“When you deal with digital transactions, some of the most intelligent minds in the entire world happen to be criminals,” says Monica Eaton, CIO of Global Risk Technologies.
Global Risk Technologies is a US company specialising in detecting and mitigating chargeback fraud on behalf of banks and issuers of credit cards.
The company is planning to locate an international office in Dublin that will employ 30 technology workers by the end of 2015.
Chargeback fraud is one of the fastest-growing fraud epidemics in the world that affects not only banks and credit-card companies, but also online merchants.
According to Eaton, one of the biggest challenges is identifying that chargeback fraud has occurred, and this calls for a more dynamic form of risk management.
“If you think about it, the internet has grown at a rapid speed and has surpassed the technology that all of the banking institutions have used to be able to manage their transactions.
“As a result nobody has been able to keep up with the technology to manage some of the dispute or refund transactions that come from online growth specifically.
“What we do is we help identify the correct context and derive full and complete information so that we can help really target in the actual source of fraud.”
Can you outline the breadth and scope of the technology rollout across your organisation and what improvements it will bring?
Our solution is cloud-based. We have a total of about 350 employees worldwide. One of the challenging things, or I guess one of the things that has led to our success, has been our ability to adapt to change with a very quick methodology. We are experts at being able to scale. We really have a dynamic platform although while it is rule-based and there’s a lot of static features in it, it’s still very dynamic in the way that we have built it to be able to be a communication hub essentially for issuing banks.
What are the main points of your company’s IT strategy?
The thing that sanctions our success is the fact we are humble enough to recognise that whatever we think is an absolute dynamite success today is still not good enough.
I think especially when you deal with digital transactions some of the most intelligent minds in the entire world happen to be criminals. Whenever you think that you sorted it out you have already lost the battle.
We tell everybody here that if you work at this company you need to develop thick skin, because you’ll never hear that that technology was the best, you never completely be your best because right around the corner there might be some piece of data that changes everything or there may be different rules we need to look at.
Visa has published statistics that 40pc of consumers who file a fraudulent chargeback will do it again within 60 days.
These are consumers who aren’t caught and the interesting thing here is that rather than criminally-minded individuals oftentimes it just the consumer contacting bank to get a refund because they see that as an option and are educated that this is a loophole in the system they can exploit.
Barclaycard because of the rise of chargeback fraud and, because of adage the customer is always right holds true, they are now considering issuing a fee to consumers who want to use them to process these funds.
How complex is the infrastructure, are you taking steps to simplify it?
It is algorithm-based. Our secret sauce would be the amount of intelligence that we have and the intuitive knowledge and understanding of the relational data within that intelligence. For instance, we look at transactions not has having five fields but maybe 40 relationships.
We categorise and we are continuously evolving our technology, developing patterns, scoring systems, continuing to rate behavior patterns of transactions, variable combinations, and then we allow a rule modification and a scoring system that can be customised by clients so they can also start building some intelligence based on what their needs are.
Do you have a large in-house IT team, or do you look to strategically outsource where possible?
We do outsource where possible but we have about 12 programmers full time on staff.
We will actually be moving a significant amount of our technical development to Dublin and we are going to be focusing that development on some of the core activities related to the European institutional infrastructure.
For instance, in the US, the structure, because of the open market, there are over 200 different institutions or banks and each of those have their own technology decisions and most are extremely archaic, to say the least. But they all speak their own language and have their own nomenclature and lack of standardisation but they do have solutions.
The US is ahead in terms of processing transactions and has more of an advertising consumer mentality and spending activity.
Now when you get into Europe you see the landscape is very different but actually more advantageous because it is more unified, people collaborate, participate together and there’s not the source of competition as there is with the 200 different banking platforms here.
The biggest advantage we see is the US is behind the 8-ball in trying to solve this problem.
In Europe for the last four years, the rate of growth for this particular chargeback fraud has increased by 41pc for Visa.
In the US we have been dealing with this kind of fraud little by little in the past 20 years. Europe is being hit with all of these problems pretty much all in one go so it’s a blank canvas.
We will be establishing a multilingual support office in Dublin so we can support a wide reach in Europe. We will probably have around 30 employees by the end of 2015.
Good technology is really all about scaling and that is often contingent on efficiencies. If you are dealing with a blank canvas you have the ability to have a meeting of the minds and people are interested in a unanimous solution that works across the board.
We have an opportunity to put in a solution that solves an industry-wide problem that enables more standardisation on a global scale and prevents Europe from going through the same pitfalls the US is suffering from.