Amidst a general surge in identity theft, with a 57 percent year-on-year increase reported in 2015 according to a Cifas report, not only banks but consumers should be looking at steps they can take to prevent fraud.
In the long run, this could mean collecting more data and using it to bring context to financial transactions.
But it might be surprising to learn that even the information currently available is not being used to full effect.
We generate information about ourselves constantly as we go about our daily lives, thanks to the smartphones that we carry with us. These have the ability to record and capture our location, sounds through the microphone or images through the camera.
Jim McNiel, CMO at NETSCOUT, a company which deals extensively with the information running across telecommunication networks, thinks that this kind of information could be key to preventing fraud in the future.
McNiel argues that many banks already have a presence on smartphones through the consumer application.
"The easiest way for banks to do it today is through the app that people have on their phones. But they’re not even doing that yet. They’re not even sending a notification to your phone to check what location you’re in."
This could be enabled very simply by having the application simply request access to location data at the point of download. Then, when somebody authorises a transaction, they could compare the location of the smartphone with the location of where it was authorised from.
This might never even get to the point of denying a transaction, but a notification could be sent via the mobile app flagging up the activity and asking them to confirm that they were responsible for the transaction.
However, this is just what banks should be doing already. McNiel says that there is potential in the future for a longer term partnership between banks and the telecoms industry.
Since their customers’ location data belongs to service providers, McNiel says that banks could use the data available to service providers to provide location-based fraud prevention.
"It’s very easily done technologically preventing fraud in this way," says McNiel.
However, he says that this is not "easily executed or delivered" from a business perspective.
"Who is Lloyds going to partner with? If they had one API they could go to every time a card was going to be used to find out whether someone was with their card, it would be easy."
The same goes for card providers such as American Express and Visa.
"Your phone could go off and it is just a quick SMS asking whether you are spending the money at this location and you confirm or deny it," he says.
Jim McNiel, CMO NETSCOUT
"But there’s not one telco. There’s Vodafone, Tesco, BT, Orange," says McNiel.
He says that the financial companies need to get together and "have a conversation", and that an aggregator is needed to make it work. This could, he hopes, be NETSCOUT.
This use of contextual data could expand beyond tackling financial fraud; security company Sophos is developing a technology called ‘continuous authentication’, which uses data such as location but also behavioural biometrics such as typing speed to constantly assess whether a person is whom they claim to be.
McNiel says that the telco data will be useful for other companies, not just banks.
"There’s a shift taking place in the telcos where we are talking to not just the radio access guys but the marketing guys."
He gives the example of a group of tourists travelling in from abroad and digital signage.
"If you’ve got a bus coming in from Heathrow full of Korean tourists, you could have a digital sign on the side of the road and switch it to Korean.
"You could make money by advertising to those people whereas before previously you wouldn’t have made a dime. But because Vodafone has told you that you have a busload of Korean tourists coming down the motorway, you could do it."
"Companies are going to get smarter by using the data. In 1999, GE and Coca-Cola were top of the S&P 500. Today it is Apple and Google. People think Google is a search company: Google is a company that sells advertising based on intelligence."
