Communication service providers (CSPs) and their customers are losing out on USD142bil in annual cost leakage due to inadequate revenue assurance and fraud management (RAFM). Those are the findings of the Risk and Assurance Group (RAG) RAFM 2020 Survey, highlighting the value of appropriate fraud management and revenue protection for enterprises.
This important study sets out the real value potential for tackling revenue leakage in CSPs. Leakage in this case is defined by any financial losses that occur as a result of errors and suboptimal decisions or as a consequence of crimes and contract violations. The cost of this leakage alone to CSPs stands at USD94bil according to the RAG report.
Neural Technologies has a long and successful history of working with CSPs to reduce revenue leakage, improve revenue management, prevent fraud, and enhance enterprise decision making. The RAG 2020 RAFM Survey highlights the remarkable importance of those decisions, and the potential for enterprises to leverage real value from powering up these critical functions.
Exploring fraud and loss in CSPs
Revenue assurance and fraud management is a vital part of any organization. Yet in the modern operating landscape, CSPs must face the pressures of achieving these revenue protection requirements in an increasingly complex and rapidly moving ecosystem.
The RAG report finds that fraud alone costs communication providers and their customers an estimated USD92bil per year. Investing in fit-for-purpose fraud solutions is a key priority in this operating environment.
Neural Technologies own fraud solutions leverage the power of artificial intelligence (AI) and machine learning (ML) technologies, providing user-friendly anti-fraud solutions that can be rapidly adopted, and quickly scaled. Despite the power of these technologies to reduce revenue leakage, just 20% of respondents to the RAG survey admitted to currently used machine learning solutions.
The Optimus Fraud Management solution utilizes sophisticated neural network technology that analyzes and identifies fraudulent behavior in near-real-time. The highly-customizable nature of the platform, combined with adaptive fraud management approach, allows it to be quickly adapted to your unique business circumstances. It covers key areas of telecommunications fraud such as PABX fraud, bypass fraud, and Simbox fraud. Bypass and Simbox fraud are particularly acute areas of revenue loss for CSPs, with bypass fraud (including Simboxing) accounting for 15% of identified fraud leakage highlighted in the report, at a total annual cost of RM6.86bil.
The RAG report identifies that the cost of fraud and other crimes to CSPs is equivalent to 2.59% of revenue value, showing that investing in suitable revenue assurance and fraud management solutions is critical.
End-to-end fraud solutions
Fraud management for the modern environment requires detailed understanding of customers, enabling enterprises to protect against revenue loss while also ensuring their customers are equally well protected from potential fraud. The RAG 2020 RAFM Survey estimates that the cost of fraud to customers stands at USD48bil, just over half of the total USD92bil CSPs and customers combined lose to fraud.
Neural Technologies’ Optimus Platform allows operators to profile and monitor all prospective customers during on-boarding, identifying risk factors at the start of any customer engagement. This is a vital area of fraud management, with subscription and identity fraud accounting for almost one-fifth (18.53%) of all fraud leakage in CSPs according to the RAG 2020 RAFM Survey, at a total annual cost of USD8.15bil.
At the same time, existing customers can be continuously monitored in their day-to-day activities, with the Optimus Platform identifying and highlighting suspicious or anomalous behavior in near-real-time.
Link analysis technology offers further protection in areas of on-boarding new customers, reducing the risk of subscription fraud or bad debt. Bad debt accounted for almost one-third (28.47%) of revenue and cost leakage for CSPs identified in the report, at a total annual cost of USD14.16bil.
Neural Technologies’ Fraud Management solution leverages the power of our machine learning and link analysis technologies to identify risk factors across linked datasets for known fraud cases, and is able to uncover emerging fraud rings by identifying shared risk factors within a network. That adaptive approach ensures that customers benefit from a solution that continually evolves to deliver the latest in fraud detection and protection.
Informed revenue assurance
The power of informed and automated decision making is another powerful tool in delivering revenue assurance for CSPs. Non-fraud leakage costs CSPs USD50bil annually according to the findings of the RAG 2020 RAFM Survey. The most common forms of non-fraud leakage identified were billing and collection errors, rating and tariff errors, subscription fee errors, and usage errors.
In a high-volume data landscape, CSPs can sometimes struggle to manage often labour-intensive manual processes and auditing in order to prevent revenue leakage. The truth is that CSPs are rich with valuable, often time-sensitive data. This provides a lucrative opportunity to optimize processes, improve customer service, and crucially — reduce revenue leakage.
Neural Technologies’ Charging-as-a-Service (CaaS) and Revenue Protection products both offer powerful, AI/ML-driven and automated solutions which can help CSPs reduce revenue loss and boost revenue generation through charging, rating, and tariff improvements.
Through use of advanced machine learning technologies and analytics, Optimus Revenue Assurance ensures accurate charging, billing, and accounting of all revenue generating events from both customers and partners. It incorporates all standard processes for revenue assurance in order to mitigate revenue leakage and quickly identify and alert businesses as to the root cause of any revenue leakage vulnerabilities.
The Optimus Platform provides a highly-configurable and scalable data management solution, capable of handling any kind of data extraction, processing, and quality checks. Inclusion of the Optimus rating functionality allows for effective rating and re-rating that further enhances revenue assurance activities in even the most complex rating scenarios.
The rapid growth of our high-volume data landscape creates significant pressures on CSPs to deliver appropriate revenue assurance and fraud protection solutions. The rise of internet of things (IoT) and 5G technologies is likely to complicate that landscape further.
This challenge also reflects a remarkable opportunity however. CSPs’ data is a treasure trove of business insight, if managed, monitored, and integrated correctly. Neural Technologies is a market leader in supporting that process for CSPs, providing a partnership pathway to turn that USD142bil lost revenue into a valuable opportunity for your business.
You can explore the full findings of the Revenue Assurance Group (RAG) 2020 report at riskandassurancegroup.org/rag-rafm-survey-2020