Protecting Mobile Money From Fraud at Neural Technologies

With over 5.3 billion mobile phone users, mobile money is now a significant and growing segment of the global financial system, predicted to reach a daily transaction value of USD3 billion by the end of 2022. 

These innovative new e-wallet and mobile transaction solutions provide new ways for citizens around the world to access financial products and services, creating exciting new opportunities to boost financial inclusion. 

This opportunity has evolved notably in recent years, with significant changes triggered by the COVID-19 pandemic. Up to 15% of all payments made through mobile money providers during the pandemic were from first-time users, and international remittances processed through mobile money providers increased by 65% according to some analysis. 

A rapid shift in industry dynamics, particularly when considering cross-border payments, also reflects a huge need to embed appropriate fraud protection and anti-money laundering systems to ensure this powerful new opportunity is not abused. Neural Technologies’ Mobile Money solution is designed to offer an effective, scalable solution to help maintain trust and transparent transactions within this exciting emerging financial ecosystem.

Fighting fraud with good data

There are a wide range of fraud and money laundering risks when it comes to mobile money. The most obvious risk comes from the sheer speed of development, adoption, and proliferation of mobile money solutions, creating fresh new opportunities for fraud. 

The sheer number of mobile phones in circulation also creates a clear channel risk for safe delivery of these services, as new and potentially naive consumers enter the market, creating vulnerable customers at higher risk of e-wallet fraud.

Providers with large agent networks also face risks in ensuring appropriate systems are in place, helping balance that powerful opportunity to expand financial inclusion against appropriate oversight and monitoring. 

Ensuring robust know-your-customer (KYC) and compliance checks can also be challenging, particularly in markets with large numbers of unbanked populations and relatively limited financial histories, making it even more difficult to encourage adoption while also managing anti-money laundering (AML) or fraud risks. This is also often reflected in the maturity of the local regulatory system, which can itself offer loopholes which fraudsters can benefit from.

Finally, the system itself must be managed appropriately, with good data oversight to ensure valid systems access which is vital to reduce fraud. Introduction of effective, automated fraud management systems are a vital piece of this puzzle to detect fraud and AML risks. 

Internal fraud is also a real challenge which must not be overlooked by mobile payment providers. Uganda’s largest mobile money provider, MTN, lost an estimated USD3.4mil through internal fraud carried out by staff in 2011. This in a market where more than 50% of agents reported having suffered from fraud in the financial year of 2015 alone.

Mobile industry association GSMA recommends a four-step approach to manage these risks in mobile money ecosystems:

  1. Determine your risk appetite
  2. Identify and assess key risks
  3. Establish effective controls to prevent and detect risk
  4. Monitor and review risk management strategy

With a flexible approach that can be adapted to your unique operating environment, Neural Technologies’ Mobile Money solution offers an effective solution that can help your business adhere to this critical mobile money fraud protection strategy.

Mobile money at Neural Technologies

Neural Technologies’ Mobile Money solution leverages the artificial intelligence and machine learning technologies of the Optimus platform to provide comprehensive protection programs for mobile money risks. It allows users to process any kind of mobile money transaction, including top-ups, payments, transactions, and withdrawals.

Our solution incorporates sophisticated KYC technologies to help mitigate many of the risks posed by fraud in mobile money transactions, backed by comprehensive transaction monitoring and automated analysis to ensure ongoing oversight of mobile transactions. That offers a way to address early mobile money risks.

Optimus cross-references individual fields and activity data against historical data across defined time periods and activities, providing a holistic view that can incorporate the lifecycle of an individual customer. This is a particularly powerful solution to the needs of a high-volume landscape, and offers an evolving solution to mitigate risks, aligning with GSMA’s pillar of establishing effective controls to prevent and detect risk.

Advanced link analysis built on our neural network technologies allows our Mobile Money solution to rapidly identify fraudulent transactions and bad actors, while also matching against sanction lists to ensure AML and CFT compliance. 

Neural behavioral modeling is implemented alongside traditional rules and threshold-based techniques, providing adaptive and predictive fraud protection that improves detection rates and reduces false-positive ratios.

Predictive analytics allows mobile money operators to analyze the actions of both customers and non-customers, providing a complete view of both existing and emerging fraud risks. It can also be adapted to cover internal fraud monitoring, providing a solution which addresses some of the risks highlighted in case studies from around the world. 

Our Optimus platform also provides clear visualization capabilities to quickly assess link analysis and output, in both tabular and graphical form, with reports able to be generated in line with statutory requirements. This is vital for ongoing monitoring and review of risk management strategy. 

The world of mobile money is rapidly evolving, and offers a remarkable opportunity for improved financial access and new modes of transactions around the world. Mobile money operators need to ensure in delivering this opportunity, they embrace effective fraud detection, protection, and AML solutions.

Get in touch to discover how Neural Technologies’ Mobile Money solution can safeguard your mobile money operations

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