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What Banks Can Learn From Casinos

Casinos are the most sophisticated industry when it comes to customer identity issues and fraud control. Banks can learn from some of their techniques.

When a "whale" (a.k.a. high-roller, Private Banking customer) walks into a casino, they are recognized, greeted at the door, and shown to their free suite and their favorite VIP gaming tables. When a "shark" (cheat, fraudster) shows his face he too is greeted, but with an entirely different response.

Can your bank do this?
Probably not. But banks have several reasons to be looking to advanced technologies to address identity issues and the casinos are where such technology has been pioneered. Those reasons include:

• Know your customer regulations – There is a difference between knowing a customer and knowing an account holder. A customer may have multiple accounts and their pattern of activity overall may be deemed suspicious even if no individual account looks suspicious on its own.

• Fraud reduction potential – No one is committing fraud today using their own name, address, and Social Security Number. Frauds involve creating or stealing identities, taking over real customers' accounts, and using real customers' identity tokens (codes, checks, cards, passwords, personal data) to steal from the customers' accounts.

• Customer management – It is just good business to know who your customers are, who they are related to, what their total product mix is, and then use that information for marketing and in the daily decision-making processes of the bank. Do you really want to cancel the credit card of the daughter of the CEO of your largest Corporate Trust customer? IBM Big Picture:

Recognition capabilities – the 6 Rs
Knowing who is who actually requires several distinct capabilities to be effective:

--Resolve – Is Jane Smith also Jane Brown and/or Jane Brown-Smythe? Banks have long talked about "scrubbing the CIF," trying to create a customer information file that accurately relates account holders across their entire enterprise.

--Research – What is known about her? Is she a known criminal?

--Relate – Who is she related to and how? (Is she Gotti's limo driver or the wife of a CEO?)

--Recognize – In the branch, on the phone, on the Internet site, at an ATM, by mail...

--Respond – All the above is wasted without the capability to differentiate the bank's response

--Recover – If all else fails, do we have all of the information to make a recovery or support an arrest?

Banks need to consider the need for each of these capabilities. Many “Identity Solutions” address one or more of these needs but none fully address all of them. It takes more than simply buying and installing a “solution” to develop and implement full identity recognition capabilities.

By Jim G. George
Fraud and Money Laundering Expert Witness
Jim George is an independent consultant working with banks and software companies serving the banking market. He has more than 25 years of experience in bank consulting, with an emphasis on payments and deposits operations and strategy. Jim can be contacted at [email protected].

Copyright Jim G. George

Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer.For specific technical or legal advice on the information provided and related topics, please contact the author.

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