Someday soon, your bank will quietly join your credit card company in compiling and monitoring a "profile" of you based on your loans, account activity, and wire transfers. They won't do it for fun, they'll do it to spot fraud.
Decision Strategies announced on Wednesday an agreement with Holland-based Inter Access Risk Management to bring its corporate intelligence system to the United States and Latin America. The software-based data surveillance system, Syfact, takes disparate data stored by banks and securities brokerages, compiles it, and links it with events such as withdrawals and account transfers.
"This gives banks and other financial institutions a tool for discovering and finding patterns [of fraud and laundering] from disparate data, instantly," said Rick Harm, director of strategic technology for Decision Strategies, a New York-based business intelligence firm.
According to the California Bankers Association, banks in the Golden State lost US$65 million in 1995 to check fraud alone. John Stafford, vice president of communications for the association, quoted a 1994 report from the American Bankers Association which put losses to check fraud nationwide that year at $815 million.
Banks already gather data on clients and their account activities, but they don't centralize the information. For example, wire transfers are recorded in one place, while current savings accounts are recorded elsewhere. Syfact connects the dots.
The system is pre-loaded with a series of templates to spot account activity frequently associated with fraud or laundering. An unusual event, such as multiple transfers from one account to a single foreign account within a short time period, will trigger the system.
Once tripped, Syfact sends an alert across a corporate network to a security officer. This alert includes a graphical representation of all the relationships between accounts, account holders, and the activity. To delve into the relationships, an investigator clicks on the iconic representation of the person or company and on the lines connecting icons, to see what sort of transaction took place.
"Typically it would take a couple of days just to gather the information, and then you'd have to look for the relationships yourself among all the text. Syfact can tell you all of this instantly, and it draws the diagram for you," said Harm.
Syfact builds its profiles from public information - mortgage applications, checking accounts, wire transfers, company and customer addresses, ages, job titles, and other information included on loan applications or transfer forms.
But by adroitly connecting this public information, the system learns more about you than previously possible, raising concern among security experts.
"This is the dumpster-digging for the '90s," said Joan Feldman, president of Seattle-based Computer Forensics.
Computer Forensics investigates corporate crimes by examining the digital footprints left by email and other activities. Feldman said that privacy of individuals is at stake with such systems as Syfact. Every account withdrawal, deposit, and loan application will be duly noted by the system, she said, noting that her firm's work is done with full disclosure, under legal warrant.
