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PRISM ® : Intelligent Fraud Monitoring Presentation to Retail Decisions, Inc +1 401 228 2355 www.red-usa.com.

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Presentation on theme: "PRISM ® : Intelligent Fraud Monitoring Presentation to Retail Decisions, Inc +1 401 228 2355 www.red-usa.com."— Presentation transcript:

1 PRISM ® : Intelligent Fraud Monitoring Presentation to Retail Decisions, Inc

2 Retail Decisions, Inc – Confidential and Proprietary Agenda What is PRISM? Why do I need it? How does it work? What are the Benefits? Why would I buy it from ReD?

3 Retail Decisions, Inc – Confidential and Proprietary Retail Decisions, Inc – Confidential & Proprietary What is PRISM PRISM is a software solution or hosted service to financial institutions, processors and switches for prevent payment fraud prevention ReD protects transactions in Real Time (RT) or Near Real Time (NRT) and works against any acceptance channel The PRISM Product Suite combines: –Complex Business Rules Engine with full business user control –Custom trained Neural networks –Alert Case Management –Workflow –Monitoring and Reporting –Analytics products for strategy development –CPP/POC detection

4 Retail Decisions, Inc – Confidential and Proprietary Where does PRISM Fit? Retail Decisions, Inc – Confidential & Proprietary Consumer Shops and Makes Purchase Merchant Sends Authorization Request to Acquirer Acquirer Sends Auth request (via Networks) to Issuing Bank Authorization Response Generated and Sent by Issuer Acquirer sends response to Merchant Consumer Notified Purchase Complete Statement and Billing Payment or Chargeback Acquirer Merchant Issuer Cardholder

5 Retail Decisions, Inc – Confidential and Proprietary PRISM – Complete Solution Rule based systems –Focus on what we know about fraud control –Known fraud schemes can be prevented easily with rules –Challenges –If the rules are too tight … we catch nothing –If the rules are too loose … we drown in reviews –Rules dont adapt to evolving fraud patterns Statistical solutions –Focus on understanding fraud –Fraud trend analysis –Helps create complex rules for fraud detection –Challenges –Not a dynamic solution … doesnt keep pace with changing schemes Neural Networks –Focus on what we dont know about fraud –Earliness of detection –Easy control of caseload vs false positive rates vs percentage detection –Increased fraud savings 5

6 Retail Decisions, Inc – Confidential and Proprietary PRISM ® Products PRISM Real Time –Real-Time Transaction Decisioning PRISM Credit and Debit –Credit and Debit Card Fraud Detection PRISM Merchant –Merchant Risk Management PRISM AML –Anti Money Laundering PRISM RulesPlus –Intelligent Rule Development and Testing PRISM PinPoint –Point of Compromise detection ReD Shield –Real-time CNP fraud prevention

7 Retail Decisions, Inc – Confidential and Proprietary Why do I need it? CCNCredit Card Numbers SSNSocial Security Numbers (or Non-US Equivalent) NAANames and/or Addresses EMA Addresses MISCMiscellaneous MEDMedical ACCAccount Information (Financial) DOBDate of Birth FINFinancial Information

8 Retail Decisions, Inc – Confidential and Proprietary The Problem Changed – Organization and Speed The scheme included money mules who were hired to withdraw the stolen money from ATMs and store it in safety deposit boxes and luggage lockers at train stations. Within a 12-hour period, $9 million in cash was withdrawn from 2,100 ATMs in 280 cities around the worldmoney mules

9 Retail Decisions, Inc – Confidential and Proprietary The Problem Changed - Easy to get

10 Retail Decisions, Inc – Confidential and Proprietary Purpose Built Skimmers

11 Retail Decisions, Inc – Confidential and Proprietary …Even instructions on YouTube

12 Retail Decisions, Inc – Confidential and Proprietary 2005 vs 2010 Fraud Type Breakdown DescriptionCategory CodePercent of Reported FraudAverage Dollar Loss Gas Stations and Service Stations5542 and %$77.28 Discount Stores %$ Grocery/Supermarket Stores %$ Same industries are taking the pain…

13 Retail Decisions, Inc – Confidential and Proprietary How does PRISM Work Retail Decisions, Inc – Confidential & Proprietary Authorization Request Authorization Response PRISM Real Time Decline Alerting NRT Rule Alerting PRISM Score Post Auth Rules PRISM Score Extract

