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TOGETHER’S TRANSFORMATION STORY

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For over 40 years, Together has been committed to providing no-nonsense lending in even the most complicated of situations.

 

The company works with homebuyers, investors, landlords, and small businesses, and partners with a network of intermediaries, including brokers, accountants and solicitors, to secure the finance people need to buy a new home or start a new venture.

 

Antiquated processes

Historically, Together relied on manual processes, which were cumbersome and time-intensive. For a business that is focused on common-sense lending, the human touch in making intelligent business decisions is essential. However, it soon became apparent that the use of technology was an integral part in supporting people in making and implementing those decisions in the most efficient and effective way.

 

As the company began to experience rapid growth, this became even more essential, and so Together turned to Mastek to embark on a digital transformation journey.

 

Simon Carter, IT Director at Together, says, “The business had ambitious growth plans, but we recognised they couldn’t be achieved if we continued to work in the same way. We were very limited in our digital engagement with our intermediaries and our customers. To transform the business, we had to transform the technology.”

 

A journey of transformation

Because Together lends mostly through brokers, its transformation journey initially focused on them. Mastek helped the company replace obscure, complex product interfaces with a unified broker portal that is easier to use, much more systematic and clear about what brokers and customers can expect from Together, and about how the lender’s products work.

 

“We’ve removed paper-dependent steps out of processes, and automated manual ones. Our own research has shown 95% broker satisfaction with the new portal, and the business has reduced the underwriting turnaround by 30%. Meanwhile the business can instantly respond to regulatory changes. Ultimately, we have been able to grow the business in line with expectations, without changing the heart of the business,” says Simon Carter.

 

Improvements to the broker portal have also continued. For example, a recent addition of decision-in-principle functionality uses sophisticated underwriting logic to give potential customers immediate pre-approval for a specific loan amount. This gives them more information and confidence when choosing a lender to apply to.

 

Realising business growth

Together’s programme of smart change has played a big part in its ability to grow the value of its loan book by 150% in just three years, two years ahead of target.

 

Speed and ease of service have made Together increasingly attractive to brokers and their customers. New channels, such as mortgage clubs, have opened up to the lender. And Together’s many new internal efficiencies have allowed the company to take this growth in stride.

 

“Importantly, the partnership has provided us with the ability to scale up or down as business requirements change. We almost doubled our head count in the last four years, and trebled the size of the loan book, so this flexibility has been essential in supporting our rapid growth. Market conditions can also change, so it’s important to have the security of knowing the technology can support the business in that scenario too,” comments Simon Carter.

 

He adds, “the reality is that unless we had transformed, we may not be in business today. We recognised we needed to keep pace with the changing market, but the growth we’ve witnessed since our digital transformation shows we’re more than competing.”

 

Agile development

In the four years since starting to work with Together on the broker portal, the original 14-strong Mastek team has grown to more than 100, working on more than 125 Agile development projects and IT-enabled business enhancements.

 

Steve Thomason, Head of Business Systems at Together, explains, “We don’t buy our core IT products off the shelf; we’ve always pursued bespoke development of our systems of differentiation. It’s a strategy that works for us, giving us the control and flexibility to respond to broker and customer needs without ever waiting on a software provider.”

 

Before bringing Mastek on board, developments were managed in-house with ad-hoc use of contractors; but as the company’s ambitions grew and the pace of change accelerated, there was an unwelcome increase in delivery delays. These are now a thing of the past, with readily scalable Mastek resource and effective Agile development processes in place.

 

Planning for transformation

Every Together development project starts with an idea — a response to a broker need, for example — that is examined until all of the expected benefits and costs are clearly understood. Ideas that pass muster become projects (large or small) and the priority and delivery of projects is continually assessed and re-assessed. Even as the current crop of projects progresses, Together is planning ahead, usually by six to twelve months.

 

Collaborating for success

Besides looking outwards to its products and services, Together looks inwards for continual improvement in delivery. To this end, Mastek and Together are in daily contact. Not just to track and measure progress, but to assess ways of working, the mix of onshore and offshore resource, the performance of individuals, the support that they need, who to hire and when: everything that impacts on the success of the collaborative approach embraced by both companies.

 

Formalising innovation

‘Innovation’ can’t really be ordered on demand, but Together wants to be actively open to new ideas, and is looking to Mastek to bring them to the table.

 

“When we toured the Mastek Centre of Excellence in India and saw some of the things they were doing for other customers, it was an eye-opener,” says Thomason. “Today we have a joint innovation forum and meet regularly to discuss ideas.”

