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Businesses are purchasing cyber insurance policies to protect themselves from the crippling cost of a data breach.
By: Maria Moynihan Cybersecurity, identity management and fraud are common and prevalent challenges across both the public sector and private sector. Industries as diverse as credit card issuers, retail banking, telecom service providers and eCommerce merchants are faced with fraud threats ranging from first party fraud, commercial fraud to identity theft. If you think that the problem isn't as bad as it seems, the statistics speak for themselves: Fraud accounts for 19% of the $600 billion to $800 billion in waste in the U.S. healthcare system annually Medical identity theft makes up about 3% of 8.3 million overall victims of identity theft In 2011, there were 431 million adult victims of cybercrime in 24 countries In fiscal year 2012, the IRS’ specialized identity theft unit saw a 78% spike from last year in the number of ID theft cases submitted The public sector can easily apply the same best practices found in the private sector for ID verification, fraud detection and risk mitigation. Here are four sure fire ways to get ahead of the problem: Implement a risk-based authentication process in citizen enrollment and account management programs Include the right depth and breadth of data through public and private sources to best identity proof businesses or citizens Offer real-time identity verification while ensuring security and privacy of information Provide a Knowledge Based Authentication (KBA) software solution that asks applicants approved random questions based on “out-of-wallet” data What fraud protection tactics has your organization implemented? See what industry experts suggest as best practices for fraud protection and stay tuned as I share more on this topic in future posts. You can view past Public Sector blog posts here.
By: Lloyd Parker Another Experian Vision Conference comes to a close today but not without a full morning of breakout sessions with compelling speakers and experts sharing real-world strategies for real opportunity and real growth. The conference concluded with an entertaining and thought-provoking speaker, Sir Ken Robinson, Ph.D., author of The Element: How Finding Your Passion Changes Everything and Out of our Minds: Learning to Be Creative, who shared with us ideas on how to cultivate innovation and change within organizations in order to grow with their environments and continue to thrive. We’d like to thank you for making this year’s event one of the best. And thank you for the confidence you give us all year round. We know the great responsibility that goes along with that and we are committed to helping your business succeed. Top Tweets of the Week #Vision2013 the slowest growing loan segment (actually it is negative) is HELOC @cumagazine@dougbenzine at -8% YOY.#engage — Mike Horrocks (@mikehorrocks) May 8, 2013 #vision2013 great credit union discussion at experian conference! — Doug Benzine (@DougBenzine) May 8, 2013 #Vision2013 @sirkenrobinson (1) we are living in a time of revolution (2) we have to think differently about talents (3) then act different — Mike Horrocks (@mikehorrocks) May 8, 2013 'Most adults don't know what their true aptitudes are' Sir Ken Robinson #vision2013 — Michele Raneri (@MLRaneri) May 8, 2013 #Vision2013 @sirkenrobinson Our kids are not trains, they are rockets ready to explore and we need to help them only light the fuse. #engage — Mike Horrocks (@mikehorrocks) May 8, 2013
By: Lloyd Parker James W. Paulsen, Ph.D., Chief Investment Strategist at Wells Capital Management kicked off day two at the Experian Vision 2013 Conference with an upbeat economic outlook for 2013 and what it means longer term, for the next generation. Paulsen is nationally recognized for his views on the economy and publishes his own commentary assessing economic and market trends through his newsletter, Economic and Market Perspective. Today he demonstrated to conference attendees how the United States is in a “gear” year and that the “new normal” has been going on for the past 25 years. His optimism predicts that for the next 10 years we’ll see an estimated 3% GDP growth. As mentioned by some on Twitter, “he makes statistics fun.” The morning was followed by more insightful breakout sessions and the launch of a new session format called, “Viewpoints” – fast paced, quick-hitting sessions that highlight new innovations, forward-thinking solutions and product demonstrations designed to satisfy the attendee’s desire to learn more. Networking activities filled the afternoon, and at the time of post the winners of the golf tournament had not yet been announced. Other highlights from the day Viewpoint: The art of portfolio analysis Maintaining a strong commercial portfolio starts with knowledge. In this session, new concepts are introduced and old concepts