New secure data exchange platform expected to lower fraud risks

16th October 2020 By: Schalk Burger - Creamer Media Senior Deputy Editor

Financial services information exchange company Astute Financial Services Exchange has established a secure data exchange platform that reduces fraud and costs related to insurance and financial controls, says Astute Financial Services Exchange CEO Jacques Rossouw.

This platform builds on its capabilities developed over 20 years, and leverages new data processing technologies to provide real-time services to clients – small or large registered financial services companies – and enable them to serve their clients faster and more accurately.

Astute has been developing its data science and analytics capabilities over the past five years to provide this service to reduce risks and mitigate fraud, as part of its long-term growth strategy he says.

“Our clients are large, listed financial services multinationals, as well as small and medium-sized companies. The model is that all users must consent to share anonymised data with the platform that will be selectively shared with other users if the process requires it, such as checking the identification numbers against the Department of Home Affairs’ database and checking account details of a client prior as a transaction.”

This service has a two-fold effect. Firstly, users are able to provide accurate and quick services to their clients, and it helps to prevent losses as a result of fraud, which, in turn, reduces the costs to financial service companies, he says.

“We are integrated with 160 product platforms across the financial services industry and we gather information from these platforms about risk, investment and/or retirement benefits. This information is then exchanged with users to check and verify processes and transactions.

“This information is not readily available to companies across the industry, resulting in higher chances that fraud remains undetected. Similarly, a person can only be designated as a fraudster if found guilty in a court, which is often costly and takes a long time to complete. However, by gathering information about the benefits of a person, companies are able to identify risks, such as an identification number associated with another policy or account details being recently changed, and can then institute processes to verify details before completing that were transaction.”

By aggregating this information, financial companies can reduce the risk of fraud, while delivering quick-turnaround services and lowering their losses and costs. Additionally, the information allows companies to gather information to meet Financial Advisory and Intermediary Services (FAIS) Act requirements, and allows them to start serving new clients quickly.

“Our data centres provide the economy of scale across the industry to allow it to use this information to supplement its processes. We keep the costs as low as possible to encourage adoption, and the costs mainly relate to data processing costs per transaction, making it equally affordable for small and large companies,” explains Rossouw.

Astute recognised the importance of, and need to, improve collaboration within the industry, specifically with regard to sharing data, and its established services and industry reputation supported the expansion of its functions.

“We have successfully provided life insurance clients with data about claims and associated underwriting risks since 2000,” he says.

The platform’s processes, and Astute’s other data exchange services, adhere to the highest international data privacy and cybersecurity standards, as well as the regulatory requirements of the financial services industry.

For example, the services do not disclose the risks of any client, as regulations require the clients to provide information to allow the service provide to identify potential risks, such as a person having a life insurance policy while wanting to open another.

Therefore, the services only disclose information during the process of registering a new client or processing a claim, for example, by highlighting that another life insurance policy is associated with a specific identity number or bank account. Companies must then gather further information from the client if there are any concerns or red flags raised.

“Companies have mature risk and fraud systems, but these rely only on their own data. Our platform allows them to support new products and services, and new channels of engagement, through the secure exchange of financial data,” says Rossouw.

Astute views the reduction of risks and costs in the financial services industry as crucial to expanding access to financial services and meeting new and emerging demands for digital services.

“Our aim is to add value to the industry. This involves reducing and removing costs and supporting higher efficiency. Our platform has contributed to preventing millions of Rands worth of fraud comprising small and large transactions during this year.

“Our growth strategy, encapsulated by the platform, is to make data more readily available and leverage its value, help reduce costs and mitigate risks in the industry, thereby supporting its growth and its readiness for future demands,” he concludes.