify which claims should be checked as potentially fraudulent across the industry and signatures of these then sent out to other organisations for matching. More details would only be revealed if there were a match, for example, when an individual has committed the same type of fraud across more than one company. This means records can effectively be shared without a business losing its competitive edge.
"A lot of organisations are unaware of recent advances in anti-fraud technology," Hoque continues. "They see storing huge amounts of customer information as costly, whereas nowadays data can be stored in smaller, more cost effective machines. Instead of worrying about losing competitive edge, companies should be more concerned about the levels of fraud happening across the industry."
Hoque says the technology to help fight fraud is out there: companies just need to become more educated about what it can do and use it more.
"Organsations which think that not investing in sophisticated anti-fraud measures will save them money are practising a false economy, as fraud could end up costing them more in the long run. Implementing technology that enables the sharing and matching of customer information will benefit the entire industry," Hoque adds.