were questioned as we shared validated intelligence on which commercial triggers are best suited for effective portfolio management. Viewpoint: A 900% return on small-business marketing Here proven approaches were reviewed for targeting existing small-business customers and prospects for deposits and loans using available firmographic data, business credit scores and response models. Viewpoint: Transaction data signals – challenges and opportunities Experian’s R&D Data Lab shared team insights into how underutilized transaction data might be leveraged as well as how to overcome some of the technical and business challenges that arise. Viewpoint: Find time and money in your credit authorization process Attendees learned how to improve decision making and productivity by bringing together multiple sources of credit authorization information in Baker Hill Advisor®. Viewpoint: Commercial fraud – An ounce of prevention is worth a pound of cure Protecting personal identities is commonplace for most businesses. Commercial fraud may not be a primary concern, but one “rare” occurrence could mean a big loss to profits and reputation. Attendees learned how BizID can prevent fraud in business portfolios and help ensure that appropriate preventive measures are taken. Viewpoint: SaaS for intelligent customer decisioning – separating the hype from the reality A stroll down memory lane highlighted the hype and reality of technology over the last several decades and looked at the realities we face that make this space so difficult to predict. Attendees looked at criteria to help them decipher what’s working, what they can do about it and the critical points to focus on when looking at SaaS solutions. Top tweets: "USA is in a GEAR Year" expects 3% growth this year. #vision2013 #finserv — Patricia Hines (@PJHines) May 7, 2013 #Vision2013 @aitegroup 32% of mobile users think mobile is secure & 55% think it is somewhat secure. Banks need to #engage mobile banking. — Mike Horrocks (@mikehorrocks) May 7, 2013 @experianvision "Growth may surpass expectations this year. Confidence is being upwardly adjusted." Dr. James W. Paulsen. #vision2013 — Martha Staten (@Sauconyandsuds) May 7, 2013
By: Maria Moynihan Reduced budgets, quickly evolving technologies, a weakened economy and resource constraints are clearly impacting the Public Sector, but it’s not all doom and gloom. Always with new challenges, come new opportunities. Government agencies must still effectively run programs, optimize processes and find growth in revenue streams. Below you will find the top 5 business challenges facing the Public Sector and municipal utilities today and ways to overcome them: 1. Difficulty finding debtors When asked to name the top challenge to their debt collection processes, governments most often indicate the difficulty in locating debtors whose whereabouts don’t in fact match information they have on hand. Skip tracing with right party contact data is key to finding people or businesses for collections and there are several cost effective ways to do this - either through industry leading tools or by tapping into available sources like voter registration information. 2. Difficulty in prioritizing debt collection efforts When resources are limited, it is critical to not only focus efforts by size, but by likelihood to make contact and access debtors with an ability to pay. Credit and demographic data elements like income, assets, past payment behavior, and age can all be brought together to better identify areas of greater ROI over others. 3. Lack of data available By simply incorporating third-party data and analytics into an established infrastructure, agencies can immediately gain improved insight for efficient decision making. Leverage on-hand data sources to improve understandings of individuals or businesses. 4. Difficulty of incorporating tools to improve debt recovery Governments too often attempt to reduce backlogs by simply trying to accelerate processes that are suboptimal to start with. This is both expensive and unlikely to produce the desired result. In the case of debt collection, success is driven by the tools and processes that allow for refined monitoring, segmentation and prioritization of accounts for improved decisioning. 5. Difficulty in determining to outsource or continue to internally collect While outsourcing to debt collection agencies is always an option, it may not be the most resourceful one, or in some cases, even necessary. Cost to value considerations per effort need to be made by agencies and often, the most effective strategy is to perform minimal efforts internally and to outsource older or skip accounts to third party agencies. What is your agency’s biggest business challenge? See what industry experts suggest as best practices for Public Sector collections or download Experian’s guide to Maximizing Revenue Potential in the Public Sector to learn more.
