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Fifth Third Stays Seven ’Steps’ Ahead of Fraud

Bank implements seven new fraud-detection systems to fight check and ID fraud.

It has been a busy year for Lisa Zarzycki, senior risk policy officer of Cincinnati-based Fifth Third Bank, with $81 billion in assets.

That's because Zarzycki has been involved in building an intricate fraud management system at the bank, comprising seven different types of technology-all installed in the past year.

"It was a fun year," Zarzycki says. It was also profitable, as the new systems have reduced losses by 43 percent.

The technology included two check fraud detection systems, two new account fraud detection systems, two check identity systems and, key to the package, an investigation case management system (ICMS) from Loss Control, LLC (Minneapolis).


Fraud continues to be a big issue for the banking industry. Ernst & Young estimates than 500 million checks are forged annually to the tune of $10 billion.

But checks are only part of the problem. Debit card fraud cost banks an estimated $51 million last year and identity theft is rising quickly. The Federal Trade Commission estimates that almost 10 million Americans were victims of ID theft last year.

Zarzycki, who joined Fifth Third when it acquired Old Kent Financial Corp. in 2001, says that before risk managers can tackle fraud "they need to understand why they're losing money. If you don't know the causes, you can't put a plan together."

That means analyzing information, and that's why Zarzycki introduced the case management system from Loss Control, technology she had used at two previous employers-Old Kent and Federal Standard.

ICMS manages workload and data for loss prevention, corporate security, compliance and anti-money laundering. It allows users to identify patterns and highlight areas that require further analysis. Almost one-third of the top 100 U.S. banks use ICMS, according to the vendor.

It's a scalable system that can be operated as a stand-alone application or across the enterprise. It provides complete financial reporting for case and item reporting. And users can monitor information related to incidents or policy violations and it can be customized to suit a bank's needs. Lastly, a workbench design allows banks to automate workflow and the files can be viewed and edited online.

"It's particularly designed for the banking industry," explains Zarzycki, who has more than 100 users accessing the system. "One of the reasons why I like it is because it allows me to file suspicious activity reports with FinCEN," the Financial Crimes Enforcement Network, part of the U.S. Department of Treasury. "The system allows us to do it electronically."

The relational database also allows fraud prevention officers to input information from their cases, which can then be tracked and compared with other cases, Zarzycki says. For instance, officers can track things like check kiting and ID theft and incidents can be compared to identify weaknesses in the system.

ICMS also allows Fifth Third to identify what types of products are most susceptible to fraud and which accounts are most at risk, according to Zarzycki. In addition, it allows the bank to pull reports based on locations and identify the "riskiest branches. We can go back and do trend analysis."

The system allows managers to gauge the productivity and performance of investigators. She knows when cases were opened, how many the investigators are juggling, the time it takes to handle them and the outcome. "That's the kind of stuff you need to manage a group."


She says it's hard to measure return on investment, but adds that "Fifth Third has always had a good track record when it comes to losses and has tracked below the industry average. This system helps Fifth Third stay at the cutting edge of fraud management," according to Zarzycki.

Combined with the other technologies to track checks and identify account holders, she says the fraud system Fifth Third has built "allows me to stay abreast and be more proactive than reactive, which is what all banks should be."


INSTITUTION: Fifth Third Bank (Cincinnati)

ASSETS: $81 billion

BUSINESS CHALLENGE: Provide risk managers with better data and analysis tools to help fight fraud.

SOLUTION: Investigation case management system (ICMS) from Loss Control, LLC (Minneapolis), along with two check fraud detection systems, two new account fraud detection systems and two check identity systems.

KEY QUOTE: Risk managers "need to understand why they're losing money. If you don't know the causes, you can't put a plan together to combat fraud."


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