Innovation in fraud prevention: TIAA’s journey and lessons learned

Transcript provided below

TIAA was selected as the Innovation in Fraud Prevention winner for the 2022 BAI Global Innovation Awards for their phone authentication risk management solution. This comprehensive, scalable, and layered innovation enables TIAA to mitigate fraud by capturing and analyzing key phone attributes to evaluate the risk of each call.

Holly Hughes, CMO at BAI, recently hosted a discussion with Rick Swenson, managing director and head of fraud strategy and governance at TIAA, and Dennis Gada, head of financial services for North America at Infosys, to learn more about how TIAA was able to strike a balance between managing fraud risk and customer satisfaction and why making meaningful improvements for customers and staff is so important.

Key takeaways:

• How TIAA’s winning fraud prevention innovation was brought to market and the impact it’s having
• What leadership lessons were learned along the way and how different obstacles were overcome
• How to create a culture of innovation and the important role of talent
• Why taking an omnichannel view and iterative approach to developing an innovation improves the process and likelihood of success

Rick Swenson, Managing Director and Head of Fraud Strategy and Governance, TIAA

Rick and his team manage fraud prevention and detection controls related to all TIAA’s customer interactions. In his role, he has sponsored and led dozens of complex multi-year fraud prevention, detection and investigation strategies and solutions including supporting the industry’s first retail mobile check deposit capability, credit card EMV conversion, the use of biometrics and omni-channel customer authentication. He has over 30 years of experience working in the financial services industry, including working for multiple fortune 100 firms.

Dennis Gada, Executive Vice President, Head of Financial Services – North America, Infosys

Dennis is part of the Global Financial Services Executive Leadership team and is passionate about leveraging the power of technology to address challenges facing the financial services industry. His expertise spans across various business competencies, including sales, strategy, consulting, marketing and general management. Dennis is also focused on bringing cutting-edge technology solutions to established financial institutions through collaborating across his professional network, including a wide ecosystem of experts, startups, and established industry players.

Holly Hughes, CMO, BAI

Holly leads strategic marketing, digital thought leadership, events and strategic programs for BAI. She joined BAI in 2014, bringing with her more than 20 years of marketing and leadership experience across a number of industries. Most recently, she served as SVP and Marketing Director for Fifth Third Bank. Prior to Fifth Third, Holly held a senior marketing leadership position at MidAmerica Bank, a leading community bank in the Chicago market (now PNC).

DISCUSSION TRANSCRIPT

 

Holly Hughes: Hi, everyone. I’m Holly Hughes, the Chief Marketing Officer at BAI. It’s our mission at BAI, to provide actionable insights that help financial services leaders make smart business decisions. We do this by providing powerful tools, meaningful connections, and relevant content, including the insights that will be shared.

Uniquely tied to our mission is the BAI Global Innovation Awards. Since 2011, the BAI Global Innovation Awards have recognized and honored leading financial services organizations. Who are driving change across the industry and globe solving problems, adding value, and providing improved experiences that positively impact their customers, employees, and communities.

Today, I’m pleased to be joined by two innovative thought leaders, Rick Swenson and Dennis Gada.

Rick is the Managing Director of Fraud Strategy and Governance at TIAA. And Dennis is the Industry Head of Financial Services at Infosys. TIAA was selected as the innovation and fraud prevention winner for the 2022 BAI Global Innovation Awards for their phone authentication risk management solution. Rick will take us through TIAA’s innovation journey, and we’ll hear about key successes and lessons learned along the way.

And Dennis will share his perspectives on trends he’s seeing, as well as opportunities that lie ahead for financial services leaders to drive change within their organizations and the industry more broadly.

Welcome, Rick and Dennis. It’s so great to be with you today.

Rick, we’ll go ahead and start with you. But first, congratulations on being selected as 2022 BAI Global Innovation Award winner. That is a very strong accomplishment for you, as well as your team. So, congrats to you.

Rick Swenson: Well, thank you.

Holly Hughes: Absolutely. Rick, I thought you could get us started, and as a foundation for today’s conversation, can you describe your winning innovation, the problem it’s solving, and how you brought it to market?

Rick Swenson: Sure. Thanks, Holly. And again, we’re thrilled to win the Innovation Award. I think the old adage that necessity’s the mother of invention is true here. We, like many other financial services organizations, found a need to improve our ability to authenticate our customers in the phone channel. At the same time, balance that against customer experience.

Our challenge was, “How do we invent a process, or use technology to support an outcome where we feel confident our customer is on the phone, but not having that customer perform activities that take us away from the servicing request?” That really was our challenge.

