Innovating to keep customers and transactions safe

Innovating to keep customers and transactions safe

In the third and final part of our International Innovation series, we explore how innovation is helping protect customers and detect fraudulent transactions


Innovation has always played a key role in keeping fraudsters at bay in the world of cards and payments. When credit cards were first introduced, fraud quickly followed and so the magnetic stripe was introduced on the back of cards from the 1970s onwards. This new feature automated fraud detection and enabled card details to be recognised by a computer and sent via telephone lines to be checked against a centralised list of fraudulent accounts.

Ever since, there has been a constant drive by the industry, including Barclays, to develop new and more sophisticated methods to reduce the risk of fraud. There was the introduction of holograms to cards in the 1980s, microchips embedded within cards in late 1990s, and then in 2003 Barclaycard was the first payments company in the UK to trial Chip and PIN cards. The trial was the largest of its kind anywhere in the world, with Barclaycard issuing Chip and PIN cards to over half of the adult population of Northampton and almost 1,000 businesses taking part. The success of the trial helped to establish Chip and PIN as the most secure technology of its time to fight fraud and paved the way for an industry-wide rollout on 14 February 2006.

However, fraud quickly evolves and criminals are fast to adapt, looking for new avenues. Chip and PIN helped solve the issue of counterfeit and stolen cards but now the fight is moving to the online space, with new challenges to address such as social media scams and sophisticated phishing attacks. As the payments industry continues on its digital transformation journey, key players like Barclays are developing stronger shields to combat these fraudulent activities.

Working internationally

Barclays has pioneered innovation throughout its history, particularly in the area of fraud prevention. The old adage of ‘offence is often the best from of defence’ holds true in many fields from competitive sports to military operations. It’s one that the Global Fraud Operations team at Barclays deploys, using the latest technologies to protect customers from illegal activities in the market such as scams, money laundering and cyber-crime. With almost 1,700 highly trained specialists from across the US, UK and India working with complex and intelligent global systems they are well equipped to prevent and tackle fraud whenever and wherever it appears.

Explaining how the team operates, Ben Chance, Managing Director, Head of Fraud Transaction Cycle, Barclays said, “The vast majority of what we do is preventative, we’re trying to stop the fraud taking place in the first place. Our fraud team investigate risks; they pull together so many different sources of data to figure out the real transactions from the fake.”

Leading with Machine Learning

Habits are key to deciphering fraudulent transactions and this is where the latest innovations in technology are being deployed. If a customer has recently applied for a mortgage on a three-bedroom house and spends a lot in children’s shops you can see a trend. But if then they suddenly buy a yacht abroad, then this type of transaction doesn’t necessarily fit the mould. It’s not expected spend behaviour and that raises a flag to be looked in to.

Working across the UK and India, the Barclays fraud protection team is building a multi-tenant scalable and vigilant platform to score every transaction going through the Barclays system. It can detect fraudulent transactions by running machine learning models and tools based on historical patterns of customers, merchants and other entities. Machine learning is a branch of Artificial Intelligence (AI) and is where a computer can learn and adapt is algorithms over time. It means systems can learn from data, identify patterns and make decisions with reduced human intervention.

The new Barclays platform makes a decision in milliseconds as to whether a transaction looks fraudulent. It can pull customer profiles, card profile, merchant profile and ATM spend profiles and runs that through a machine learning model and dynamic business rules to make a decision to accept, decline or refer the transaction. It’s important to stay one step ahead of the fraudsters and this tool uses the latest in machine learning technologies in combatting fraud in a faster and better way.

Protecting for the future

Fraud often comes in waves: where there’s a new opening criminals will look to tap into this. Right now, according to a report by UK Finance social engineering and data breaches are the biggest threat. However, the report went on to say that last year the advanced security systems and innovations that the finance industry invested in stopped more than £1.6 billion of unauthorised fraud, this is equivalent to £2 in every £3 of attempted fraud being stopped.

Innovation in technology continues to be key to combating fraud – from the humble magnetic stripe from over 50 years ago to the latest advances in AI. Ben sums up how Barclays is striving to stay one step ahead of the fraudsters, “Our fraud detection systems are constantly evolving and we are using the latest cutting edge technology to improve our platforms. Innovation in machine learning is driving our business forward and ensures we are protecting our customers today and in the future.”