EBA CLEARING issues specifications and runs analytical pilot for pan-European fraud pattern and anomaly detection

Nine banks from six countries are engaged in the data model training for the new fraud-fighting functionality in STEP2 and RT1.

EBA CLEARING announced that it has issued the specifications for its pan-European Fraud Pattern and Anomaly Detection (FPAD) functionality. The pan-European payment infrastructure provider also delivered a developer portal, including a sandbox, to support users in the development and testing of FPAD’s application programming interfaces (APIs).

At the same time, preparations for the go-live of FPAD functionality have made great strides over the summer, with nine banks from six countries contributing to the data model training of the ongoing analytical pilot phase. The aim of the analytical pilot is to develop models that identify fraud patterns in cooperation with users and to qualify anomalies based on their feedback.

FPAD will cover a broad range of real-time fraud prevention and detection tools, including an IBAN/name check, to support the fraud-fighting efforts of payment service providers (PSPs) across Europe. The tools will enable STEP2 and RT1 users to complement their individual risk view with insights on patterns and anomalies from a central infrastructure level perspective.

FPAD will be an integral part of STEP2 and RT1, which are the largest payment systems for euro credit transfers and instant payments by volume and participation reaching every corner of Europe. Deployment will start with a post-transaction investigation feature as well as transaction and account risk assessment functions, which can be leveraged by users before executing a transaction.

Raphael Barisaac, Global Head of Payments & Cash Management at UniCredit SpA, said:

“At UniCredit we value payment systems security as essential to protect customers, increase confidence and enhance their user experience when using digital banking products, and we are constantly implementing innovative solutions in order to improve the quality of antifraud controls. Instant payments are growing fast, so a higher level of security and better fraud fighting tools are needed. With FPAD, all banks from all over Europe are joining forces – with a systemic approach – to take fraud-fighting capabilities to the next level in the SEPA perimeter.”

Enrico Canna, Head of Anti-fraud & Customer Protection Center at Intesa Sanpaolo, said:

“The recent increase in fraud trends and the use of instant payments have required us to broaden our view on payment transactions. At Intesa Sanpaolo, we strongly believe that a shared international solution, such as FPAD, driven by the importance of real-time information sharing and data correlation, will enhance our customer protection.”

Christof Hofmann, Global Head of Corporate Cash Management at Deutsche Bank, said:

“We appreciate the innovative solutions that FPAD offers, not only to address our and our clients’ fraud risk, but also to further strengthen the entire SEPA payments ecosystem.”

Andres Kitter, Deputy CEO at LHV bank, said:

“The surge in instant payments demands faster and better tools to combat fraud. Whilst criminals leverage vast international networks, until now, there has been no real cooperation between banks in the EU. This tool is the first step at levelling the playing field, enabling fraud teams across the SEPA region to access previously unavailable data, thereby enhancing the precision of their risk assessment.”

Simone Löfgen, Global Head of Payment Platforms at Commerzbank, said:

“The growing use of instant payments requires faster and better fraud fighting tools. With FPAD, banks from all across Europe are pulling together to enhance fraud combatting – not just for one community, but all over SEPA. This will further improve the quality of our checks and the payment experience of our customers.”

Jaco Struik, Global Head Fraud Services at ING, said:

“Our customers expect us to be a safe and secure partner for their personal and business financial needs. At ING, we raise customer awareness, train employees and invest in new technologies, such as AI, to keep up with the increased velocity and quantity of new fraud attacks. We recognise fraud prevention as a top priority, making it a key part of ING’s ambition to be a trusted partner. This challenge thus needs a common response. Banks, service providers and other companies should work together on combatting fraud. At ING, we have been pleased to participate in the FPAD design and analytical pilot phases, because we believe FPAD can make a real difference for fraud combatting. It will feed us new insights that only a network view can provide, which will help us to better detect and prevent payment fraud going forward to keep both our customers and ING safe and secure.”

Erwin Kulk, Head of Service Development and Management at EBA CLEARING, said:

“We are grateful for the active engagement we receive from the analytical pilot banks. Together with these frontrunners of different sizes and from different countries, we are training the fraud pattern and anomaly detection models. These models will be used for each settled transaction to detect matching fraud patterns and anomalies, creating value for all STEP2 and RT1 users from day one. With the delivery of the specifications and the developer portal, our participants can start their activities to integrate FPAD insights into their own fraud- combatting tools and processes.”

The development of EBA CLEARING’s FPAD functionality started in early 2023, following the release of a blueprint and subsequent RT1 and STEP2 user consultation in Q4 2022. STEP2 and RT1 are pan-European retail payment systems processing SEPA Credit Transfers and Direct Debits (STEP2) and SEPA Instant Credit Transfers (RT1) respectively. Both systems are owned and operated by EBA CLEARING, a European-owned, European-governed, and European-regulated financial market infrastructure provider.