Synthetic data to help tackle online banking fraud

A Scottish company is working with the Financial Conduct Authority to help tackle an “epidemic” of online fraud.

Smart Data Foundry, a spin-out from the University of Edinburgh’s £600m Data Driven Innovation programme, will collaborate with the FCA and the Payment Systems Regulator (PSR) to help address the growth of online bank transfer fraud known as Authorised Push Payment (APP) fraud.

During a three-day TechSprint, more commonly known as a hackathon, financial services providers, innovators, academics, regulators, and technologists were brought together to find ways to tackle the biggest problem in digital fraud.   

Smart Data Foundry used its Smart Agent Simulation software to create an agent-based modelling approach to generate a synthetic data set without commercial or privacy risk, as it did not clone any real data.  

For the first time, participants used the data to simulate events such as mobile phone conversations, emails, and the associated connection with financial fraud to show the end-to-end story of APP fraud, through the eyes of the data.    

APP is now the UK’s number one finance fraud type, accounting for 44 per cent of all financial fraud and amounting to £583m in lost money. The type of scam affects consumers more than anyone else.

Bryn Coulthard, chief platform officer of Smart Data Foundry, said: "Smart Data Foundry has united with fintech innovators to help tackle the UK’s APP epidemic. Our high utility synthetic data allows us to understand complex scenarios without exposing customer data as we work to solve our top financial fraud problem.  

“Our work in partnership with the FCA and PSR helps to shine a light on the issues affecting consumers and how they are increasingly struggling to make ends meet, not just because of rising costs but also because of the ever-present risk of becoming a victim of a scam or fraud."  

Jessica Rusu, chief data, information and intelligence officer at the FCA, said: "TechSprints bring together participants from across, and beyond, the financial services sector, to develop technology-based ideas or proof of concepts that address and help provide solutions to industry challenges. These events help bring important systemic issues to the forefront, inform our thinking as a regulator, and provide a forum for collaboration and innovation.  

“Using synthetic data helps bring to life the challenges we're working to fix and lets the TechSprint participants quickly test ideas and show the art of the possible."  

Kate Fitzgerald, interim head of policy at the Payment Systems Regulator, added: “The PSR has been working to fight APP scams by driving the adoption of Confirmation of Payee and working with industry to improve data sharing for fraud detection, as well as improving reimbursement for victims via the CRM code. Most recently, we’ve set out our proposals to make reimbursement for victims mandatory.  

“The joint PSR and FCA TechSprint is a great opportunity to build on this important work. It gives us a chance to hear from people from a range of backgrounds, with different skills, to explore solutions to an issue that continues to have a devastating impact on so many. It plays a key role in more accurately illustrating the real-life scams people face and helping us all go further in tackling them.”