By: Ken Pruett
The use of Knowledge Based Authentication (KBA) or out of wallet questions continues to grow. For many companies, this solution is used as one of its primary means for fraud prevention. The selection of the proper tool often involves a fairly significant due diligence process to evaluate various offerings before choosing the right partner and solution. They just want to make sure they make the right choice.
I am often surprised that a large percentage of customers just turn these tools on and never evaluate or even validate ongoing performance. The use of performance monitoring is a way to make sure you are getting the most out of the product you are using for fraud prevention. This exercise is really designed to take an analytical look at what you are doing today when it comes to Knowledge Based Authentication.
There are a variety of benefits that most customers experience after undergoing this fraud analytics exercise. The first is just to validate that the tool is working properly. Some questions to ponder include: Are enough frauds being identified? Is the manual review rate in-line with what was expected? In almost every case I have worked on as it relates to these engagements, there were areas that were not in-line with what the customer was hoping to achieve. Many had no idea that they were not getting the expected results.
Taking this one step further, changes can also be made to improve upon what is already in place. For example, you can evaluate how well each question is performing. The analysis can show you which questions are doing the best job at predicting fraud. The use of better performing questions can allow you the ability to find more fraud while referring fewer applications for manual review. This is a great way to optimize how you use the tool.
In most organizations there is increased pressure to make sure that every dollar spent is bringing value to the organization. Performance monitoring is a great way to show the value that your KBA tool is bringing to the organization. The exercise can also be used to show how you are proactively managing your fraud prevention process. You accomplish this by showing how well you are optimizing how you use the tool today while addressing emerging fraud trends.
The key message is to continuously measure the performance of the KBA tool you are using. An exercise like performance monitoring could provide you with great insight on a quarterly basis. This will allow you to get the most out of your product and help you keep up with a variety of emerging fraud trends. Doing nothing is really not an option in today’s even changing environment.
