Fighting the $3.5 Trillion Fraud Problem

Fraud and financial crimes cause $3.5 trillion in losses each year, according to IBM. To help businesses stem those losses, IBM has introduced new software and services to help organizations use big data as part of their efforts to prevent, identify and investigate fraudulent activities.

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IBM's new "Smarter counter fraud" initiative draws on more than 500 fraud consulting experts, 290 fraud-related research patents and $24 billion invested in IBM's Big Data and Analytics software and services capabilities since 2005.

The initiative includes new software that, according to IBM, "allows organizations to gain better visibility and take a more proactive holistic approach to countering fraud, through the aggregation of Big Data across a variety of internal and external sources -- including mobile, social and online -- and the application of sophisticated analytics to continuously monitor for fraudulent indicators. This includes advanced analytics that understand non-obvious relationships and co-occurences between entities, new enhanced visualization technologies that can identify and connect fraudulent patterns closer to point of operation, and machine learning to help prevent future occurrence based on previous attacks and behaviors."

The goal is to address all kinds of fraud and financial crimes, including money laundering and cyber-attacks, to insider threats, to tax evasion. According to IBM, "The new offerings can detect cross-channel mobile fraud and prevent cybercrime 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,, which 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.

Counter Fraud Services Offerings, industry-aligned services that combine IBM's consulting, software and technology expertise to help clients improve the effectiveness and efficiency of their counter fraud programs, including: Strategy and Roadmap (evaluate a client's counter fraud environment and program governance, identify strengths and weaknesses, develop a recommendation for protection); Target Operating Model (deploy technologies to better detect fraud, respond and investigate exposures); and Scale & Manage (design and implement strategies and technological dimensions to run counter fraud program tailored for each client).

Fraud Discovery Assets, a portfolio of customizable assets that use analytics to discover fraud, waste, abuse, and errors in data intensive industries and functions. IBM says it plans to offer four levels of cloud services for the assets, running on IBM SoftLayer, ranging from cloud hosting to performing analysis and providing recommendations.

[To learn more about how financial firms are preparing for and responding to security incidents, attend the Acknowledge the Inevitable: How to Prepare For, Respond to, and Recover from a Security Incident session at Interop 2014 in Las Vegas, March 31-April 4.
You can also REGISTER FOR INTEROP HERE.]

Katherine Burger is Editorial Director of Bank Systems & Technology and Insurance & Technology, members of UBM TechWeb's InformationWeek Financial Services. She assumed leadership of Bank Systems & Technology in 2003 and of Insurance & Technology in 1991. In addition to ... View Full Bio