To learn more about the detection methods employed, go here.

To learn more about the IT environment, go here.

The Problem with Fraud

Fraud is on the rise worldwide. Credit and debit cards have become an everyday tool of trade and these forms of electronic payment are being greatly affected by fraudulent activities. Gartner estimated fraud at US$ 2.75 billion for a 12-month period ending in May 2005 while more recent investigations by the Federal Trade Commission determined that fraud costs the financial industry approximately US$ 300 billion per year. Adding new internet trading possibilities has likely worsened the situation in the last two years.  Fraud affects financial institutions in three ways, namely:

Economic Costs

1. Fraud causes financial losses for companies.

2. The conventional prevention and detection methods can be expensive.

Operating Costs

1. 1.Detection using conventional methods implies having expert skills.
   

2. 2.Fraud is constantly evolving and becoming more sophisticated so it requires constant attention.
   

3. 3.The analysis of potential fraudulent transactions requires a full-time monitoring team.
   

Worsens Relationship with Customer

1. Fraud can tarnish the institution’s reputation.

2. 2.Fraudulent situations exposed to the public may deter clients from doing business with the financial institution.
   

3. 3.Excessive consultation about potential fraudulent transactions may strain the relationship with the financial institution’s customers.
   

4. 4.The request for insurance fees against fraud may upset customers.
   

Minimizing these negative consequences through conventional methods is highly improbable. Because of the constant evolution in fraud, it is impossible for advanced mathematical methods to fully protect a company. predisoft has therefore developed effidetect Pointer, which uses unique technology called the “symbolic vector,” or more correctly, the “personal vector.” This concept was awarded the innovative technology prize by the Switzerland-based World Organization of Intellectual Property (WIPO); the personal vector  concept provides the means to describe the behavior of a person in terms of  mathematical constructs.  Once the personal vector has been stored, our software application effidetect Pointer compares incoming electronic transactions to the personal vector. Differences from the personal vector can be considered as deviations in the behavior which should be then investigated more throughly.