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Cheltenham & Gloucester: Working together to focus on preventing fraud now, and in the future

Many companies fraud and risk departments face a constant challenge of managing immediate risks whilst dedicating enough time and resources to effectively analyse and predict future trends. 

The challenge

Without investing resources in examining fraud trends, it is almost impossible to know what the emerging threats will be and how to effectively combat them. 

Some fraud and risk teams opt for the referral all approach. This simply means that all activity noted as suspicious or with inconsistent information will be manually checked before any decision is made. This approach detects and prevents fraud at the point of application but can be very inefficient in terms of finding high propensity frauds due to the large numbers referred. The labour intensive nature of this approach can also make meeting customer service levels extremely difficult.

The answer

Working in partnership Cheltenham & Gloucester, Experian sought to address the issue of resource and enhance processes to find increased levels of fraudulent activity. The Financial Crime Team at Cheltenham & Gloucester initially had to focus their resources on preventing the fraud that had been referred from their application process rather than trying to predict future trends. 

The mix of referrals the team were working was sporadic and some high risk cases were being missed. The medium term goal was to uncover new fraud trends that were not being investigated currently. Ultimately, they needed to ensure that they got the best out of their highly skilled team and utilised existing fraud prevention software (Hunter) to full capacity.

The project between Cheltenham & Gloucester (C&G) and Experian covered a full review of existing fraud detection processes and considered various known fraud methodologies. The Financial Crime Team assisted Experian to optimise the Hunter system to C&G’s specific requirements and implement a number of key changes that allowed the organisation to increase the value of fraud detected by more than 100%. 

The key changes implemented were diverse and included; new work lists to more effectively target and segment referrals, an optimised rule set including new employment rules for known mortgage fraud deceptions, access to Value Added Data sources including ‘Accommodation Address’ information, a ‘Fraud Scorecard’ to determine highest risk cases that should be worked, enhanced ‘Management Information’ reports and a number of other minor changes to improve efficiency.

The results

The level of cooperation between the Financial Crime Team at C&G and Experian allowed both partners to benefits from each other’s existing knowledge and resulted in a very successful collaboration. The new optimised fraud system at C&G allows current frauds to be identified whilst also increasing the level information, allowing C&G’s experienced team to analyse trends and protect themselves against emerging threats. In the first full week of having implemented these changes, C&G detected and prevented increased levels of fraud with savings of over £2.4 million – the largest single week’s savings since the credit crunch took hold.

About Cheltenham & Gloucester
C&G offer a range of simple and flexible mortgages and investments to UK consumers. It has been part of the Lloyds Banking Group since 1995, which is the largest retail bank in the UK with a number of leading market positions. One in three people in the UK bank with the Group.

The Benefits

	Increased value of fraud detected by more than 100%
	Improved resource management, focusing effort while finding more fraud
	More effective detection of fraud producing lower quantities of referrals whilst capturing a higher propensity of frauds
	Enhanced use of value-added external data sources including accommodation addresses, saving £2.4 million of fraud in first week of changes
	Increased detected fraud volume by 36% with lower rate of false positives
	Tackling new fraud methodologies and trends to stay ahead of the fraudsters
	Truly collaborative project ensuring the success of the review and significant results

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