Nets has announced it has collaborated with KPMG to develop Fraud Ensemble, a next-generation fraud monitoring and prevention solution. As the total annual value of fraudulent transactions across Europe hits €1.8bn, the need to step up fraud prevention, particularly in card not present (CNP) transactions, has never been greater. Reducing transaction fraud is an increasingly convoluted and nuanced business, however, as factors such as the mass adoption of e-commerce, increasing cross-border payments, and the growing popularity of new digital payment methods combine to add new layers of complexity.
Nets Fraud Ensemble is an AI powered anti-fraud engine that assists fraud prevention teams to navigate this ever-changing landscape in real time. By deploying true machine learning (i.e. a system that identifies emerging fraud indicators as well as established patterns), it represents a step forward from the rules-based models that are currently in use across the international banking industry.
“Although initiatives such as 3D-Secure have done much to make it more secure for people to shop online across Europe, the industry still faces challenges," said Sune Gabelgård, head of Digital Fraud, Intelligence & Research at Nets. "Many issuing banks have focused on fraud prevention through consumer education, but the industry must also tackle the problem where it starts and where it is orchestrated by organised criminal enterprises: on the internet.
“[Nets Fraud Ensemble] brings security and value to issuers, merchants and cardholders by blocking fraudulent card-present and card-not-present transactions in real time, creating a real societal benefit by keeping illegally obtained funds out of the hands of criminals. We look forward to our continued collaboration with KPMG to stay ahead of the curve and prevent fraud throughout the value chain.”
The ‘brain’ of the solution consists of multiple models working together to analyse each individual transaction within ten milliseconds - the time frame in which a transaction can be safely blocked. The solution learns from the results of its analysis and adjusts accordingly, meaning the longer that it is operational the more fraudulent transactions are blocked, and the fewer false positives are granted. In initial pilot programmes, it reduced fraudulent payments by 25% within weeks and up to 40% in the long-term.
The benefits to issuers extend beyond achieving significant reductions in fraud. Nets Fraud Ensemble also decreases operating costs and chargebacks, creating an improved cardholder experience. Furthermore, to balance accuracy with customer convenience, issuers can implement customised decision thresholds to minimise false declines.
“In terms of tangible reduction of fraudulent transactions, Nets Fraud Ensemble is surpassing all other products currently available," commented Bent Dalager, Nordic head of NewTech and Financial Services at KPMG. "The development of Fraud Ensemble and its state-of-the-art algorithms is the result of Nets’ and KPMG's combined innovation capabilities, AI experience and fraud monitoring and prevention expertise. It's a big step forward in the use of AI to fight fraud."
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