HSBCis planning to replace hundreds
of fraud detection systems with a single anti-fraud system to
monitor bank transactions across 83 operations
worldwide.
The bank has begun a project in Hong Kong to adapt credit card
fraud detection software to monitor all of its banking products,
including credit cards, debit cards, cheques, online and telephone
banking, and contactless card transactions.
Ralph Silva, business analyst at research firm TowerGroup said
other banks were likely to follow HSBC's lead following the
introduction of the
Basel 2
regulations. The rules require banks to identify the risk profile
of all customers across all the products they use.
Derek Wylde, head of fraud risk at HSBC Group, said the
technology would improve fraud detection by giving a single view of
customer accounts.
Card fraud alone cost UK banks £263.6m in the first six months
of this year, according to UK payments association
Apacs.
The technology would also cut management costs significantly,
said Wylde. "We want a single system that can give us fraud
protection and detection across multiple channels," he said.
HSBC plans to roll out its bespoke system, based on SAS's Fraud
Management software, in Hong Kong in early 2009, before deploying
the system elsewhere. The bank's IT teams will customise the
software to meet the fraud detection requirements of each banking
product.
"Once this has been completed and all customer data is fed into
the single system for our Hong Kong business, we will have the
potential to take a holistic customer view of activity," said
Wylde.
Silva said this method would introduce complexity to HSBC's
systems because of the required customisation to the software.
However, he said this was outweighed by the ability of HSBC to
identify the risk profile of a customer through their entire
relationship with the bank, rather than just one product.
"Banks want to use a single system that will identify a fraud
event and broadcast it to all lines of business," said Silva.
HSBC last week completed a trial of the underlying SAS Fraud
Management software in its US credit card operation.
The system, which will be rolled out to the bank's UK credit and
debit card businesses next year, will form the core of HSBC's
bespoke fraud detection system.
Silva said banks would have difficulty achieving a single view
of fraud unless they developed systems themselves. "There are no
suppliers that offer holistic fraud systems for banks, and HSBC is
developing the software itself because it has to."
SAS said its Fraud Management software was available to all
banks.