Addressing the Challenge Part One

Summary

The video discusses the ongoing efforts to address debit order abuse, with a focus on a four-pronged model developed to manage fraud and rogue user behavior. The model includes pre-onboarding checks, central registration, monitoring, and an exit process to ensure better risk management. A proof of concept, conducted with major banks, revealed key insights into the scope of the problem, identifying that 60% of the issues were fraud-related and 40% due to rogue user behavior. The approach aims to create transparency, reduce risks, and improve decision-making across the debit order system.

Takeaways

• 😀 Debit order abuse has been an ongoing challenge in the industry, with efforts to address it dating back to 2013.
• 😀 The complexity of resolving debit order issues involves system builds, testing, and mobilizing a large community of users and banks.
• 😀 The debit order abuse project was officially launched towards the end of 2017 to find a more effective solution.
• 😀 A proof of concept was designed to explore the issue, utilizing manual intervention and collaboration with major banks for dispute resolution.
• 😀 The findings from the pilot study revealed that 60% of debit order abuse was due to fraudulent actions by users, and 40% stemmed from rogue user behavior.
• 😀 The focus of addressing debit order abuse shifted towards managing rogue user behavior, which was linked to a smaller group of users (20,000) compared to fraudulent actions (millions of users).
• 😀 A four-pronged approach was developed to manage user behavior, consisting of pre-onboarding, central registration, monitoring, and exit elements.
• 😀 Pre-onboarding acts as a gatekeeping function, where a central database is used to check if users have been previously exited due to risk, helping to prevent repeat offenders from entering the system.
• 😀 The central registration process ensures complete visibility of all entities involved in debit order transactions, addressing issues caused by aggregators and rogue behavior.
• 😀 The central registration system also allows for monitoring the behavior of entities, providing transparency on volume movements between different banks and helping to detect suspicious activity.

Q & A

What is the main issue being addressed in the script regarding debit orders?

The script addresses the issue of debit order abuse, specifically fraudulent activities within the system and how the industry is attempting to resolve it through various processes and systems.

When did the industry start working on resolving debit order abuse?

The industry started working on resolving debit order abuse around 2013, with significant initiatives and projects beginning around 2017.

What role did the 'debit order abuse project' play in addressing these issues?

The 'debit order abuse project' was born at the end of 2017 to explore alternative ways to address the problems caused by debit order abuse, involving systemic solutions and user behavior management.

What was the outcome of the proof of concept designed in 2017?

The proof of concept focused on designing a manual dispute process, which involved banks handling disputes through various channels like call centers, branches, and digital methods, leading to key learnings about user behavior.

What were the findings regarding the causes of debit order abuse from the manual dispute process?

The findings revealed that 60% of the problem was due to fraud committed by users exploiting current rules and processes, while 40% was caused by rogue behavior from a smaller group of users.

Why did the industry decide to focus on addressing rogue user behavior?

The industry decided to focus on rogue user behavior because it could be managed by a smaller group of around 20,000 users, whereas addressing fraud (60% of the problem) would require handling millions of users.

What are the four elements of the model designed to address debit order abuse?

The four elements of the model are pre-onboarding, central registration, monitoring, and exit. These elements aim to track user behavior and ensure informed decisions throughout the debit order process.

What is the pre-onboarding process and why is it important?

The pre-onboarding process is a central function that checks users against a central data set to identify potential rogue users before they enter the debit order system. It helps banks make informed risk decisions about new users.

How does the central registration process help improve transparency in the system?

The central registration process ensures that all participants in the system are registered and tracked, providing full visibility of user behavior and preventing rogue entities from hiding under different banks or aggregators.

What are the benefits of having a central registration system in place?

The central registration system helps track users across banks, provides insights into user behavior, and allows the industry to monitor trends and risks, such as volume shifts between different banks, thus ensuring better oversight.