HIGHLIGHTS OTP BANK USES MOBILE ALERTING THE CHALLENGE TO DRIVE DOWN OTP Bank faced a growing fraud problem as fraud in Hungary grew to more than FRAUD RATES AND three times the regional average. INCREASE CUSTOMER The bank needed a cost- effective solution that did ENGAGEMENT not require significant investment yet was easy to use by consumers. Card fraud was a growing problem for OTP National Savings and Commercial Bank in Hungary. With fraud THE SOLUTION rates rising, the bank needed a solution that would be OTP implemented effective, easy to implement and attractive to customers. MoneyGuard, created by Spectrum in conjunction with They turned to Spectrum and ACI Worldwide to create a ACI Worldwide. The SMS- mobile alert system that worked in near-real time to stop based system interfaces with ACI’s BASE24® payments fraudulent transactions. switching software and ACI Proactive Risk Manager™ to identify and stop fraudulent transactions.
THE RESULTS
Within two quarters of implementing MoneyGuard, OTP saw a 90% reduction in card fraud. Fraud attempts overall have declined, even for OTP customers not using A CLEAR AND PRESENT DANGER MoneyGuard, due to a “halo OTP National Savings and Commercial Bank (OTP) is the largest retail bank effect” as fewer criminals in Hungary with over 50% market share and about four million payment target OTP customers. cards. The bank has more than 1,500 branches and 2,000 ATMs in Hungary The mobile alerting service and also has subsidiaries in Ukraine, Russia, Croatia, Bosnia, Herzegovina, has generated €25M in Serbia, Romania, Slovakia and Bulgaria. annual revenues for OTP. By 1999, card payments fraud in Hungary had reached a very high level, more than three times the regional average. OTP urgently required a MoneyGuard solution, but knew that the security of bank card transactions had to be enhanced in a simple and cost-effective way that did not require a large PLACES THE infrastructure change or significant investment, yet was easy to use by CARDHOLDER consumers. OTP Bank approached Spectrum Message Services (Spectrum) to provide a solution. IN THE CENTER With the cooperation of BASE24 experts from ACI Worldwide, Spectrum OF FRAUD created MoneyGuard, a solution which interfaces with BASE24 and BASE24-eps®, to identify a card transaction as it comes into the system, DETECTION, and sends a text message notification based on pre-defined criteria to the BECAUSE cardholder’s mobile phone. The solution is a highly scalable and versatile platform which can be used for a whole range of added-value functions in ULTIMATELY IT IS addition to fraud alerting. OTP connects MoneyGuard directly with ACI’s THE CARDHOLDER BASE24 payments switching software and has also added ACI Proactive Risk Manager™, replacing its own fraud monitoring software. WHO IS IN A POSITION TO CONTROL AND CONFIDENCE IDENTIFY FRAUD Prior to the launch of MoneyGuard, bank customers may not have noticed AND REACT a fraudulent transaction for days or even weeks after the fraud occurred, QUICKLY. until they saw the transaction on a monthly statement. MoneyGuard places the cardholder in the center of fraud detection, because ultimately it is the cardholder who is in a position to identify fraud and react quickly. With MoneyGuard and BASE24 or BASE24-eps, the text is sent within seconds of the authorization message being received by the bank host, and the consumer receives it less than one minute from the time the transaction is initiated. If the transaction is fraudulent, the card holder can immediately contact OTP via phone or by responding to the text message.
When used with Proactive Risk Manager, ACI’s fraud management solution, cardholders are notified via SMS based on pre-defined transaction thresholds, or based on rules for transactions that appear risky to the bank. If a transaction is deemed fraudulent, cardholders can automatically request a block on the card via text response so no additional transactions are permitted until the account activity has been verified.
When initially introduced under the name of “Card Control”, MoneyGuard customers were mainly cardholders with high credit limits who had more exposure to fraud and therefore were more sensitive to the risk. In the first two years, 20% of OTP’s customers were using MoneyGuard, which represented almost 50% of fraudulent transactions. Over the next four years, MoneyGuard adoption accelerated in tandem with increased mobile phone penetration in Hungary. Word of mouth drove a significant percentage of the growth in adoption as well. In the past five years, growth has continued to accelerate due to the ubiquity of mobile phones, as well as an increased awareness of ID theft and fraud by consumers. Today, OTP has more customers using SMS as a channel than internet banking, with almost 1.5 million customers using MoneyGuard. Message volumes in 2011 were 201 million, or an average of more than 16.5 million messages a month.
2 IMMEDIATE AND SUSTAINED IMPACT After installing MoneyGuard, OTP saw an immediate and impressive reduction in fraud. In the first quarter of service, fraud decreased 70% and within two quarters, it had decreased a total of 90%. OTP’s payment card fraud level is now well below the European average. An additional benefit has been a reduction in card fraud overall, even for customers not using MoneyGuard. There has been a “halo effect” as criminals realize it is not worth the effort to target OTP customers, as a large percentage use MoneyGuard and fraud will be detected almost immediately.
From the beginning, OTP recognized the value of mobile alerting and commoditized the offering for its customer base. Revenue streams from these types of services can pay for infrastructure, fund new initiatives and contribute to a bank’s bottom line. On average, the consumer in Hungary pays ¤1-2 per month for the service including transaction text messages and added-value text messages. As a result, OTP has generated a new, highly profitable income stream in excess of ¤25M per annum from MoneyGuard.
OTP continues to refine and expand the mobile offerings available to their customers. In addition to fraud alerts, MoneyGuard supports a variety of opt-in SMS transaction notifications based on customer preference. For instance, customers can be alerted whenever a credit, such as a salary deposit has been made, or when a debit occurs, such as a bill payment. They can also send an SMS message to the system to request information about their account, or set up a recurring alert, such as a daily SMS with their account balance. OTP has also recently launched a service which creates single-use passwords to be used when shopping online, reducing the possibility of internet fraud.
According to Mr. Ákos Takáts, the deputy CEO and head of the IT and bank operations division of OTP Bank, “Although SMS alerting started as an addition to a fraud monitoring system, MoneyGuard quickly became a highly regarded fundamental customer service of the bank that was associated with its innovative thinking whilst generating significant profit.”
MoneyGuard CUSTOMER ADOPTION OVER THE PAST 10 YEARS
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3 HOW IT WORKS At OTP Bank, the customer must have either a bank account with a payment card or a card account using their OTPdirekt service. They can sign up online, by phone or in a branch, providing their mobile phone number at this time.
Each time the card is used, or based on preset limits by transaction type, the customer receives an SMS alert. If the transaction is legitimate, the customer does not need to take any action. If the customer feels the transaction is fraudulent, they can call the bank or reply to the SMS, and the bank will block the card. The bank can contact the customer immediately to analyze the transaction and identify whether it is fraudulent, and confirm it’s not a payment the customer may have forgotten they scheduled. This immediate response, involving the customer ACI Worldwide, the Universal Payments (UP) company, powers in the process of fraud detection and prevention, creates a more positive, electronic payments for more interactive relationship between the customer and the bank. The result is than 5,100 organizations around a tangible differentiation that helps OTP retain existing customers and win the world. More than 1,000 of new customers. the largest financial institutions and intermediaries, as well as OTP Bank’s fraud rates have remained low since the first few years of the thousands of global merchants, service and are among the lowest in the world. rely on ACI to execute $14 trillion each day in payments and securities. In addition, myriad organizations utilize our electronic bill presentment and payment services. Through our comprehensive suite of software solutions delivered on customers’ premises or through ACI’s private cloud, we provide real-time, immediate payments capabilities and enable the industry’s most complete omni-channel payments experience.
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