 

One of the novel approaches being tried is a hackathon, in which a number of small Mastek teams compete to come up with innovative solutions to a given Together challenge. Since most of the teams aren’t working on the Together account, it’s a productive — and fun — way for the Together/Mastek partnership to come up with fruitful new ideas to explore.

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Business

Defining Fraud in 2023

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Scott Buchanan, Chief Marketing Officer at Forter

Fraudsters are fluid — they constantly experiment with new tactics to find cracks in a merchant’s defenses. In 2023, there are five trends that merchants need to be aware of — we saw each in 2022 and expect to see them with even more frequency in the year ahead.

Human ‘Bot’ Farms

First, let us acknowledge that while “human bots” is an oxymoron, it is also highly insensitive. At present, our industry lacks a better way of describing the practice. It used to be that human ‘bot’ farms referred to sweatshop-style arrangements in which poorly paid workers, often in developing countries, spent their days on brute force attacks, solving things like CAPTCHAs.

Now, though, a new twist on this old theme has arisen. In short, human bot farms use trafficked humans to scale their fraud operations. Often, they behave as bots, conducting brute force (and similar) attacks.

Human bots were widely recognised in fraud manager communities as a driving force behind recent repeated attacks, especially during the holiday rush. For example, human bot farms bombarded merchants that offer limited edition merchandise, decreasing the chances that prized products find their way to (and ultimately frustrating) good customers. These same operations also applied several tactics that follow at a scale that overwhelmed some fraud solution providers and their merchant customers.

Low-tech Address Manipulation

In the past year, fraudsters reverted to old tricks to circumnavigate rule-based fraud prevention as we saw an uptick in low-tech address manipulation. Consider a merchant with a rules set that checks a shipping or billing address against a negative list. And let’s say a noted fraudster has an address of 123 Main Street that is on that list. Therefore, any transaction with a shipping or billing address of 123 Main Street will be blocked by rules.

Fraudsters found an easy workaround. They simply write a variation of the address during checkout that evades the rules but can be easily understood by FedEx, UPS, or any other delivery company. For example, 123 Main Street becomes One-two-three Main Street or 123 Maain Street.

This should be simple to identify and block in theory. Still, fraud managers were frustrated that rules-based solutions — even those that applied artificial intelligence to speed rules application — struggled to spot this manipulation. During the Black Friday rush, more than one vendor threw up their hands and admitted they had no way to stop this tactic effectively. And as a result, fraud teams with these solutions had to manually review a growing queue of transactions.

Triangulation

With the growing presence of marketplaces to exchange goods, fraudsters are using triangulation more. Think about this as ‘stolen to order’ (instead of made to order). A fraudster posts a sought-after item for sale on a marketplace; in 2022, some of the most popular items for triangulation were high-end ‘cozy’ blankets, sneakers, gaming systems, and other electronics.

When a consumer buys an item from a fraudster on the marketplace, the fraudster then steals the item from a merchant. They input a shipping address for the marketplace buyer at checkout, which typically evades address verification checks. The marketplace buyer gets their item; the fraudster gets their money; the merchant gets penalised, and the marketplace is entirely unaware.

Fraudsters prefer triangulation because they don’t make any effort until they have a buyer — they never have to worry about stealing something they can’t sell, and they never have to touch the merchandise (further reducing their operating costs).

Double-dipping

Emboldened cheaters are attempting more brazen tactics. A prime example of that is double-dipping — while this is not new, we did see more attempts (especially from amateurs and previously good consumers) to double-dip in 2022.

Double dipping can take any form where a bad actor wins twice. For example, the bad actor makes a purchase and has the product shipped. They tell the merchant the item was not received and simultaneously file a chargeback with their issuer. Since it may take hours or days for the issuer to inform the merchant of the refund request, the communication gap can mean the bad actor receives money back from both entities and keeps the product.

We’ve also heard examples of bad actors buying and receiving an item, then filing a return, yet failing to return the item. Instead, they send the merchant back a package with rocks (or something else weighted). In one particularly devious example, a bad actor filled a bag with dry ice, which evaded a weight check by the delivery company, and then arrived at the merchant as an empty package.

Friendly Fraud

The best-known form of friendly fraud is chargeback fraud when a customer makes a purchase and receives it but files a fraud chargeback claiming that the purchase was made by a fraudster. This form of friendly fraud has been growing dramatically in recent years. Less recognised is that other forms of friendly fraud — which can also be labeled policy abuse — are increasingly serious.

