The U.K.-based high-volume transaction analysis provider Insider Technologies has plans to expand beyond its current customer base in Europe.

It is eyeing the U.S. market, which needs an upgrade in bank security systems, says John Bycroft, the company's sales and marketing director.

Many U.S. banks operate fraud protection systems not designed for high volume in the digital age in tandem with databases that do not store full transaction information, Bycroft says.

"We spoke to one American bank that has a part-time person come in to look over the previous week's data and fraud reports to determine any trends," Bycroft says. "That is like looking at what has happened in a rear view mirror; they are not looking at the road ahead."

Still, banks have to suffer significant losses to justify a business case for purchasing the kind of system Insider offers, says Shirley Inscoe, senior analyst with Boston-based Aite Group.

But many prospective users of this technology may not have any way to determine if they even have a need for it because their current systems don't show the full extent of any fraud taking place. "If you aren’t aware of what you are losing due to lack of detection, it is hard to create a business case without facts," Inscoe adds.

Some banks rely more on policy than technology, she says.

"Many financial institutions rely primarily on a system of internal controls they have in place," Inscoe says. "Of course, when there are lapses in internal controls, that enables internal fraud."

Bycroft says Insider Technologies' Sentra client-server software would catch and report any internal fraud occurring through the transaction authorization process.

Data storage has always been an expensive proposition for banks, but Insider's technology expands storage capability and lowers expense, Bycroft says.

"We believe our price tag is very interesting, especially for mid-level banks," he adds. "We are at about $80,000, where as it is not uncommon for banks to spend a couple million on fraud systems."

Sentra analyzes transaction data from all sources, including ATM, point of sale, e-commerce and mobile devices.

Sentra alerts a bank to any possible discrepancy in transaction data after analyzing details such as where the transaction came from, how long the transaction took, what was purchased and whether the customer has ever bought this product or if the merchant has sold it before.

In addition, Sentra will know how many other transactions took place through the bank with a specific card in the past, and how many occurred within the last 10 minutes or half hour, Bycroft says.

This type of analysis allows Insider to go far deeper into what the transaction data is telling the bank than just reviewing customer names, PIN codes or Internet Protocol addresses.

Most importantly, Bycroft says, Sentra quickly analyzes a transaction against data that has been stored for years because speed is a critical component for banks, Bycroft says. "We are processing thousands of transactions per second," he adds.

Deeper analysis is critical because fraud systems in the past have been set up to look for exceptions to transaction rules, but "criminals are not giving you the exception now," Bycroft says. "They are duplicating, replicating and skimming something that is genuine, so if what looks like genuine transactions are coming in, a bank's system tends to say OK."

Sentra takes notice if these genuine-looking transactions create patterns that the bank has not seen before. "If 25 police cars suddenly went by you, you would know that something was happening," he adds. "It is the same with transactions."

Insider Technologies has also been helping thwart a type of merchant retail fraud in which criminals obtain merchant account credentials and process millions of dollars in refunds from the acquiring bank.

In those cases, if the bank does not catch the fraud early enough, it could end up having to work with 10 different issuing banks across the globe to resolve the issue, Bycroft says.

Insider cites last year's massive ATM fraud incident as a key reason for coming into the U.S. market.

In that incident, hackers obtained credentials from only a handful of accounts and stole about $45 million in a day. It all happened because the transactions looked legitimate with "genuine" cards and no bank system stopped it, Bycroft says.

"Sentra would let the first transaction through, but would have questioned the second one coming in 10 seconds later," Bycroft says. "We would have stopped it and alerted the bank then."

In the future, Insider will help banks monitor their social network feeds, Bycroft says. Analyzing social networks puts Insider in a position to halt potential fraud through those networks, he says.

Insider Technologies was founded in 1989 and eventually moved into high-volume transaction security, working for the British government and army as well as the German army. Its bank clients in Europe include Bank of England, HSBC, RBS, Barclays and Lloyds, Bycroft says.

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