The fight against financial fraud is an endless battle that requires organizations to leverage every tool and resource at their disposal. While internal fraud detection systems and processes are undoubtedly crucial, savvy companies recognize the immense value of building robust external financial fraud intelligence programs.

The value proposition is clear: by tapping into a wealth of external data, insights, and collaborative relationships, organizations can gain a far more comprehensive and up-to-date understanding of the fraud landscape. This intelligence can then seamlessly integrate into fraud prevention and detection efforts, empowering teams to anticipate emerging threats, identify suspicious patterns, and respond swiftly to mitigate the damage.

This ability to uncover connections and patterns that may not be visible from an internal perspective is a key advantage of external fraud intelligence. Fraudsters often operate across multiple organizations, utilizing similar tactics and techniques. By tapping into external sources, companies can better anticipate future threats and develop more effective countermeasures. This forward-looking approach is crucial in the dynamic world of financial fraud, where fraudsters are constantly adapting and evolving their methods.

However, building and maintaining an effective external financial fraud intelligence program is no easy feat. There are several challenges that organizations must navigate, beginning with the complex web of seemingly overlapping data sources and partnership opportunities, to ensuring that the intelligence is properly leveraged across the entire fraud management lifecycle.

One of the biggest hurdles is the sheer volume and diversity of external data available. From government agency reports to industry-wide fraud alerts, and private threat intelligence feeds to public-private partnership initiatives - the options can be overwhelming. Not all sources are reliable, and sifting through vast amounts of data to find actionable insights requires significant effort and expertise. Businesses must develop a strategic approach to identifying, vetting, and efficiently integrating the most relevant intelligence into their fraud prevention workflows.

Another common challenge is the issue of data silos and lack of cross-industry collaboration. Fraudsters often operate across multiple organizations, utilizing similar tactics and techniques. But without a formalized mechanism for intelligence sharing, companies may be left in the dark about broader fraud trends and patterns. Overcoming this siloed mentality and fostering a spirit of collaboration is crucial for maximizing the value of external fraud intelligence.

Integrating external intelligence with internal systems is another hurdle. Organizations often have established processes and tools for internal fraud detection. Incorporating external data seamlessly into these systems requires careful planning and technical integration as well as the analytic skills and resources to develop effective and efficient detection strategies.

On a more significant note are privacy concerns and legal hurdles when sharing intelligence in “give-to-get” sharing models, as well as the ability to mask, hash, or protect sensitive data ingested from external sources (such as compromised credit card information ingested to an analytic environment that is not PCI compliant). While significant progress has been made recently in privacy-enhancing technology designed to anonymize data for sharing without losing its analytic qualities, that technology is not yet mature enough for broad financial fraud intelligence applications.

Finally, effective external intelligence programs rely on strong relationships and collaborations with various entities, including vendors, industry groups, and law enforcement agencies. Building and maintaining these relationships requires ongoing effort and engagement. Trust and information sharing are crucial components, and fostering a collaborative environment can be challenging, especially when dealing with sensitive information.

Fortunately, there are several tactics and solutions that organizations can employ to build and maintain a best-in-class external financial fraud intelligence program. A key starting point is to conduct a thorough audit of existing data sources, strategies, and partnerships to determine the efficacy of current intelligence sources and the efficiency of existing strategies. Intelligence sources have a shelf life in the fast-paced world of fraud. Taking time to identify sources with diminishing value and listening to the proposition of new providers is a great way to identify gaps and opportunities for expansion. Oftentimes vendors will gladly share sample data to demonstrate the timeliness and value of their intelligence.

Beyond intelligence vendors, organizations are encouraged to engage deeply with industry groups, law enforcement, and public-private partnerships to ensure they understand the full value proposition they offer and are taking advantage of these often-lower-cost intelligence sources.

The value of consortium data within vendor tools and platforms cannot be overstated. By pooling fraud-related data from multiple organizations, these solutions can provide a much richer and more comprehensive view of the threat landscape. Fraudsters don't operate in a vacuum, and by understanding their tactics across the ecosystem, companies can develop more proactive and effective countermeasures.

