Credit Management September 2019

OPINION
AUTHOR – Simon Blackwell
graydon.co.uk/downloads/
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board and communicated with all involved
through both education – for those who aren’t
directly in the firing line but who need to be
on the lookout for anomalies – and training
for the front-line staff, such as those involved
in credit control and customer onboarding.
MANUAL OR AUTOMATIC
The size and nature of your business will
determine whether you deploy your antifraud
measures manually, wholly
automatically or somewhere in between.
Companies that rely on fast credit and
onboarding decisions to beat their
competitors to new business will almost
certainly welcome a high degree of
automation. Others, in specialised, noncompetitive,
businesses might be able to
take a more relaxed manual approach. The
question to ask is, ‘how much automation do
I need?’
Decision-making systems are quite
common for mapping out various repetitive
customer journeys as a series of connected
decisions. Information supplied by human
operators or credit reference agencies
and other databases is used to generate
recommendations. The user can easily
check the decision logic and confirm it or
challenge it.
A bit more automation can allow the
system to make all but the more questionable
decisions which will still be referred to a
human. Advanced analytics systems can
sift through masses of data – customer data
and third-party databases – in a way that is
understandable to a human but that is also
beyond a human’s, or a team’s, capacity
to process in the time available to make a
decision. The output from this would be
fresh insights or strong recommendations
that a human is unlikely ever to have
discovered. The final say ought to remain
with the human decision-maker.
At some point, you might find yourself
tempted by machine learning and deep
learning in which the software systems
teach themselves based on their ongoing
discoveries. This is a step to take carefully
and to base on much parallel testing and
comparison of machine versus human
decision outcomes. In fact, none of the
automated systems mentioned should be
trusted until they’ve earnt that trust.
Decision-making as a service, for want of
a better term, opens up new opportunities.
many companies run siloed operations,
perhaps due to geography or departmental
specialisations. A single service, perhaps
using different local databases, can
harmonise the processes and much, if not
all, of the data served to all users regardless
of where they are. Another advantage could
be that data from different companies,
in the same industry perhaps, can
be anonymised and brought into the
decision-making without breaching any
regulatory compliance codes.
SHARING INFORMATION
Many companies are uneasy about sharing
information regarding successful frauds.
They fear shaking the confidence of
investors, for example. But not to share is a
fraud against those same investors. However,
sharing information about detected frauds
and fraudsters is a completely different
matter.
Unlike admitting a breach, there’s no
embarrassment or shame in sharing details
of successful avoidance of fraud. Your
peers would welcome warnings of who’s out
there and the methods they’re using, just as
you would welcome the same information
from them. Vertical industries benefit
from forums and online or physical gettogethers
where they can share information
of common interest, not just about fraud.
And, indeed, general forums exist where
fraud is the primary topic of conversation
and experts in the subject share their own
insights and experiences. You can be sure
that the fraudsters are adept at sharing
information with each other, to help keep
them ahead of the game. It only makes sense
for you to do this as well. After a successful
fraud, various bodies need to be notified, but
this is beyond this article’s scope.
GOOD STRATEGY
By keeping out the fraudsters, you are
improving the bottom line, increasing
effectiveness and customer service, and
ensuring your compliance with regulations.
You can make improved onboarding and
credit decisions with a minimum delay,
potentially improving your competitiveness
and revenue generation. You might even find
that you are introducing consistency and
harmonisation between far (and not so far)
flung parts of your business operations.
GUIDANCE
Graydon’s report goes through the issues
and stages described above in more detail.
It also provides you with material relating to
criminal and civil law and provides links to
sources of useful advice. And its checklists
will help you regardless of whether you’re
sticking to a manual approach or adopting
some degree of automation.
It’s a new world out there and the
fraudsters are in the thick of it. They will
be using advanced analytics and machine
learning to choose their targets and refine
their attacks. And they’ll be sharing their
intelligence. So, as we said at the beginning,
‘Don’t be a victim. Go on the attack!’ And
make sure you share too.
Simon Blackwell, Managing Director
of Graydon UK
The Recognised Standard / www.cicm.com / September 2019 / PAGE 31