We began that journey roughly four years ago, as we started to think about how we would solve to this problem going forward. And took an iterative approach during that timeframe, coming into a measured amount of challenges that we had to overcome, both technical and process driven challenges, through that traverse.

I think we still have opportunities. Like others, when you invent something or create innovation, your step away is, “How do we improve on that?” So we’re going to continue to do that, going forward.

Holly Hughes: It’s definitely a never-ending journey when you’re an innovator. You put something out and then it’s, “What’s next?”

Rick, I’m sure you gained a lot of valuable insights along the way. What are some of the leadership lessons that you learned during your innovation journey?

Rick Swenson: Thanks, Holly. The number one thing that you learn is to involve as many people as you can in the organization, and keep them informed about what it is you’re trying to accomplish. And then ask them what value you can deliver to them. You have to be able to say what you need, and get from them what they need, and then you have a collaborative outcome in trying to develop.

Our solution’s very complicated. It started from the phone servicing elements of our carrier, all the way through to what our end users see on their screen. Multiple touchpoints in relationship to the technology. We are touching in an environment that, if something were to break, we could potentially stop calls from coming into the call center, as an example.

You cannot be too overly sensitive to who knows and who needs to be involved in what is taking place. Not only because you’re trying to get your product out, but they’re also making changes in your environment that you’re deploying, and they can potentially get your innovation not where you need it to be.

So my advice to everyone from a leadership perspective… And we have those moments where some team would say, “We’re not aware. We didn’t know.” And that was our cue to step back and say, “Who else needs to be in the conversation?”

You know, your product people need to be involved. Your customer service delivery people need to be involved. Your IT staff. You also need to ensure you’re compliant, your legal folks will want to be engaged.

Those that need to know what you’re doing relative to both risk and service delivery should be in that conversation as frequently as possible. It’s just very difficult to overly communicate.

Holly Hughes: Really good points. And we’ll talk a little bit more about that omnichannel type of approach that you took in a little bit.

Dennis, I know you work with a lot of different clients, helping them drive innovation within their organizations. What other lessons have you experienced with those clients?

Dennis Gada: Thanks, Holly. And my congratulations as well to Rick and the team at TIAA for winning the 2022 BAI Global Innovation Award. Amazing story.

I think as we work with clients across the globe and kind of help them in their innovation agenda, a few things really stand out for me.

Number one is, really, innovation needs to be democratized and made more end to end. It’s not just one team or one department in a company that does innovation, but it’s across the board. And I think Rick explained very well of how client services, product, technology, compliance, all are part of the innovation that they did at TIAA.

I think the second thing is also really solving the customer problem. Empathizing with, “What are you really solving for? And how will you make your customer’s life better?” And that should be the lens to look at innovation.

And third is really getting comfortable with a bit of experimentation and ambiguity. When you do innovation, you may not get it right the first time. We need to be agile and experiment a bit.

And I think these are the three things that really stand out for me, as lessons learned from innovation journeys of various different clients.

Holly Hughes: Some really good points. Some points for people to reflect on. I’m sure those listening have experienced some of those. But also to know, if you’re heading into it, some of the things to keep in mind.

And Rick, I’m sure it wasn’t totally smooth sailing for you. None of these types of projects never are. I would love to know some of the obstacles that you faced and how you overcame them while you were working on this innovation.

Rick Swenson: Yeah, certainly a lot of obstacles, especially on the user interface side where, “What do you need to know, or what do you need to see?”

So we had an idea… Just one example. In our solution set, we would provide the GUI interface with a red, green and yellow outcome. So if it was red, it meant that we were expecting an elevation in authentication. If it was green, that we were okay. If it was yellow, we were functionally saying, “We need to get more information.” So we put a hesitation in that, if you will, in yellow, and the end user didn’t know if it was going to go green or red.

So they’re on the call and it’s yellow, and you’re making up small talk, because you’re waiting for an algorithm in the background to compute an outcome.

We soon discerned that that probably wasn’t the greatest approach. So we fell on one angle that basically said it was going to be either red or green, as an example. We got a lot of feedback from the servicing folks, explaining that we weren’t helping reduce handle time, because yellow was increasing handle time.

We were however, on the risk side saying, “We weren’t comfortable making a vote one way or the other without additional information.” So that was a great lesson for us to learn on that side.

We also learned that the training was not as straightforward as we thought. To the example I just provided, “What does red really mean? What do I say when I see it? How do I keep a uniform conversation going, across hundreds of different individuals that are getting the information in front of them?”

We had to put in a fairly extensive training program, where initially we thought that would be a short-lived event. That turned out to be a very big piece of getting the innovation plugged in and making it successful.