Of course, simply amassing external intelligence is not enough - organizations must also ensure that this data is seamlessly integrated into their existing fraud detection and prevention tools and workflows. This may involve developing automated processes for ingesting and analyzing intelligence, or training cross-functional teams to interpret and act upon the insights. The goal is to create a cohesive, data-driven approach to combating fraud, with external intelligence serving as a vital strategic input. Where industry group consortia tend to be comprised more of raw data indicators that must be ingested, analyzed, and leveraged in a bespoke detection strategy, vendor-based consortia is often enhanced by the proprietary analytic strategies of the vendor to reliably identify threats with highly efficient false positive rates.

Vendor platforms that enable this type of collaborative intelligence sharing can be particularly valuable, providing a centralized hub for data exchange and joint problem-solving. As the old saying goes, "A rising tide lifts all ships" - by providing timely feedback to the consortium, businesses can better protect themselves, their customers, and their industry peers from the devastating impacts of fraud.

Assessing the efficacy of an external fraud intelligence program and continually improving it is crucial. Metrics such as the breadth of data sources, the timeliness of intelligence, and the measurable impact on fraud detection and prevention rates can all provide valuable insight into the program's performance. Regularly reviewing these KPIs and adjusting as needed can help ensure that the program remains a strategic asset in the ongoing battle against financial fraud.

Tips for Assessing the Efficacy of and Continually Improving the External Financial Fraud Intelligence Program

To ensure the continued effectiveness of an external financial fraud intelligence program, organizations must regularly assess its efficacy and implement improvements. Here are some practical tips for this process:

Conduct Regular Reviews and Audits

 Regularly reviewing and auditing the external intelligence program helps identify areas for improvement. This can include evaluating the quality and relevance of intelligence sources, assessing the integration with internal systems, and measuring the impact on fraud prevention and detection efforts. Audits should be comprehensive and involve input from various stakeholders to ensure a well-rounded evaluation.

Measure Key Performance Indicators (KPIs)

Establishing and measuring key performance indicators (KPIs) provides a clear picture of the program's effectiveness. KPIs can include metrics such as the number of threats detected, the accuracy of threat assessments, the time taken to respond to threats, and the reduction in fraud incidents. Regularly monitoring these metrics helps track progress and identify areas that need attention.

Solicit Feedback from Stakeholders

Feedback from stakeholders, including fraud prevention teams, management, and external partners, is invaluable for continuous improvement. Regularly soliciting feedback helps identify pain points, areas of concern, and opportunities for enhancement. This feedback can be collected through surveys, interviews, and regular meetings, ensuring that all perspectives are considered.

Stay Updated on Emerging Trends and Technologies

The threat landscape is constantly evolving, and staying updated on emerging trends and technologies is essential for maintaining an effective external intelligence program. This includes monitoring industry reports, attending conferences, and participating in professional development opportunities. Staying informed about the latest developments ensures that the organization can adapt its strategies and tools to address new threats effectively.

Foster a Culture of Continuous Improvement

Creating a culture of continuous improvement within the organization encourages ongoing evaluation and enhancement of the external intelligence program. This involves promoting a proactive approach to fraud prevention, encouraging innovation, and rewarding efforts to improve processes and outcomes. A culture of continuous improvement ensures that the program remains dynamic and responsive to changing threats.

In conclusion, building an effective external financial fraud intelligence program is not a luxury, but a necessity in today's rapidly evolving fraud landscape. Though the path may not be easy, the benefits of getting it right are immense. By tapping into a wealth of external data, insights, and collaborative relationships, organizations can gain a far more comprehensive understanding of the threats they face and develop more proactive, robust fraud prevention strategies. Regular assessment and continuous improvement ensure that the program remains effective and adaptive in the face of evolving threats.

It's a journey worth taking, and one that can make all the difference in the high-stakes fight against financial fraud.

Brent Whittington
Director of Fraud Strategy Consulting at Anti Fraud Advisors. With over 25 years of experience in building and managing technology, cyber, and fraud risk programs, Brent is a recognized expert in the field.