By: Lloyd Parker There aren’t many things that energize me more than seeing our clients arrive for the Experian Vision 2013 Conference. Industry leaders from all over the world have joined us in Southern California to kick-off a full day of insightful topics. This year’s event sold out in record time and we have many first time attendees taking advantage of the opportunities to network and learn from industry peers. Today began with a welcome from Steve Wagner, President of Consumer Information Services followed by Victor Nichols, Chief Executive Officer, Experian North America and myself, Lloyd Parker, Group President Credit Services. We launched our key theme of Real Strategies, Real Growth, Real Opportunities, discussing the concept of “reality checks.” Reality check #1: Micro-targeting is required Identify market differences Understand your customer segments Adapt to specific needs of your empowered consumers Reality check #2: Managing risk Protect against risks that follow success Keep your door open for good business Focus on operational efficiencies Reality check #3: Optimizing engagement Utilize all the data of each customer Understand all of your customer touch points Manage customer strategies holistically A key theme of the day was the economic, regulatory and political changes impacting our economy and your customers. We had a conversation with Timothy F. Geithner, 75th U.S. Secretary of the Treasury, who shared his experiences as the principal architect of the President’s strategy to avert economic collapse and to reform the financial system. He also discussed international economic challenges and gave us his personal outlook on the economy. The afternoon featured many great speakers and industry experts across many topics that included hearing from many of our regulators on the topic of banking regulations; experts in the area of mobile payments and banking; along with many of our clients who shared their successful programs and experiences working across consumer and commercial portfolios and the customer lifecycle. Other highlights from the day Things overheard at the Roundtable Sessions: “You don’t need extensive touches for small loans, but let go of Excel,” Community bank topics “Loans are milk, deposits are steak,” Issues and opportunities within commercial risk management roles topic “Pent up demand will lead to overall positive auto market conditions near term,” Automotive hot topics “Keeping various systems in synch; Spend time early on implementation to define biz requirements,” Overcoming system operation challenges topic “Marketing to the underserved remains a challenge,” Issues and opportunities in consumer risk management roles topic “Using mobile to go paperless in commercial lending to improve convenience,” Mobile tools for business lending topic Top tweets: #vision2013 "Be relentlessly skeptical. Be humble about what you don't know." Former Secretary Timothy Geithner. — Martha Staten (@Sauconyandsuds) May 6, 2013 Experian CEO to Us bankers on current reg environment. "we have to get in compliance. We have to grow in compliance".#vision2013 — eric haller (@erichaller2) May 6, 2013 Great description of the current environment - "Economic Pinball" Victor Nichols #vision2013 #finserv — Patricia Hines (@PJHines) May 6, 2013 #vision2013.@experiancredit data lab is the "most unique initiative in the industry". The lab lets you #engage w/ untraditional data. — Mike Horrocks (@mikehorrocks) May 6, 2013 Only take risks you can understand, measure, and monitor. CRO round table. #vision2013 — alissa (@adh314) May 6, 2013 The phone is the new wallet. Apps are the new cards. #engage #vision2013 — Andrew Beddoes (@beddoesa712) May 6, 2013
As we prepare to attend next week’s FS-ISAC & BITS Summit we know that the financial services industry is abuzz about massive losses from the ever-evolving attack vectors including DDoS, Malware, Data Breaches, Synthetic Identities, etc. Specifically, the recent $200 million (and counting) in losses tied to a sophisticated card fraud scheme involving thousands of fraudulent applications submitted over several years using synthetic identities. While the massive scale and effectiveness of the attack seems to suggest a novel approach or gap in existing fraud prevention controls, the fact of the matter is that many of the perpetrators could have been detected at account opening, long before they had an opportunity to cause financial losses. Synthetic identities have been a headache for financial institutions for years, but only recently have criminal rings begun to exploit this attack vector at such a large scale. The greatest challenge with synthetic identities is that traditional account opening processes focus on identity verification compliance around the USA PATRIOT Act and FACT Act Red Flags guidance, risk management using credit bureau scores, and fraud detection using known fraudulent data points. A synthetic