Effective Identity Fraud Prevention and Detection with Machine Learning: Tips and Strategies
The rise of machine learning technology in recent years has provided businesses, particularly financial institutions, with advanced capabilities in preventing and detecting identity fraud at account opening. However, there are many arguments regarding the best practices in identity fraud defense, including the role of machine learning in pinpointing risks. The message is clear: a strong fraud defense requires machine learning, but equally requires strong underlying data and well-practiced fraud operations procedures to make it effective.
Businesses should consider a number of factors before moving forward with a machine learning-based fraud detection and prevention solution.
In this LIVE Webcast, a seasoned panel of thought leaders and professionals brought together by The Knowledge Group will provide and present an in-depth analysis of employing machine learning in detecting and preventing fraud. Speakers will also provide practical tips and strategies to ensure that potentials are maximized, and pitfalls are mitigated.
Some of the major topics that will be covered in this course are:
- Recent Identity Fraud Threats & Trends at Financial Institutions
- Critical Qualities of Identity Fraud Defense Strategies
- Fraud Prevention and Detection in Machine Learning – Fundamentals
- Practical Best Practices and Strategies in Fraud Defense
- What Lies Ahead
ID Analytics, a Symantec Company
- Identity Fraud Landscape: Identity fraud can take place across the customer journey, and fraudsters use a range of approaches to misrepresent their identities and intentions to financial institutions.
- Fraud Trends in 2019: Identity fraudsters are constantly evolving how they attack financial institutions, changing methodologies and amplifying their focus on the weakest area of defenses.
- The Imperatives for Machine Learning in Fraud: Identity fraud’s impact on an organization spans far beyond losses - threatening operational resources and the customer experience. The result is an urgent need for defenses to be as efficient as they are effective.
- Practical Strategies for Fraud Models: The success fraud models have in shoring up an organization’s defenses hinge on successful risk management strategy. A basic set of best practices lays out how to use these machine learning tools effectively to combat identity fraud.
- Build, Buy, Both?: With an expanding talent pool of data scientists capable of supporting the development of fraud models, organizations are increasingly weighing the pros and cons of building their own models, buying models from a third party, or doing both.
Charles Schwab & Co., Inc.
- Consistent and accurate data feeds from multiple datapoints are the critical first step to implementing ML for fraud prevention and detection
- ML requires sufficient activity and fraud instances to “learn” normal vs anomalous activity and detect fraud
- Identify the right datapoints and ingest clean data for the model to learn normal activity
- Fraud incident rates in the channel need to be sufficient to develop better predictive capabilities to detect fraud through ML
- Understanding of ML fraud detection implementation decisions
- ML implementation approach should be based on in-house capabilities (Wayne, this will likely tie-in directly based on your expertise
- Consider criminals’ ability to identify and bypass your anti-fraud controls in implementing ML
- Benefits (selling points) of ML in anti-fraud prevention and detection can reduce alerts and minimize operational costs while improving CX and mitigating fraud
- Identity fraud spans a broad range of threats
- Fraud models once considered outside of the scope of model risk management (MRM) are now considered in scope
- Best practices need to align with FRB SR 11-7 and MRM
- Regulatory guidance for a model’s conceptual soundness, outcomes analysis, and ongoing monitoring
- What characterizes a process as a model
- What does inherent uncertainty imply about what we must assume?
- Qualitative components vs. quantitative components
- How do machine learning models fit into the traditional MRM framework?
- Commonality between data scientists and traditional statisticians
- Accountability of the model owner and developer and proper documentation
- Managing new processes with real time re-training and reporting requirements
- ML special features
- Optimization for predictive performance
- Highly automated/online learning
- Complex representation
- Stochastic training
- Several hyperparameters
- Open source and vendor ecosystem
- Process automation applications
- These requirements should boil into the following MRM themes:
- Data bias and limitations
- Explanability or interpretability
- Replicability and stability
- Ongoing monitoring
- Safety in autonomous mode
- Non-linear, non-parametric model form: Important to capture the interaction effects & non-linearities inherent in fraud data
- Automated model retraining: As fraud evolves, automated retraining of fraud ML models will pick up the predictive patterns left behind by fraudsters in the data
- Velocity features: Leverage stream analytics to measure the frequency of a given variable or combination of variables within a specified time period as compared to a baseline period
- Link variables: Leverage graph theory to connect quickly understand how attributes of applications & accounts are related and if there are risks
- 3rd-Party Data: Go beyond internal data to get fraud signals from consortium providers
Who Should Attend:
- Financial Institutions
- Fraud Analysts
- Information Technology Executives
- Fraud Monitoring Officers
- Fraud Consultants
- Privacy and Data Security Officers
- In-house and Outside Counsel
- Top Level Management
Kevin King has nearly a decade of experience in credit risk and fraud analytics, having served in a variety of roles at ID Analytics since joining the company in 2007 including analytics, business analysis, product strategy and professional services. In each of these roles, King has focused on applying ground breaking analytic tools to the unique financial services challenges, and has directly supported projects at top 10 banks, several “Big 4” wireless carriers, the two leading U.S. satellite television companies, and multiple leading cable and internet providers. A driving force behind ID Analytics’ thought leadership program, he has authored several thought leadership whitepapers on a range of topics spanning fraud, credit and identity risk. Kevin has a B.A. in Marketing from the University of Colorado at Boulder.