14 Retail Decisions, Inc – Confidential and Proprietary PRISM Scoring Engine

15 Retail Decisions, Inc – Confidential and Proprietary c Learned solution –Solution accurately models the underlying patterns in the data –Iterates to converge on a global error minima –Captures non-linearity and inter-feature dependence Incremental Learning –Adaptive systems which learn from new experience –Reinforces existing trends and learns new trends Reasons for decision making –Localized neural networks provide exact reasons Real-world tested –In commercial applications since early 1980s –Used successfully in reducing card fraud worldwide –Capable of processing large amounts of data ReD - Key features of Neural Networks 15

16 Retail Decisions, Inc – Confidential and Proprietary Transaction Fraud Scoring SCORING ENGINE Authorization Read Merchant Data Object Merchant Database Customer Account Non-Monetary Activity Transaction Activity ChargebacksEvents Derive Features Change in Individual Merchant usage patterns

17 Retail Decisions, Inc – Confidential and Proprietary Transaction Fraud Scoring SCORING ENGINE Authorization Neural Network Fraud Score (0-999) Derive Features Compare this particular change in usage with Neural Memory of legitimate & fraudulent changes in account Read Merchant Data Object Merchant Database Alert

18 Retail Decisions, Inc – Confidential and Proprietary PRISM Real Time

19 Retail Decisions, Inc – Confidential and Proprietary Immediate Response Entrance Criteria Screening Database Neural Score Business Rules As defined by the customer, these are the rules on which transactions need to be scanned in real time. Positive and Negative database. Accounts and terminal are checked against this list to determine if they should be approved or denied immediately based on this information. Transactions are scored relative to cardholder profiles of activity using neural model. User defined Rules are executed against the transactions. Transactions can be approved or denied, but no ALERT is generated by this system Excluded Found Card or Terminal Included Rules Result PRISM Real-Time High Level System Flow Not In DB TXN + Score

20 Retail Decisions, Inc – Confidential and Proprietary Result Neural Database Neural Database Transaction Database Yes – Recommend denial No – Recommend approval Authorization System Entrance Criteria Service Manager Screening Database Neural Score Business Rules Other All Transactions Exclud e Excluded Include Executed at Lower Priority Transactions are Included or Excluded in RT screening based on customer selected criteria. Not all transactions have the same risk and require the same overhead. All Transaction are fed to the system and logged for velocity. Services are executed in order to respond to the request as quickly as possible. Neural score is added to the transaction to enhance the options with the business rules engine. Real Time System Flow

21 Retail Decisions, Inc – Confidential and Proprietary PRISM Real Time Decisioning Customized implementation based on your authorization system Suite includes –Browser based administrative controls –Service Based Architecture including Configurable Entrance Criteria –Full control over what is decisioned or responded to immediately, with full logging of account history Real Time Neural Engine –Real Time neural score Positive/Negative Database –Allow data elements like Account Number or Terminal ID to be entered in Positive/Negative lists Complex Business Rules Engine –Standard rules –Velocity rules Block Account interface for requests to add/remove 15 day historical database –Integration to NRT system for alerts or decline management

22 Retail Decisions, Inc – Confidential and Proprietary PRISM RT Database (all Score + Decision data) PRISM RT Database (all Score + Decision data) PRISM Real-Time System PRISM Real-Time System All Transactions PRISM Alerts (NRT) System PRISM Alerts (NRT) System Score (Optional) Score (Optional) NRT Rules Queues Workflow All approved and denied transactions are shipped from the RT system to he NRT system. Neural Score may have been calculated in Real Time. NRT Rules may have higher false positive, slower executions or different criteria for alerting to send to agents or automated contact systems. Existing workflow of alerted accounts and transaction is utilized to increase efficiency. Real-Time and NRT Interaction

23 Retail Decisions, Inc – Confidential and Proprietary PRISM Alerts (NRT) Retail Decisions, Inc – Confidential & Proprietary

24 Retail Decisions, Inc – Confidential and Proprietary PRISM High Level Processing Flow Retail Decisions, Inc – Confidential & Proprietary

25 Retail Decisions, Inc – Confidential and Proprietary Retail Decisions, Inc – Confidential & Proprietary PRISM Alerts System - Benefits Case Management –All account, transaction and customer interaction data on one screen –Improves quality of customer care Workflow –Alerts are prioritized and routed to analysts for immediate review –Sophisticated queuing software –Improves operational efficiency Strategy Software –Test drive rules and measure performance before production roll-out –Instant deployment of rules without IT involvement –Implement and monitor risk management policies Monitoring and Reporting –Comprehensive suite of performance reports –Report Wizard to construct, schedule and deploy customized reports –Continuous fraud loss and trend measurement and mitigation