identity ring simply sidesteps those controls by using new false identities created with data that could be legitimate, have no established credit history, or slightly manipulate elements of data from individuals with excellent credit scores. The goal is to avoid detection by “blending in” with the thousands of credit card, bank account, and loan applications submitted each day where individuals do not have a credit history, where minor typos cause identity verification false positives, or where addresses and other personal data does not align with credit reports. Small business accounts are an even easier target, as third-party data sources to verify their authenticity are sparse even though the financial stakes are higher with large lines of credit, multiple signors, and complex (sometimes international) transactions. Detecting these tactics is nearly impossible in a channel where anonymity is king — and many rings have become experts on gaming the system, especially as institutions continue to migrate the bulk of their originations to the online channel and the account opening process becomes increasingly faceless. While the solutions described above play a critical role in meeting compliance and risk management objectives, they unfortunately often fall short when it comes to detecting synthetic identities. Identity verification vendors were quick to point the finger at lapses in financial institutions’ internal and third-party behavioral and transactional monitoring solutions when the recent $200 million attack hit the headlines, but these same providers’ failure to deploy device intelligence alongside traditional controls likely led to the fraudulent accounts being opened in the first place. With synthetic identities, elements of legitimate creditworthy consumers are often paired with other invalid or fictitious applicant data so fraud investigators cannot rely on simply verifying data against a credit report or public data source. In many cases, the device used to submit an application may be the only common element used to link and identify other seemingly unrelated applications. Several financial institutions have already demonstrated success at leveraging device intelligence along with a powerful risk engine and integrated link analysis tools to pinpoint these complex attacks. In fact, one example alone spanned hundreds of applications and represented millions of dollars in fraud saves at a top bank. The recent synthetic ring comprising over 7,000 false identities and 25,000 fraudulent cards may be an extreme example of the potential scope of this problem; however, the attack vector will only continue to grow until device intelligence becomes an integrated component of all online account opening decisions across the industry. Even though most institutions are satisfying Red Flags guidance, organizations failing to institute advanced account opening controls such as complex device intelligence can expect to see more attacks and will likely struggle with higher monetary losses from accounts that never should have been booked.
When outsourcing consumer data to vendors, here are a few outsourcing practices companies should follow to safeguard the information.
By: Maria Moynihan A recently-released staff report prepared for the House Oversight and Government Reform Committee revealed that nearly 17,000 efficiency and process improvement recommendations made by agency Inspectors General remain pending as of 2012 and in combination could have saved more than $67 billion in wasteful government spending. At the same time, the 2013 Identity Fraud Report released in February 2013 by Javelin Strategy & Research indicates that in 2012, identity fraud incidents increased by more than one million victims and fraudsters stole more than $21 billion, the highest amount since 2009. Fraudsters know where process inefficiencies lie and government agencies can no longer delay the implementation of much needed system improvements. There are several service providers and integrators in the public sector that offer options and tools to choose from. Specifically, identity management tools exist that can authenticate a person’s identity online and in real-time, verify an address, validate one’s income and assets, and provide a full view of a constituent so funds go to those who need them most and stay out of the hands of fraudsters or those who are otherwise not eligible. There is a better way to validate and authenticate individuals or businesses as part of a constituent review processes and time is of the essence. By simply incorporating third-party data and analytics into established infrastructure, agencies can immediately gain improved insight for efficient decision making. Experian recently sponsored the FCW Executive Briefing on Detecting and Preventing Wasteful and Improper Payments. Click here to view the keynote presentation or stay tuned as I share more on this pressing issue.
