Accelerator: Driving Data Analytics and Reducing Fraud

By Charles Potts


In recent years, we’ve seen financial institutions increasingly use data analytics to drive growth and profitability, manage risk and compliance, reduce fraud, and enhance the customer experience.

But for community banks with fewer resources and less money to invest in technology than their larger counterparts, using data analytics may seem out of reach. 

It’s not. At ICBA we are working closely with this year’s ThinkTECH Accelerator participants to develop best-in-class solutions that meet the unique needs of community banks and their customers.

While there are many ways data analytics can help community banks flourish, let’s consider one of the biggest pain points community banks face—fraud. Consider the following statistics:

  • In 2018, the Federal Trade Commission (FTC) processed 1.4 million fraud reports totaling $1.48 billion in losses.
  • According to Javelin Strategy, new account fraud accounted for $3.4 billion in losses in 2018, up from $3 billion in 2017. The most common targets for new account fraud are mortgages, student loans, car loans, and credit cards.
  • Mobile phone account takeovers are also on the rise, Javelin says, rising to 679,000 in 2018 from $380,000 in 2017.


Reducing Fraud Losses with Analytics

It’s statistics like these that sparked our interest in companies like Fraud.net for our ThinkTECH Accelerator program. The company offers a variety of innovative solutions that leverage collective intelligence, artificial intelligence/machine learning, and real-time analytics to combat fraud across the institution.

Fraud.net performs real-time assessments—sometimes hundreds of times per second—of payments intermediaries to identify and halt anomalous and problematic flare-ups in real time. This helps banks get in front of potential fraud, reducing fraud losses while providing a frictionless experience for your customers.

"I'm a 4th generation banker, and innovation has been in my DNA since my grandfather founded the bank, said John Buhrmaster, president and CEO of the 1st National Bank of Scotia, N.Y.  “As a community bank, if you're not continuously monitoring what the new offerings are, you're falling behind. Just by standing still, you're falling behind."


Cutting Dispute Processing Costs

Another Accelerator participant is Finscend, which developed an AI/machine learning-driven predictive scoring engine with the potential to change the way credit and debit card disputes are handled.

According to CEO Aaron Lazor, dispute processing costs banks anywhere from $5 to $26 billion annually, and that’s just for those that are easily assessed. Less tangible costs, such as customer attrition due to poor service, make the total cost much higher, he says.

The company’s Bank Dispute Platform reduces the costs associated with dispute processing and improves the customer’s dispute experience. BDP’s AI-driven engine streamlines the entire dispute process using a series of tools—real-time reporting, fraud monitoring, batch processing, and others—to increase customer satisfaction and reduce total costs by an estimated 40 percent.

"It's very exciting to hear about all the new technology that's out there that we have not seen before,” said Rebecca Guiltron, senior vice president, Internal Audit at FNBC Bank, a $520-million asset bank in Ash Flat, Ark. “Just knowing that the ICBA ThinkTECH 2.0 companies want to collaborate with community banks to provide innovative products and services will really help us serve our customers today and in the future."


Leveraging Data to Gain a Competitive Edge

HEXANIKA, another participant to this year’s Accelerator, offers a cloud-based machine learning platform that can be leveraged to uncover insights, automate regulatory reporting, comply with AML regulations, and enhance data readiness. Founder Yogesh Pandit says the company’s philosophy is simple—to solve complex business challenges by leveraging data in a simple, smart, and efficient manner.

With mounting regulations and compliance pressures, changing business models, and disruptive technologies, community banks are under more pressure than ever to create memorable experiences that drive revenue and create a compelling user experience.

Our Accelerator participants are working alongside ICBA staff and our member banks to develop high-tech business solutions that meet today’s competitive demands, positioning community banks to not only compete—but thrive—now and into the future.

Join us at the ThinkTECH Showcase at ICBA LIVE® to learn more about Fraud.net, Finscend, and HEXANIKA and all of this year’s ThinkTECH Accelerator participants.


Charles Potts is ICBA senior vice president and chief innovation officer.