Itaú Unibanco Avoids Over USD$20M A Month in Fraud Losses Using FICO’s Cloud-Based Fraud Solutions

Largest bank in Latin America wins FICO® Decisions Award for cloud deployment

FICO (NYSE: FICO)

Highlights:

• Itaú has avoided over USD$20M a month in fraud losses using cloud-based fraud solutions
• Itaú has delivered a 15 percent cost reduction per account
• Itaú has seen a 20 percent improvement in fraud detection for online transactions
• Itaú achieved a 25 percent increase in customer self-service fraud suspicious resolution
• Itaú won a 2022 FICO® Decisions Award for cloud deployment

Itaú Unibanco, a global financial services firm and the largest private sector financial institution in Latin America, has migrated its fraud management and customer communication to the cloud, helping it to avoid over USD$20M a month in fraud losses. The service has delivered a 15 percent cost reduction per customer account and a 20 percent improvement in fraud detection for card-not-present (online) transactions.

More information: https://www.fico.com/en/products/fico-falcon-fraud-manager

“Itaú manages approximately a third of all credit cards issued in Brazil,” said Ulisses Okamoto, Fraud Risk Management Superintendent at Itaú Unibanco. “We processed more than 3.0 billion transactions in 2021. When you are dealing with these sorts of volumes, any competitive advantage is worth pursuing, so we decided to move to the cloud to enhance the customer experience, increase security and reduce losses and costs.”

Prior to the implementation, Itaú had been well-served for many years by FICO® Falcon® Fraud Manager on-premise but saw an opportunity to gain increased performance, agility, efficiency and cost savings by moving to the cloud. The project also allowed Itaú to compete more effectively during the pandemic.

“Fraud attacks across the Brazil market increased about 70 to 80 percent over the lockdown months,” said Okamoto. “This was considerable, given we are usually exposed to fraud levels exceeding three digits in terms of base points. FICO Falcon Fraud Manager and FICO Customer Communication Services were crucial in keeping the impact within our risk appetite without affecting the customer’s experience.”

FICO® Customer Communication Services for Fraud (CCS) was chosen as the primary communication service for transaction confirmation, offering high-quality and frictionless digital self-service for the bank's customers. The use of CCS during the pandemic delivered substantially to the business results and critical indicators. There has been a 25 percent increase in CCS usage, which represents a significant jump in participation by cardholders in the resolution process. The bank now receives response rates above 40 percent for regular accounts and above 50 percent for premium accounts. Itaú also used CCS to offer a self-service solution for customers to confirm suspected fraud transactions through SMS and Mobile App Push notifications.

The combination of FICO® Falcon® Fraud Manager and CCS has also modernized Itaú’s approach to fraud by incorporating other advantages of the cloud, such as the ability to quickly update software and predictive models that capture current fraud risks. Itaú has also seen a significant increase in operational efficiency and reduced the risk of outages and timeouts with a 24x7 operation promising 99.9 percent availability.

“Banco Itaú has embraced customer-centricity through cloud-based decisioning that has allowed them to compete more effectively during the pandemic,” said Nikhil Behl chief marketing officer at FICO. “The benefits of the cloud have helped their bottom line as well as providing increased protection for their customers.”

For its achievements, Itaú Unibanco won a 2022 FICO® Decisions Award for cloud deployment.

“This project ticked all the boxes when it came to the potential benefits of moving to the cloud,” said Senthil Erulappan, director, product engineering for merchant, risk and collections at FIS and one of the FICO Decisions Awards judges. “Itaú landed a trifecta of benefits when it came to scalability, high availability and agility. When you are a large organization, there can be considerable complexity to these implementations, so they were well rewarded with some impressive, quantifiable benefits.”

About Itaú Unibanco

Itaú Unibanco’s purpose is to promote people’s power of transformation and we do it through a strategic agenda focused on client centricity and digital transformation, based also on the diversity of our people. The largest bank in Latin America, Itaú Unibanco is present in 18 countries and has more than 56 million customers, among individuals and companies in all segments, to whom we offer the best experiences in financial products and services. Itaú Unibanco has been selected for the 21st consecutive time to be part of the Dow Jones Sustainability World Index (DJSI World), being the only Latin American financial institution to be part of the index since its creation in 1999. www.itau.com.br

About the FICO® Decisions Awards

The FICO Decisions Awards recognize organizations that are achieving remarkable success using FICO solutions. A panel of independent judges with deep industry expertise evaluates nominations based upon measurable improvement in key metrics; demonstrated use of best practices; project scale, depth and breadth; and innovative uses of technology. The 2022 judges are:

• Sidhartha Dash, research director at Chartis
• Paul Deall, head of risk, mortgages at Westpac (previous winner)
• Senthil Erulappan, director, product engineering for merchant, risk and collections at FIS
• Armando Junior, general manager, risk and compliance at Dock (previous winner)
• Sheila Leverone, chief marketing officer at eDriving (previous winner)
• Sibulelo Ncamani, head of operational risk and governance at Absa Bank (previous winner)
• Graham Rand, operational researcher and editor of Impact
• Dinesh Suresh, head, digital builds for consumer secured lending at OCBC Bank (previous winner)

The winners of the FICO Decisions Awards will be spotlighted at and win tickets to FICO® World 2022, the Decisions Conference, May 2022 in Orlando, Florida.

About FICO

FICO (NYSE: FICO) powers decisions that help people and businesses around the world prosper. Founded in 1956, the company is a pioneer in the use of predictive analytics and data science to improve operational decisions. FICO holds more than 200 US and foreign patents on technologies that increase profitability, customer satisfaction and growth for businesses in financial services, manufacturing, telecommunications, health care, retail and many other industries. Using FICO solutions, businesses in more than 120 countries do everything from protecting 2.6 billion payment cards from fraud, to helping people get credit, to ensuring that millions of airplanes and rental cars are in the right place at the right time.

Learn more at www.fico.com.

FICO and Falcon are registered trademarks of Fair Isaac Corporation in the US and other countries.

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