The fraud landscape is rapidly changing in today’s financial services industry. According to a recent ABA Deposit Account Fraud Survey Report, the estimated fraud loss against deposit accounts is $2.8 billion annually. Forgeries and counterfeits each accounted for 29 percent of that loss, followed by 25 percent returned deposit items (RDIs), and 8 percent alterations (11 percent were categorized as ‘other’). At 49 percent, over-the-counter (OTC) is the channel with the greatest loss, followed by remote deposit capture (RDC) at 30 percent and ATM at 12 percent. With respect to electronic channels, 80 percent of respondents reported browser-based online banking loss, which is up from 67 percent in just two years.
To help the industry fight back against fraud we developed a solution to improve detection predictive accuracy.
With our substantial predictive analytics core competency, we felt confident we could dramatically improve prediction probability. We determined we could improve fraud detection by combining software innovations such as decision tree or multiple variable analysis and image analysis with machine‑learning predictive analytics. That led to the development of our fraud solution, OASIS™ (Optimized Assessment of Suspicious Items) which provides cross-channel, multi-fund analytics and adjudication workflow to detect fraudulent transactions and suspicious items.
Today, ARGO solutions perform fraud detection for over 300 financial institutions in over 40 U.S. states, Canada, the Caribbean, and Far East Asia. We achieved a detection rate of greater than 95 percent of fraudulent transactions compared to the industry standard of 80 percent, with an alert review rate of less than 0.5 percent of transactions compared to the industry standard of greater than 2.0 percent. In summary, our OASIS solution catches more fraud with the need to manually review fewer transactions.
On a daily basis, ARGO analyzes over 3.35 million transactions, detecting $345,000 in check fraud. We also receive 4,320 positive pay issue files with 89,032 corporate payments made by check and 2,826 ACH files with 43,612 corporate payments made by ACH—in-clearing and originated, daily.
ARGO has achieved an FP:FN ratio of 30:1, and we’re still improving it with our Champion-Challenger strategy. Since ARGO dominates the U.S. OTC monetary processing space, we are moving fraud detection to the front line, addressing the 49 percent fraud loss through that channel.
For more information, download the “OASIS Historical Progress” interview with David Engebos, President and COO of ARGO.