Report: Privacy-Enhanced Data Collaboration Between Banks Can Help Defuse Canada’s Rapidly Growing Financial Fraud Crisis

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 Duality Technologies, a starring supplier of privacy-enhanced information collaboration solutions, contiguous announced the work of a study authored by fiscal services advisory firm Aite-Novarica, entitled Inter-Bank Privacy-Enhanced Information Sharing: Fraud Detection and Prevention. The study analyzes however Canadian fiscal institutions tin prosecute successful accusation sharing based connected Privacy-Enhancing Technologies (PETs) to mitigate the accelerated emergence successful integer fraud (which is treble the planetary mean successful Canada), successful bid to reverse this increasing crisis. The probe estimates that specified fraud-focused collaboration could collectively prevention the apical 7 Canadian banks hundreds of millions of dollars per twelvemonth astatine the precise least, and perchance much than CA $1B.

Fraud is simply a long-standing scourge successful Canada (and globally), but grew exponentially during the pandemic arsenic the enlargement of ‘faceless’ integer banking services provided an perfect camouflage for fraudsters. The complaint of suspected integer fraud attempts against Canadian fiscal services companies accrued by 218% successful the archetypal 4 months of 2021 implicit the past 4 months of 2020. As of 2019, the estimated outgo of fraud to Canadian fiscal services firms is an alarming CA$2.96B, and this fig lone takes into relationship known fraud, indicating the existent outgo of fraud whitethorn beryllium overmuch higher. For years, banks person been acquiring solutions to assistance them woody with increasing fraud challenges, fueling a marketplace for fraud detection and prevention products estimated successful 2020 astatine CA$8.62 billion. However, the study determines that currently, banks are chiefly investing successful interior approaches to code a shared occupation that is champion solved by moving together. It concludes that successful an interconnected banking ecosystem, collaborating connected relationship and transaction information is the lone effectual mode to observe and forestall fraud which is often perpetrated crossed aggregate banks utilizing compromised individuality informationAnalyzing this benignant of information is perfect for detecting assorted types of fraud, specified arsenic synthetic identity, bust-out, and ATO (account takeover) fraud, and tin beryllium executed successful bid to assistance uncover attempts to prey connected customers of aggregate fiscal institutions.

The study highlights the usage of accusation sharing solutions based connected Homomorphic Encryption (HE) for privateness protection, arsenic a cardinal enabler of inter-bank collaboration for warring fraud. Using HE, banks tin encrypt information and stock it with adjacent institutions for investigation and querying, portion protecting banks’ and customers’ interests and remaining compliant with strict privateness regulations. Canada’s banks are taxable to PIPEDA, which allows information sharing to support the nationalist involvement – successful peculiar for fraud prevention. By utilizing PETs to unafraid delicate accusation and Personally Identifiable Information (PII), accusation sharing tin assistance banks summation the precocious manus successful the combat against fraud portion overcoming their hesitance to stock their astir guarded accusation portion mitigating legal, business, and information privateness concerns.

Alongside an evolving fraud landscape, the displacement toward unfastened banking and outgo modernization has led fiscal services executives to admit the request for modernizing their fraud detection and prevention programs successful a broad manner. Increased contention successful the banking assemblage has been squeezing nett margins, making it much hard for banks to sorb losses from fraud arsenic a outgo of doing concern and accelerating the request to make fraud prevention initiatives. As portion of the report, Aite-Novarica surveyed anti-fraud executives astatine Canadian fiscal services companies and recovered that the overwhelming bulk of these executives are either ‘likely’ oregon ‘very likely’ to question to alteration their capableness to mitigate hazard implicit the adjacent 1-2 years.

“Privacy-protected accusation sharing enables Canadian banks to determination beyond inward-focused approaches and tackle the country’s skyrocketing fraud occupation collectively,” said Dr. Alon Kaufman, CEO and Co-Founder, Duality Technologies. “If banks proceed with concern arsenic accustomed by lone processing fraud-related information internally down fastener and key, they hazard important reputational and fiscal harm arsenic fraud continues to grow. Adapting innovative, collaborative, fraud-fighting processes arsenic soon arsenic imaginable volition instantly interaction the effectiveness of their anti-fraud efforts portion ensuring regulatory compliance and preserving their customers’ privacy.”

“Banks indispensable person entree to a broader array of lawsuit information to analyse patterns, behaviors, and incidents of fraud; to people hazard decently and to observe fraud occurring astatine their slope arsenic good arsenic others,” said Tari Schreider, Strategic Advisor – Cybersecurity Practice, Aite-Novarica Group. “In the satellite of unfastened banking, caller menace vectors volition emerge, which volition necessitate banks to grow their hazard skyline crossed relationship and instrumentality information held by different banks.”

Please find a nexus to the afloat report here.

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