26 Retail Decisions, Inc – Confidential and Proprietary Retail Decisions, Inc – Confidential & Proprietary A&R – Rule Queue Relationship PRISM All Transactions All alerts: 0.1% - 1% of volume Rules Engine Purpose: Identify fraud Queue Facility Risky MCC queue Risky city queue High amount queue Purpose: Targeted alert distribution / Facilitate reviewer expertise

27 Retail Decisions, Inc – Confidential and Proprietary PRISM Rules Engine PRISM Rules engine allows complicated business rules to be run on transaction receipt to detect fraud events Rules can be written by Business Users, not IT staff PRISM supports many types of near real-time rules Transaction-centric rules Rules employing the neural score in isolation and in combination with non-neural data elements Rules requiring account history Velocity - Number of transactions on card / account in user-defined time period Aggregated amount - Average / total amount per card / account in past X days Hybrid combinations Examples: Support all standard SQL operators (, etc), Booleans (AND, OR, NOT, etc), string operations (IN, etc), wildcards (%) Rules requiring negative tables Geolocation – Implemented as pass-through features Average distance between merchants for all purchases in past 30 days Average distance between CDH home and merchant in past 30 days Any valid SQL condition which does not prohibitively impact throughput

28 Retail Decisions, Inc – Confidential and Proprietary PRISM 8.x Thin Client Main Screen Tool Bar for quick access to standard functions Quick highlights of account status Information on Account holder, account relationship andnon- monetary activities can be displayed here in a single view Display of funds at Risk and Fraud Already Reported 90 Day account activity history – All transactions A single account may have multiple cards. Click here to see status of all associated cards. If there are Fraud Transactions on this account, use this button to quickly access the screen to Mark Fraud Transactions History of all agent and system activity on this account Charting of trends on the account Button to expand panes of the view. Extensive account information can be displayed on these screens including financial info, account history or information from external sources

29 Retail Decisions, Inc – Confidential and Proprietary Analysis and Review System - Benefits Case Management –All account, transaction and customer interaction data on one screen –Improves quality of customer care Workflow –Alerts are prioritized and routed to analysts for immediate review –Sophisticated queuing software –Improves operational efficiency Strategy Software –Test drive rules and measure performance before production roll-out –Instant deployment of rules without IT involvement –Implement and monitor risk management policies Monitoring and Reporting –Comprehensive suite of performance reports –Report Wizard to construct, schedule and deploy customized reports –Continuous fraud loss and trend measurement and mitigation

30 Retail Decisions, Inc – Confidential and Proprietary … Browser Based … flexible queuing functionality … prioritization of alerts … iterative review and workflow … all with point and click navigation PRISM ® Fraud Review Workstation

31 Retail Decisions, Inc – Confidential and Proprietary PRISM Analytical Tools

32 Retail Decisions, Inc – Confidential and Proprietary PRISM PinPoint - CPP / POC Detection & Mitigation Benefits –Dramatically reduce your counterfeit fraud losses –Identify merchants unknowingly targeted by skimmers –Isolate cards which are about to be used fraudulently –Automatically detect in minutes what takes you weeks of manual review –Protect your cardholders confidence in you

33 Retail Decisions, Inc – Confidential and Proprietary Common Point of Purchase Typical Counterfeit Activity – Skimming: The fraudster secures a number of credit or debit account numbers at the original Common Point of Purchase, this location is known as the Point of Compromise. – Testing: The fraudster makes purchases for small denominations on an unattended terminal or e-commerce website to determine which of the accounts are active thus creating a second Common Point of Purchase. – Slamming: Fraudster rapidly perpetrates repetitive fraud on each active account. Common Points of Purchase (CPP) and Points of Compromise (POC) – Data Mining: Interactive data analysis to locate CPP – Triangulation: Expand search and mining criteria to locate testing terminals and POC – Prevention: Block-and-reissue compromised cards that have not been used search and mining criteria to locate testing terminals and POC

34 Retail Decisions, Inc – Confidential and Proprietary PinPoint Screens

35 Retail Decisions, Inc – Confidential and Proprietary What is PRISM RulesPlus? Rule Performance Quantification Create statistically measured data samples random, or be a target subset, such as all commercial cards, to target fraud in specific portfolios or data segments Enables the user to quantify the performance of rules prior to releasing them into production Enables the user to quantify rule performance on one or more samples of data, allowing them to accelerate the rule optimization process

36 Retail Decisions, Inc – Confidential and Proprietary PRISM RulesPlus Features Benefits – Sample: Create random and targeted sample segments to evaluate performance. – Evaluate: Measure performance of single or a family of rule sets. – Quantify: Obtain fraud detection and false positive rates of rules prior to deployment.

