Q&A: Subex offers insights into the battle against mobile money fraud

Fraud and revenue assurance issues are as important as ever but in times of fast-paced change, they tend to be forgotten. Grabbing or keeping customers and revenue is more important than saving a dollar here or apprehending a petty thief there.

The opportunities for virtual theft are impressive and speak for themselves – in mobile money alone Frost and Sullivan estimates that there are more than 3 billion mobile phones against 1 billion bank accounts. It doesn’t take a criminal genius to spot that opportunity.

Connected Planet spoke to Mark Nicholson, CTO and Dale Youngs, fraud expert at Subex – which of late has been focusing heavily on the problem – about the challenges.

Connected Planet: Focusing on mobile money, what are the main issues in fraud management?

Mark Nicholson: Scale and diversity. If you think about the progress of banking, from the branch to online banking and now to mobile, the diversity creates both the opportunities and the problems. The process gets more complex and more distributed, which creates the complexity and the flaws.

Add to that the huge increase in settlements, the arrival of the cloud and the internet itself and you have a constantly expanding and changing scene. When you go mobile or take another big step then processes become more difficult to monitor and control.

Connected Planet: Complexity and scale creating most of the problems?

Nicholson: Yes, and two industries trying to work together or at least work out how to work together.

Connected Planet: What are the specific problems that you are finding?

Dale Youngs: Most of the problems are created by the diversity of services and models that Mark spoke about and one of our problems is that we get different answers from every service provider we talk to. There are so many different requirements that every solution is essentially tailor made.

Connected Planet: I thought that there would be the same problems across the board?

Youngs: Sadly every customer has separate issues, but there are some things that are common and quite easy to address. We can monitor high levels of transactions, for instance, or unusual levels. We can provide profiling so that service providers can begin to see patterns that are out of the ordinary or behavioural changes. But there are more complex issues too.

Connected Planet: Such as?

Youngs: Actually a lot of the extra work-load is in areas such as data protection where we need to ensure that our customers are compliant, and money laundering which has more and more regulation around it.

Connected Planet: And presumably there is the extra dimension that it is not just the quantity of transactions, you need to monitor the value too?

Youngs: There is that, for sure, but the theory is the same – transaction records can be monitored. Cards, of course, need to be protected and in many instances encrypted.

You can also use geographic and demographic data to create parameters in order to spot odd goings-on. For instance, you can take a cell, take the average salary per capita in the area and create alerts around unusual numbers and values of transactions coming from that cell.

Connected Planet: Are there different issues between emerging economies and mature markets?

Youngs: Actually what we have seen is this different set of requirements for almost every customer. We have also seen a lot of ignorance of what is possible using fraud management systems. There is a range and breadth of things you can do that is more effective than most customers acknowledge. It is a question of exploiting the data that is there.

Connected Planet: Thank you, an excellent overview. Are there any other issues that you are concerned about at the moment?

Nicholson: One of the things that concerns us, me, is that banks and mobile service providers do not understand each other’s security issues.

Connected Planet: So the interfaces are causing problems?

Nicholson: It is potentially very serious. It is really where the different industries come from. About culture. Telcos understand a secure transport network and banks understand a secure financial system. They are two different things.

Connected Planet: There has been a lot of talk about eco-systems lately. You say it is about culture – do you think there is still a ‘them and us’ approach to this whole thing?

Nicholson: I do, and I think the players need to stick to what they are good at and partner with the rest of the system – there is plenty of opportunity to go round and we don’t want to ruin it before it gets going.

Connected Planet: Gentlemen, thank you.