So, you learn things in an iterative model that you believe in some assumption. So, never assume, we always try to say that. But you have some optimistic outcome expected, and then out of… Maybe not left-field, but out of your scope of perspective comes another opportunity that you didn’t realize was going to take as much time. And you have to put that in, in order to get your innovation accepted in a way that you believe is going to be palatable to both your needs, as well as your customer.

It’s really an iterative feedback. You try, you test, you try. I think Edison said he had 1,000, not failures, but learning moments, right? We didn’t have 1,000, but we did have multiple, especially on the technical side. I won’t talk to the specifics on technical, but we have the API in the environment in different locations.

Those APIs also be up to be cross-functional with other APIs that are running. We had opportunities where there was interference that had to be worked through, so we had to come up with new challenging ways.

We started this traverse with one key vendor. Six months into that effort, we realized we didn’t have a place where we thought we would land. We had to change vendor solutions in the middle of the stream, so to speak. Re-plug in a whole new group of players, reintroduce them to what we’re trying to accomplish. And then still try to meet somewhat of a mandated outcome on time and timeline.

So, just expect the unexpected. Try to plan for B and C. Sometimes you’ll only be able to put your most viable product in initially, and then you go back and say, “How do I go from most viable to best viable?” As you go forward.

Dennis Gada: That’s amazing. You’re juggling a lot of things together to get to the outcomes with all the changes that you talked about. Good story.

Rick Swenson: Yes.

Holly Hughes: Absolutely. A lot of iteration, and we’ll talk a little bit more about that. But, pivoting… I think just knowing obstacles are going to happen and it’s how you work through them.

And sometimes it’s a benefit to get that feedback, right, Rick? Where you got that feedback and then you could adjust and make the overall product better. So I think some really good points.

I want to talk a little higher level about just creating a culture of innovation. And Dennis, I think this would be a great one for you to answer for us. It’s so important for organizations to have the right culture, and a lot of that is around building, retaining and developing the right talent.

What’s most important for leaders to consider in this area, as they’re trying to build this true culture of innovation at their organization?

Dennis Gada: When you look at complex transformation and innovation, while there are technology challenges, business challenges, I think the most important challenge is likely to be the challenge around changing the culture. And managing the impact that such an innovation or transformation can create.

And I think a few things, again, stand out. There is a need for ensuring kind of continuous learning and re-skilling in organizations that are driving up on the innovation value chain. Because that’s how people will stay curious, and they’ll work towards more and more new ideas as they come along.

I think the other thing also, is to have an agile approach. Because innovation needs to be in short cycles with rapid delivery, rather than very long-term programs. And that also brings a culture of experimentation and responding very quickly to what the clients and the market might be demanding.

And linked to that is a little bit of a multi-speed approach. So some parts of the innovation need to happen very quickly, while others are tough and might take a longer duration. And there needs to be a little bit of a multi-speed way of thinking of how you can really innovate on one side very quickly, while continuing to bring incremental improvements on certain core parts of the business.

So I think these are some of the things that we’ve seen of really driving the culture of innovation, which becomes a very important ingredient of really driving successful programs in organizations.

Holly Hughes: Really great points. I think Rick touched on a few of those as well, and gave that real world context for sure.

And Rick, I want to go back to something you talked about earlier in terms of all the different people that you brought into the mix as you were doing this work. And it’s certainly important that innovation doesn’t happen in silos.

How did you and your team build this kind of omnichannel approach to share and integrate the learnings cross-channel? How did you cross-pollinate? I’d love to get a little bit more from you on that.

Rick Swenson: Yeah, the how is really in the structure. We have a very dispersed audience. We have folks in New York, and Charlotte, and Denver, across the globe. We have folks overseas that are helping organizing and creating a cadence around, for example, at least a monthly summary of overview.

So a cast of character is not on a particular medium, maybe 30 to 40 individuals, each representing different areas of the business, hearing everything that we’re trying to get done.

And then at a lower level, at least a weekly basis, doing a summary of where we are, where we’re trying to go and how we’re getting there. Asking and inviting individuals to not only hear what we’re talking about, but to inject any opportunities that we need to be aware of, that may either conflict or in intersect with our work. And that’s a big part of it.

And then asking, and honestly asking, “Where can we improve? What does this need to look like? How can it look like something else?”

So I think at the build level, you’ve got your programmers, you’ve got your IT folks. They’re already got the requirements. And then on a weekly basis, a higher level of what we got done this week, what our challenges are.

And then on a monthly basis, you’ve got an elevated level of leadership that are aware of what you’re trying to do and able to ask great questions. And even offer up solutions to the team, as to how we can approach a problem that we’re trying to get through, with either some work effort, or supply support within the organization. And I think that’s extremely important.

