Eagle

Merchant Risk system A case Study

Management

a CMM Level 5 Company

Case Study - Eagle Merchant Risk Management System move to those banks without the capability to detect fraud). Protect/enhance the ANZ brand by offering superior service and protection for cardholders and merchants. Create a confidence in the Merchant establishments by eliminating the weak and unreliable from the system.

EAGLE MERCHANT RISK MANAGEMENT SYSTEM

Background

1.1

Merchant fraud (Collaboration to outright malafide intention of the Acquiring unit) has been on the increase globally including Asia Pacific. The increased volumes in net abased transactions and the need for faster and a consistent customer experience at the merchant terminal has made the acquirers to be over relying on the Merchants. As the competitive advantage is in having a strong terminal deployment / merchant base has also led to the merchants squeezing more out of the acquirers through all means. Therefore ANZ businesses has thought it pertinent to use technology to oversee the transactions conducted at merchant locations from a fraud perspective and create patterns that are used to unearth fraudulent activity at the earliest. While detection of the fraud was the paramount importance it was felt more important to watch fraud and prevent fraud occurrence. The Australian Acquiring business was therefore, in need of a mechanism that will enable them to carry out some analysis and identify those potential merchants who were involved in fraud activities. Accordingly, multiple options were evaluated and a System from Fair Isaac known as Eagle was identified as the best fit to meet the business and deployment objectives. The Eagle Merchant Risk Management system enables acquiring banks to identify merchants likely to engage in bankcard fraud, to fail to honour chargebacks against bankcard transactions, to go bankrupt or out of business, perpetrate fraudulent activity or be targeted by fraudsters

1.3

Project Scope

The scope of this project was to implement Eagle, the Merchant Fraud Detection Platform for the Global Cards Australia. Specifically this included the following: Design and Implementation of interfaces (batch) between the merchant and authorisation processing platforms Deployment of a neural network model for data analysis including the design and implementation of expert rules for alerts to be generated. Deployment of the necessary infrastructure to support the Eagle Software platform Training and Documentation necessary for the Fraud operations area to use the case management tools and related reports. Provide the expertise required to manage the business partners and to monitor their effectiveness

1.4

Responsibility by the Technical support team (ANZIT)

ANZIT was responsible for the end-to-end delivery of the system, the activities included the following: Installing the Eagle application on the Sun Unix platform Identifying the various interface partners that should feed data to Eagle Design & implement those interfaces Help the business in defining Rules thru Eagle Rule editors which help in creation of Rule based cases. Educate the fraud analysts in working thru the cases created Support the Eagle application on a day to day basis Coordinate with the Fair Isaac production support and implementation team whenever required. Prepare consortium tapes to be sent to Page 2 of 2

1.2

Objective

There were several objectives in implementing the Merchant Fraud Detection Platform: Reduce the fraud losses to the bottom line by utilising technology that recognizes individual merchant operating patterns. Significantly improve the Banks operational ability to detect fraud and manage the increase in transaction volumes without a large increase in staff numbers. Significantly reduce our exposure as a soft target (Fraudsters are likely to

ANZ Information Technology

Case Study - Eagle Merchant Risk Management System Fair Isaac to enable them to build custom models for ANZ Australia acquiring businesses. new one and would like to monitor merchant activities effectively could consider Eagle as a right fit. In fact ANZ is considering how to bring in other Merchant portfolios apart from Australia into Eagle as well. As far as ANZ can justify the business benefits of the costs involved in setting up a analyst team to work through the cases they can bring in any Merchant business under Eagle monitoring at any time with out the additional cost of installing another Eagle. A bank or a financial institution running business across different geographical locations can have one Eagle system running for all their business with either a common Analyst centre or a distributed one with each handling the cases for a few Merchant businesses. The only thing that needs to be considered in a set-up like this is the logistics of handling different time zones and different languages. Installing Eagle to an existing business that already maintains a data centre running other applications would not be a big task. Eagle can be made to sit in a separate box and separate interfaces could be built to it from other applications to feed data to Eagle. There will be no major impact to the existing applications that are already in place. For more information regarding Eagle or setting up Eagle please contact Siva Nagarajan Associate Project Manager ANZ Information Technology Pvt. Ltd., Bangalore. IDD : +91-80-2283004 (ext 1197) Email Id : sivan@anz.com

One of the other major activity that was carried out after the Eagle application installation was to upgrade Eagle from the existing version of 3.5 to 4.5. This would enable the support of Windows 2000 workstation instead of the Windows NT workstations to be inline with ANZs policy of moving all the desktop applications to WIN2000. This project involved upgrading the underlying Unix platform on which Eagle runs from ver 2.7 to 2.8, Oracle upgrade from 8.0.6 to 8.1.7 apart from upgrading Eagle to 4.5.

2 BENEFITS THAT EAGLE HAS BROUGHT TO THE BUSINESS.

Like any other statistical Model Eagle strongly relies on the data that is passed to it in predicting whether a transaction could be Fraud or not. Care has been taken to populate each transaction with as much details as possible to Eagle. This has helped in fine tuning Eagles decision-making processes. Rules have been created to target specific cases on Frauds The Business has reported over A$ 500,000 for the financial year 2002 to 2003 as direct Fraud savings through Eagle. The business has also seen a decrease in the Merchant Fraud compliance breaches. Eagle has also helped the Fraud analysts to have better monitoring capabilities on Merchants especially on those who are experiencing frequent charge backs on their transactions. Any Financial Institution which are either running a Merchant business currently or planning to set-up a

ANZ Information Technology

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