By: Maria Moynihan State and Federal agencies are tasked with overseeing the integration of new Health Insurance Exchanges and with that responsibility, comes the effort of managing information updates, ensuring smooth data transfer, and implementing proper security measures. The migration process for HIEs is no simple undertaking, but with these three easy steps, agencies can plan for a smooth transition: Step 1: Ensure all current contact information is accurate with the aid of a back-end cleansing tool. Back-end tools clean and enhance existing address records and can help agencies to maintain the validity of records over time. Step 2: Duplicate identification is a critical component of any successful database migration - by identifying and removing existing duplicate records, and preventing future creation of duplicates, constituents are prevented from opening multiple cases, thereby reducing the probability for fraud. Step 3: Validate contact data as it is captured. This step is extremely important, especially as information gets captured across multiple touch points and portals. Contact record validation and authentication is a best practice for any database or system gateway. Agencies and those particularly responsible for the successful launches of HIEs are expected to leverage advanced technology, data and sophisticated tools to improve efficiencies, quality of care and patient safety. Without accurate, standard and verified contact information, none of that is possible. Access the full Health Insurance Exchange Toolkit by clicking here.
Last January, I published an article in the Credit Union Journal covering the trend among banks to return to portfolio growth. Over the year, the desire to return to portfolio growth and maximize customer relationships continues to be a strong focus, especially in mature credit markets, such as the US and Canada. Let’s revisit this topic, and start to dive deeper into the challenges we’ve seen, explore the core fundamentals for setting customer lending limits, and share a few best practices for creating successful cross-sell lending strategies. Historically, credit unions and banks have driven portfolio growth with aggressive out-bound marketing offers designed to attract new customers and members through loan acquisitions. These offers were typically aligned to a particular product with no strategy alignment between multiple divisions within the organization. Further, when existing customers submitted a new request for credit, they were treated the same as incoming new customers with no reference to the overall value of the existing relationship. Today, however, financial institutions are looking to create more value from existing customer relationships to drive sustained portfolio growth by increasing customer retention, loyalty and wallet share. Let’s consider this idea further. By identifying the needs of existing customers and matching them to individual credit risk and affordability, effective cross-sell strategies that link the needs of the individual to risk and affordability can ensure that portfolio growth can be achieved while simultaneously increasing customer satisfaction and promoting loyalty. The need to optimize customer touch-points and provide the best possible customer experience is paramount to future performance, as measured by market share and long-term customer profitability. By also responding rapidly to changing customer credit needs, you can further build trust, increase wallet share and profitably grow your loan portfolios. In the simplest sense, the more of your products a customer uses, the less likely the customer is to leave you for the competition. With these objectives in mind, financial organizations are turning towards the practice of setting holistic, customer-level credit lending parameters. These parameters often referred to as umbrella, or customer lending, limits. The challenges Although the benefits for enhancing existing relationships are clear, there are a number of challenges that bear to mind some important questions: How do you balance the competing objectives of portfolio loan growth while managing future losses? How do you know how much your customer can afford? How do you ensure that customers have access to the products they need when they need them What is the appropriate communication method to position the offer? Few credit unions or banks have lending strategies that differentiate between new and existing customers. In the most cases, new credit requests are processed identically for both customer groups. The problem with this approach is that it fails to capture and use the power of existing customer data, which will inevitably lead to suboptimal decisions. Similarly, financial institutions frequently provide inconsistent lending messages to their clients. The following scenarios can potentially arise when institutions fail to look across all relationships to support their core lending and collections processes: Customer is refused for additional credit on the facility of their choice, whilst simultaneously offered an increase in their credit line on another. Customer is extended credit on a new facility whilst being seriously delinquent on another. Customer receives marketing solicitation for three different products from the same institution, in the same week, through three different channels. Essentials for customer lending limits and successful cross-selling By evaluating existing customers on a periodic (monthly) basis, financial institutions can holistically assess the customer’s existing exposure, risk and affordability. By setting customer level lending limits in accordance with these parameters, core lending processes can be rendered more efficient, with superior results and enhanced customer satisfaction. This approach can be extended to consider a fast-track application process for existing relationships with high value, low risk customers. Traditionally, business processes have not identified loan applications from such individuals to provide preferential treatment. The core fundamentals of the approach necessary for the setting of holistic customer lending (umbrella) limits include: The accurate evaluation of credit and default rise The calculation of additional lending capacity and affordability Appropriate product offerings for cross-sell Operational deployment Follow my blog series over the next few months as we explore the core fundamentals for setting customer lending limits, and share a few best practices for creating successful cross-sell lending strategies.