And having that cadence out there… And I think to the point you were making earlier, never take perspective as a criticism. Never be defensive in these models. I mean, you’re not trying to defend your idea of some perfection that you’ve already decided is what’s going to happen.

Be open to questions that state, and maybe even help steer you, or would steer you away from your initial idea of how you was will deploy.

And whether or not you indoctrinate those or not, it’s extremely important to let people get a sense of ownership in the idea of how they can bring it to market. And then you have a shared experience and a shared understanding.

And I won’t go off on too much. But innovation, to your point, the culture of that is, it doesn’t have to be the light bulb, right? You will notice things… And we promote this internally. It can be a little thing about how to change a form, or how to change a communication, or maybe how to just tweak a little bit of technology. All the way up into a more paradigm shifting model.

But we never say innovation has to be grandiose, it has to change the world. And so, that invokes the idea that you can share those ideas.

We popularize those internally. We give recognition for those. We have an internal aspect called applause. We’ll send out applause, and everybody in the company can see somebody’s getting recognized for their contribution. And that instills in others, the idea that they can also contribute.

So having that culture helps, across the organization, build a momentum behind making a difference today, that can lead you to a change tomorrow. And they do feed off each other. New ideas invent new ideas, invent new ideas.

Holly Hughes: Yeah, really great point, that innovation… Now, yours happens to be technology focused, but not all innovation does need to be technology focused, for sure.

And a good segue to this next question, a question for you, Dennis. I think as we were looking at all the innovations that came in, one of the trends that we saw was that people were really focused on solving real world issues. Things like fraud, security, sustainability, that made meaningful improvements for customers, for employees.

Dennis, can you talk a little bit more about why that’s so important?

Dennis Gada: Yeah, and I’d also would like to build on what Rick said in terms of innovation really happening at the grassroots. And that’s where innovation is really very pervasive in today’s environment.

It’s not just focused on the front-end experience, but really front-to-back. It’s very important to innovate the middle and back office processes, systems, platforms, et cetera, to really have a better end-to-end experience.

We were working with a client, for example, where we were speaking to their end clients and they said, “It’s a great front-end experience you’ve created, but opening an account still takes 30 days, so what’s the point?”

And I think that highlights really an example of why innovation needs to be front-to-back, or end-to-end.

And as you mentioned, Holly, there were some great nominations in this year’s BAI Global Innovation Awards. There were nominations around digital securities. That’s so critical in today’s time. There were nominations around sustainability. Obviously the winning nomination from TIAA, around fraud prevention.

These are all great examples, right? We are not looking at the best website, or the best mobile app to win these awards. But where it is really making an impact on the customer experience, or the employee or associate experience, which also indirectly impacts the customer experience, really end-to-end.

I do think that there will be still some form of, once in a while, game-changing breakthrough innovations. We’re seeing a lot of hype these days around, of course, GPT and several other new technologies. And that will happen.

But on a day-to-day basis, it’s the incremental innovation on the fringes, bottoms-up innovation, that really makes a tremendous impact when it has an overall end-to-end experience.

Holly Hughes: And to build off of that, Rick, talk to me a little bit more about the success you’ve seen in terms of what you were doing to reduce fraud. How has that positively impacted customer satisfaction more specifically?

Rick Swenson: Thank you for the question. Specifically, customer satisfaction is found in us not requiring, as an example, to provide us with additional information on every call that comes through. And in a lot of cases, you have multiple people owning an account, as an example.

So we’re able to identify who the caller is without them supplying us with the information specifically to who they are. So the customer satisfaction goes up, not having to remember or answer questions that…

They’re trying to get a servicing request. They want to move money, they want to change an address, they want to add a beneficiary to their account. Their satisfaction goes down when they have to answer a series of questions that either they can’t really recall, you know, “What was the color of your 1972 Ford Mustang?” Or whatever we’re asking, taking those off the table.

And then internally, being able to measure a straight through reduction in time on call. So that’s a metric we manage internally. We manage in our current constructs, red and green. And we have a differential cost for red calls, that take longer, green take less time. So we can calculate that through, and either infer customer satisfaction increase, or see a reduction in complaints related to servicing security needs in our channel. So, we measure both of those things.

Holly Hughes: That’s excellent. Keeping the customer at the center of everything you’re doing is so, so important.

Rick, one other just follow-up question. I know you talked before about that iterative approach. Anything else you would add there that would be helpful for the audience, in terms of why that’s so important to rolling out in innovation?