Kevin King has nearly a decade of experience in credit risk and fraud analytics, having served in a variety of …
Clyde Langley is the Vice President, Head of Fraud Risk Management, for Charles Schwab & Co., Inc. The Fraud Risk Management group is responsible for firm-wide Fraud Investigations, including Cybercrime Detection and Investigations (online fraud), Anti-Fraud Digital Strategy, Fraud Strategies & Surveillance, Fraud & Security Awareness, Visa & Check Fraud and Fraud Investigations teams. He also oversees the Identity Theft Red Flags Program.
Before joining Schwab in 2014, Clyde spent 22 years as an FBI Special Agent in Executive Management to Investigator roles. In the FBI, Clyde spent over 15 years supervising and investigating financial and cybercrimes, including 8 years managing financial crimes investigations and four years overseas in Kazakhstan and Belgium. After the 9/11 attacks, Clyde was part of the team that established the FBI’s terrorist financing section to enhance terrorism investigations from the financial perspective. Prior to the FBI, Clyde spent five years as an auditor/accounting manager in public accounting and private industry.
Clyde Langley is the Vice President, Head of Fraud Risk Management, for Charles Schwab & Co., Inc. The Fraud Risk …
Wayne Shoumaker is an applied statistician with experience in the financial services, healthcare, and various social services. He has been involved in basic statistical research, marketing effectiveness, business-to-business analytics, and various types of risk. His model validation experience at Wells Fargo’s Corporate Model Risk (CMoR) spans several modeling domains, such as financial crimes, fair lending, credit and operations risk, and CCAR,. He leads a team within CMoR’s Decision Science/Artificial Intelligence (DSAI) group, which validates traditional models and newer technology artificial intelligence and machine learning models. The models span a variety of financial businesses and risk related uses to identify or classify customer and employee behaviors. Wayne has a Ph.D. in Quantitative Psychology from the University of California at Berkeley, an M.A. in General Experimental Psychology, and a J.D. in Law.
Wayne Shoumaker is an applied statistician with experience in the financial services, healthcare, and various social services. He has been …
Joe joined Enova as Chief Analytics Officer in 2014. As CAO, Joe leads a multi-disciplinary analytics team that provides end-to-end data and analytic services including data warehousing, business intelligence, business analytics, fraud, credit risk and marketing. His team supports the global online financial services offered by Enova International and delivers on-demand decision-making technology and real-time predictive analytics services to clients through the Enova Decisions® brand. Prior to working at Enova, he served as Director and Practice Leader of Advanced Analytics for Chicago-based West Monroe Partners. He has also held a number of executive positions at HAVI Global Solutions and the Allant Group. Joe received a B.A. in economics from Lewis University and an M.A. in economics from the University of Illinois at Chicago. He is Immediate Past-President of the Chicago Chapter of the American Statistical Association and is on the Advisory Board of the UIC College of Business Administration. Joe lives in the Chicago area with his wife and daughters.
Joe joined Enova as Chief Analytics Officer in 2014. As CAO, Joe leads a multi-disciplinary analytics team that provides end-to-end …
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Method of Presentation:
General knowledge of financial fraud
NY Category of CLE Credit:
Areas of Professional Practice
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About ID Analytics, a Symantec Company
ID Analytics is a leader in consumer risk management with patented analytics, proven expertise and near real-time insight into consumer behavior. By combining proprietary data from the ID Network®—one of the nation’s largest networks of cross-industry consumer behavioral data—with advanced science, ID Analytics provides in-depth visibility into identity and credit risk. Every day, many of the largest U.S. companies rely on ID Analytics to make risk-based decisions that help enhance revenue, reduce fraud, drive cost savings and protect consumers. ID Analytics is a Symantec company. Please visit us at www.idanalytics.com.
About Charles Schwab & Co., Inc.
The Charles Schwab Corporation provides a full range of brokerage, banking and financial advisory services through its operating subsidiaries. Its broker-dealer subsidiary, Charles Schwab & Co., Inc. (member SIPC), offers investment services and products, including Schwab brokerage accounts. Its banking subsidiary, Charles Schwab Bank (member FDIC and an Equal Housing Lender), provides deposit and lending services and products.
About Wells Fargo
Wells Fargo & Company (NYSE: WFC) is a diversified, community-based financial services company with $1.9 trillion in assets. Wells Fargo’s vision is to satisfy our customers’ financial needs and help them succeed financially. Founded in 1852 and headquartered in San Francisco, Wells Fargo provides banking, investment and mortgage products and services, as well as consumer and commercial finance, through 7,600 locations, more than 13,000 ATMs, the internet (wellsfargo.com) and mobile banking, and has offices in 32 countries and territories to support customers who conduct business in the global economy. With approximately 263,000 team members, Wells Fargo serves one in three households in the United States. Wells Fargo & Company was ranked No. 29 on Fortune’s 2019 rankings of America’s largest corporations. News, insights and perspectives from Wells Fargo are also available at Wells Fargo Stories.
Enova International (NYSE: ENVA) is a leading FinTech company headquartered in downtown Chicago. Our mission is helping hardworking people get access to trustworthy credit. Powered by our advanced analytics and innovative technology, we’ve issued more than $20 billion in credit to over 5 million non-prime consumers and small businesses around the globe. In 2016, we launched Enova Decisions™ to offer on-demand digital decision-making technology and real-time predictive analytics services to clients across industries.