The goal of achieving Information Superiority is to gather intelligence that can be used to put you in an advantageous position.
All skip tracing data is the same, right? Not exactly. While there are many sources of consumer contact data available to debt collectors, the quality, freshness, depth and breadth can vary significantly. Just as importantly, what you ultimately do or don't do with the data depends on several factors such as: Whether or not the debt is worth your while to pursue How deep and fresh the data is What if no skip data is available, and, What happens if there is no new information available when you go to your skip-tracing vendor requesting new leads? So what's the best way for your company to locate debtors? What data sources are right for you? Check out my recent article in Collections and Credit Risk for some helpful advice, and be sure to check out our other debt collection industry blog posts for best practices, tips and tricks on ways to recover more debt, faster. What data sources do you find most beneficial to your business and why? Let us know by commenting below.
By: Maria Moynihan Fact: In fiscal year 2011, the federal government allocated ~$608M to investigate and prosecute cases of alleged fraud in health care programs Fact: Medicare and Medicaid related scams cost taxpayers more than $60B a year These statistics are profound, especially when so many truly need–and rightfully deserve–access to health benefits. To make the facts a bit more tangible, how would you feel if you heard that neighbors of yours were submitting claims to Medicare for treatments that were never provided? In essence, you’ve got thieves for neighbors, don’t you? Thankfully, government agencies are responding. Even while being challenged with reduced budgets and limited resources; they are investing in efficient processes, advanced data, analytics and decisioning tools to improve their visibility into individuals at the point of application. By simply making adjustments to one or all of these areas, agencies can pinpoint whether or not individuals are who they say they are. Only with precision, relevancy, and efficiency of information, can fraud and abuse be curtailed. Below are a few examples of how to improve your eligibility systems or processes today. Or, simply download the Issue Brief, Beyond Traditional Eligibility Verification, for more detail. Use scores, models, and screening questions to assess a beneficiary’s true identity or level of identity fraud risk. Use income and asset estimation models to compare to stated income as a validation step in determination of benefits eligibility. Create a single system for automatic identification and verification of beneficiaries and businesses applying for service. Tighten controls around business identity to weed out fraud rings, syndicates and other forms of business fraud. The Bottom Line: Only with process, information, or system improvements, can government agencies move the needle on the growing and pressing issue of fraud and abuse.
By: Maria Moynihan Cyber Monday recently passed and I'm curious to know if you were one of the many who contributed to the $1.465 billion spend online that day? ‘Tis the season - not only for increased online shopping, but for increased ID theft or risk of fraudulent activity. With a quick online search, you can find some good tips on how to protect your information. Here’s a great read on password protection. Other sources offer added tips, like the below, when submitting information online: 1) Ensure sensitive information is secure before submitting 2) Only access websites you know you can trust 3) Be sure you are comfortable with the information your mobile device is asking you to provide in specific apps Beyond the holidays and even beyond the type of organization you are interacting with, these online tips apply. Government agencies for instance, encourage similar cautionary behavior when interacting with them. In fact, several have even implemented tools and processes to ensure the proper level of information security, authentication, and checking occur. Take the Social Security Administration for example. Here is an agency that implemented a secure process for individuals to access their benefits online. By incorporating a step to quickly and efficiently cross check an individual’s identity, the agency was able to validate information, ensuring people seeking access to their information are truly who they say they are. Watch a video to see how the Social Security Administration offers secure real-time access to individuals’ benefits. And, most importantly, keep these important information safety tips in mind every day and enjoy a stress-free and peaceful holiday!