IBM Launches Counter Fraud Effort With New Software, Services

By Darryl K. Taft  |  Posted 2014-03-21 Print this article Print

Analysts estimate that market demand for fraud and risk solutions is quickly accelerating. According to Gartner, 25 percent of large global companies will have adopted big data analytics for at least one security or fraud detection use case, up from 8 percent today, and will achieve a positive return on investment within the first six months of implementation by 2016. IDC estimates that the market for financial crime solutions alone will be nearly $4.7 billion in 2014, with a 5.5 percent over the 2014-2017 forecast period.

Theresa Payton, former White House CIO and current founder and CEO of Fortalice, a security consulting firm focusing on fraud, spoke at the IBM Counter Fraud Summit on March 20. She said the average time it takes for an organization to find fraud is 18 months. She also said fraudsters tend to be ahead of the game, not only in knowing company policies and skirting them but also in leveraging big data and sharing best practices with others of their ilk.

In an interview on IBM’s Smarter Planet blog, Payton said: “There are multiple types of fraud consistently reported by businesses around the globe. They include the back office type, such as asset misappropriation, accounting fraud and procurement fraud. There are also fraud and financial crimes related to money laundering, and false claims. And then there’s also cyber-crime. With all the digital smokescreens now available, I believe you will see these types of fraud continue. But you will also see cyber-crime as a percentage of overall fraud numbers climb as the entry point to fraudulent activity.”

However, “IBM is applying many of the same tactics, techniques and procedures used by the intelligence and law enforcement communities to help commercial organizations take a holistic view of this growing and pervasive threat,” Griffin said. "These technologies allow organizations to move and adapt at the speed of threat in ways that human beings simply can't. Our new initiative puts big data and analytics into the hands of those tasked with defending their organizations from financial losses, protecting the brand and delivering exceptional customer service."

IBM is combining software, services and research capabilities to address the full spectrum of fraud and financial crimes--from tax evasion, money laundering and cyber-attacks to threats from inside the organization. For example, the new offerings can detect cross-channel mobile fraud and prevent cyber-crime enablers like phishing scams. They can enable an insurance company to review thousands of claims in real-time to flag potentially fraudulent activity while processing legitimate claims faster, or help a global bank more accurately detect and investigate money laundering activities to meet regulatory compliance.

The new software and services include counter fraud management software in the form of a single offering that brings together IBM’s Big Data and Analytics capabilities to help organizations aggregate data from external and internal sources and apply sophisticated analytics to prevent, identify and investigate suspicious activity. It includes analytics that understand non-obvious relationships between entities, visualization technology that identifies larger patterns of fraud, and machine learning to help prevent future occurrence based on previous attacks.

To enhance these capabilities as new threats emerge, IBM also launched a new counter fraud intelligence task force--IBM Red Cell--that will work in tandem with the IBM X-Force unit to continuously research trends, develop strategies and deliver enhancements to the software and services R&D team.


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