Rick Swenson: I think iterative allows you to build in stages and identify opportunities to improve at a more precise level. So Big Bang Theory means, you built it all end-to-end, you plug it in. And I’ve had those approaches in the past, and it becomes very problematic to troubleshoot where the problems really are when they’re occurring. And the ability to remedy it becomes problematic, because you have to rebuild an entire team across… Everyone has to fix the problem at once.

Iterative means, “We’re going to do this piece. We’re going to really understand the challenges around that piece as it comes in.”

As an example, we analyze all incoming phone traffic for the carrier of the phone, the type of phone that’s coming in. And then we talk about how we’re going to apply that in relationship to risk on the call. So we want to make sure that that piece is good.

So we roll out that first. It starts to provide good and bad, good and bad, good and bad.

And then we have another piece. And then we look at voice strongly. And, “What does voice mean? And how do we plug voice into that?” And then we put those two together and we move that forward into our model.

And then we started to take a look at cross-channel. “What does other indicators look like outside of our channel?” And we introduce that.

That iterative approach allows us to identify value-add, as well as troubleshoot independently those pieces. Rather than, again, build to the whole monolithic solution, and then when things aren’t working, trying to dissect in that flow, “Where is the problem?” It becomes a lot more difficult.

It also means a lot of times, you may have to reinvent the blueprint and start over, and then go back to an iterative approach. Which is a timing issue.

So sometimes it looks like you’re moving slower, but you’re actually moving faster, to a better solution than you say, “Well, let’s get it all done quickly.” And you’re constantly trying to improve that last, I’ll say, more monolithic design than a more iterative design.

So an iterative also allows you to get better feedback on those, I’ll say, modular delivery points from your stakeholders, as you try to discern what your best value proposition is for yourself and for your customer.

And it also gives you a chance to even rethink. As I alluded to earlier, at one point iteration said, we had a vendor we probably didn’t believe was going to be able to meet our expectation. Taking that vendor out after the solution was done, because you’ve integrated all those points, again, puts you in a very awkward position. Because it’s difficult to just pull that out, and plug in a vendor to go across your entire solution.

Holly Hughes: Yeah, a lot of great advantages for sure. And it goes back to that setting expectations with leadership, so they understand you’re going to take that approach.

Well, Rick and Dennis, you guys have shared so many great insights, very valuable tips for everyone to keep in mind.

We’d love just a final lightning round, kind of a quick answer in terms of a little encouragement for the people listening. Where can financial services leaders look to for inspiration, as they’re thinking about developing new products and services for their customers, and their innovations?

And Dennis, I’ll start with you. Any nugget of inspiration you could lead with folks today?

Dennis Gada: I think one kind of general broad answer to this would be to look for inspiration where you can get an Apple-like experience, Google-like targeting, Amazon-like fulfillment, and Uber-like customer service. Pack it all together and get the best of all.

But I think the most specific one I would also call out is, look at the transformation happening in other parts of the world. Especially the financial services transformation happening in a country like India, where you can open a bank account in 30 seconds, you can make real-time payments across multiple channels. And the whole digital infrastructure that has been created that has revolutionized banking in an unprecedented way. I think there are a lot of great examples and learnings from there.

Holly Hughes: Perfect. Thanks, Dennis. Rick, what would you share?

Rick Swenson: Very similar, right? I think you look at where application of technology is being deployed elsewhere, for other purposes. And then ask, “How would you reconstitute that into your own environment?”

So as an example, I know there’s a lot of work around, again, I’ll say AI and ChatGPT. Where, you’re able to take voice and try to understand sentimentality, as an example, what the customer’s saying. You can do miming on voice, to try to invent better product service delivery.

But you can also look at voice, as an example in my world, of pattern activity. So, “Do we see the same sequence of scripting going through in a voice channel? What technologies are being used to analyze voice conversation?”

And try to come up with, “Is this an expectation against fraud in my world? Or is this something I can use to improve my product?”

So, you hear about how technologies are being deployed elsewhere, and you need to ask the question, “How can I take that technology and put it into my framework for value?” Right?

Maybe you can, maybe you can’t. But I would ask everyone to not, out of hand, just say, “That doesn’t apply to my business.” Ask yourself, “How could it apply to my business?”

Holly Hughes: Yeah, I love that. A great point to end on. Again, Rick, Dennis, thank you so much for sharing all the great insights with us today, to help our audience more successfully drive innovations within their own organizations.

And thanks to all of you for listening. You can learn more about the BAI Global Innovation Awards and the 2022 winners and finalists on our website, which is BAI.org.

I also wanted to let you know that we’ll begin accepting nominations for the 2023 program in May, and encourage all of you to share your innovation stories with us.

Thanks again so much for joining us, and have a great day.