37 Retail Decisions, Inc – Confidential and Proprietary Retail Decisions, Inc – Confidential & Proprietary Focus –This is our core competency. This is what we do and do it well –We are there for our customers as fraud evolves –Our competitors customers are converting to ReD Why ReD ? Financials –ReD has high earnings stability –Profitable and double-digit growth for the past five years Global Presence –Fraud is an international issue without borders –We learn and transfer knowledge from each territory –We rapidly deploys our services as fraud evolves and migrates Expertise –Some of the top fraud managers in the world are employees of ReD –Our objective is to maximize valid transactions not just stop bad ones –We help our customers balance the trade-off between risk and opportunity

38 Retail Decisions, Inc – Confidential and Proprietary Benefits of PRISM Application Complete Solution –Real Time and Near Real-Time Decisioning –Fraud alert Case management –Reporting on agent and system performance –Integrated communications Increase detection and lower false positives –PRISM Neural Engine –User defined business rules Configurable –User defined workflow –Automated Actions –Tieback to other systems

39 Retail Decisions, Inc – Confidential and Proprietary Benefits of PRISM Partnership approach –Collaborate with Customer to demonstrate immediate and measurable value –Ongoing application review to ensure performance –World wide and multi-channel fraud expertise –Consultative relationship throughout contract Tailored and customized –Truly tailored solution for functions and verticals –Detailed and ongoing review of business objectives to ensure the application meets the need –Customizable options for SMS, , and ARU integrations available Technology –Provides hybrid technology solution using Neural, Rules and Analytic solutions. –Focused on developing products to help fraud managers –Committed to this solution as we use it for our own business

40 Retail Decisions, Inc – Confidential and Proprietary Benefits of RD Multi-channel Solution –Incorporates activity across all customer interaction channels Monitors deposits and non-monetary transactions Risk weighting for products Risk weighting for risky merchant categories –Facilitates communication of Alert both inside and outside the organization with multiple channels Scalable –Linear scalability of all components –Designed for phased roll-out across business lines and products –High volume transaction processing –Experts in Real Time Fraud decisions Support –Solution supported by internal resources –Rated top-notch by our customers

41 Retail Decisions, Inc – Confidential and Proprietary Focus –Payments Fraud Detection is our core competency. –We are there for our customers as fraud evolves –Participate in Issuer, Acquirer and Merchant fraud prevention –Hosted and fully managed worldwide fraud solutions for over 10 years Global Presence –Fraud is an international issue without borders –We learn and transfer knowledge from each territory –We rapidly deploys our services as fraud evolves and migrates Expertise –Some of the top fraud managers in the world are customers of ReD –Our objective is to maximize valid transactions not just stop bad ones –We help our customers balance the trade-off between risk and opportunity Why Choose Retail Decisions?

42 Retail Decisions, Inc – Confidential and Proprietary Why choose Retail Decisions? Stay Focused on Customer Business –Create environment for iterative improvement –Monitor False Positives –Continual review of system effectiveness –Focus manual efforts on most likely alerts –Ensure enough data to make effective decisions is available on the alert –Communicate trends –Use information we have to establish more value –Establish and maintain account relationship focused on the industry

43 Retail Decisions, Inc – Confidential and Proprietary Customer References and Projects Customer Commitment –Our customer relationships stand as a testament to our commitment to their success. –We would arrange reference with any of our customers –We regularly attend all customer internal product meetings to ensure we are part of the team Conversions from competitors products –We have converted two customers off PRM as live software installs, Both took less than 10 weeks. –Both required multiple installations of the PRISM product (Credit and Debit). –Neither were required to change SEIP message. –Both received new quick start models as part of the conversion, with complete custom models within 4 months. –New tools available are providing them more options to bring additional data into the PRISM Score and Rules than was available previously

44 Retail Decisions, Inc – Confidential and Proprietary QUESTIONS / NEXT STEPS Questions / Next Steps?

45 PRISM ® Debit: Intelligent Fraud Monitoring Presentation to Banamex THANK YOU Retail Decisions, Inc


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