Technical Solutions for Todays Check Fraud Environment

April 6, 2004

Abstract

 

Boston, MA, USA  April 6, 2004

Technical Solutions for Today's Check Fraud Environment

Old foe to the banking industry promises to come back with a vengeance.

Check fraud remains significant when stacked against other frauds affecting the banking industry. Although banks have lost US$708 million dollars to check fraud, they have thwarted almost six times as much check fraud by implementing procedures and technologies to detect and prevent it. But, like any fraud, check fraud continues to evolve as criminals identify new vulnerabilities in the banking system and conjure up new schemes. Recent changes in check legislation have also breathed new life into check fraud by creating new exposures and demanding new methods of deterrence.

Such exposures require financial services to implement new procedures and technologies, as well as to improve old ones. The enactment of Check 21, the need for efficiency and reduced labor costs, and the proliferation of images have resulted in a surge of smart solutions.

"Check fraud is nothing new to financial institutions. Unfortunately, they, and their customers, have had to deal with it for years. However, recent changes in the check industry will open the door to new vulnerabilities, requiring banks to change some of their detection tactics and procedures," commented Ariana-Michele Moore, an analyst in Celent痴 retail banking practice and co-author of the report.

"Check 21 brings both good news and bad news," said Alenka Grealish, manager of Celent痴 banking practice and co-author of the report. "The good news is that the fraud window will close dramatically and automated fraud detection tools will be more powerful. The bad news is that many of the paper-based security features will be lost."

In a new report, "Technical Solutions for Today痴 Check Fraud Environment," Celent explores the current state of check fraud and several of the solutions and deployable tactics to prevent it. In addition to examining the technologies, a variety of vendors are highlighted.

The report is aimed at helping fraud managers and IT executives understand this latest threat and the steps and solutions they can deploy to reduce its impact.

A for this 40-page report is available online.

 

 

of Celent Communications' Wholesale Banking research service can download the report electronically by clicking on the icon to the left.  Non-members should contact info@celent.com for more information.

 

        

Send mail to info@celent.com with questions or comments about this Web site.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned subsidiary of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

 

  Boston, MA, USA April 6, 2004

Check Fraud

Return to report Abstract

 

EXECUTIVE SUMMARY 3
SIZING THE RISK 5
ORIGINS OF CHECK FRAUD 8
  Primary Schemes 8
  The Shifting Tides 9
  Trends in Payments 10
  Implications of Check 21 11
TECHNICAL TACTICS & PROVIDERS 14
  Traditional Measures 15
  Image-Related Solutions 20
  Risk & Analysis Solutions 26
  Alternative Technologies 29
ADOPTION DRIVERS & TRENDS 32
CONCLUSION 38
OBJECTIVITY & METHODOLOGY 39
 

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