For example, a consumer buys a sweater as a final sale. When it arrives at their doorstep, they realise it doesn’t fit as they’d hoped. Disappointed, the (previously good) consumer contacts the merchant to claim the sweater never arrived (code = Item Not Received) and demands a refund. The consumer now has the item they can wear (hey, at least the fit is close) or resell on a marketplace for profit.

Friendly fraud can also surface as returns abuse (returning items worn or outside of store policies), promotions abuse (re-using new customer discounts or other voucher codes), and more.

Friendly fraud is difficult to stop since it is often perpetrated by good consumers — they don’t appear on negative lists or fail basic rules. But professional fraudsters get in on the same acts, industrialising the consumer problem by increasing its scale and professionalism significantly. To increase their odds of success, they have gotten pretty systematic about this form of fraud. For example, on the dark web, fraudsters have shared the exact language to use when calling specific large merchants or issuers to nearly guarantee a refund or chargeback.

Parting Thought: The Power of Identity

The above tactics that fraudsters used with some success in the past year generally exploit gaps in rules-based systems (deployed by the merchant and/or offered by a fraud solution provider). These tactics don’t work when you can pinpoint the identity behind an interaction.

When you can be statistically confident that the identity entering an address of “One-two-three main street” is associated with fraud, it doesn’t matter what they enter in the address field; their transaction attempt is blocked. When a known fraudster is attempting to put an item up for sale on a marketplace or purchase an item with a net new shipping address, you stop them. And when they try to re-use promotional codes repeatedly, you reject the attempt.

You cannot pinpoint an identity with rules — instead, you need a massive graph of online identities and as much data as possible on each. While fraudsters always manipulate aspects of their identities, they cannot mask thousands of data points. Next-generation fraud solutions that use machine learning to augment human expertise can pattern match and pinpoint identity.

And to build the largest identity graph, you need a consortium of the largest merchants — collectively, they will ‘know’ the vast majority of online identities. And in this model, an identity — a bad actor or a good customer — known to one merchant is immediately known to all merchants.

And that is why the final trend for 2023 will be merchants abandoning rules-based systems at an increasing rate. That includes the rules-based fraud solution providers masquerading as machine learning (but really just speed up the application of rules). To combat more sophisticated fraudsters, merchants will make decisions based on identity. They will seek out the largest identity graph in order to achieve superior results.

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Mizuho Bank Luxemburg upgrades anti-financial crime compliance risk management with Napier

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Mizuho Trust and Banking (Luxembourg) S.A , the Luxembourg subsidiary of Japan’s Mizuho Trust & Banking division (part of Mizuho Financial Group) , is upgrading its Transaction Monitoring  framework strategy through a partnership with Napier, the financial crime compliance technology specialist.

An intelligent compliance platform, Napier Continuum, including Transaction Monitoring, Client Screening, Perpetual Client Risk Assessment and Client Activity Review, will provide Mizuho Bank Luxemburg with a holistic overview of compliance that will enable it to connect data, control compliance operations, and manage risk.

The bank wanted to upgrade its framework to make it more robust given the importance of financial crime for credit institutions.

Naim Tliba, Chief Compliance Offer and Vice President at Mizuho Trust and Banking (Luxembourg) S.A., said: “We chose to work with Napier as it has the flexibility to meet our needs, at the same time offering the most advanced technology supported with powerful AI. With improved transaction and client monitoring capabilities, our organisation will be able to stay ahead of the curve and provide our clients with the most secure and regulated asset servicing experience.”

As part of Mizuho Financial Group, Mizuho Trust & Banking (Luxembourg) S.A.  has been formed in 2000 and provides securities and fund services to its institutional clients.

Napier’s compliance technology helps businesses and financial institutions to comply with local and international anti-money laundering (AML) regulations, monitor transactions, and screen customer and business partners and therefore participate to the efforts to better combat financial crime.

Greg Watson, CEO at Napier, said: “Our range of new-breed compliance solutions help organisations like Mizuho Luxembourg to gain control over their risk management so that it can become a competitive advantage. The technology is one side of this, but it’s the capability to adapt a system in adherence with local regulations that offers the most effective solution, and that’s what we have been able to provide Mizuho Luxembourg. Approaching a system upgrade in this proactive way means that they will be equipped with a futureproofed anti-money laundering strategy that will take care of their AML compliance needs.”

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