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8 Simple Strategies for Telcos to counter Wangiri Fraud
Wangiri is not new rather; it is one of the most commonly occurring telecom fraud. In a recent case, a fraudster gave a missed call to several users of different countries. When the users viewed the missed call on their mobiles, they thought that it was a genuine missed call and called the number back. That is where they got tricked! The fraudulent numbers were unusually long and originated from an array of exotic countries. These were premium rated numbers so when the users called back, the fraudster’s intention to extract maximum payment out of them was successful.

In such scenarios, it is not just the subscribers but their operators as well who bear the losses. There is both a direct and an indirect loss for the operator. As per the latest CFCA 2017 global fraud loss survey, Telcos have lost close of 1 Billion USD to Wangiri Fraud alone, which is quite a lot!

In my point of view, Wangiri cannot be eliminated entirely for two main reasons- there is no proper regulation on the carrier business, and there is lack of visibility on the end carrier who is terminating the call. The end carrier who terminates a fraudulent missed call is not aware of the fraudster details and whether the country from which call has originated is a high-risk destination or not.

So, let’s look at how can telcos protect revenue and provide great customer experience?
- Subscriber Awareness
A pro-active approach to minimize Wangiri fraud would be, making the consumers aware of the fraud scheme. If a number appears to be suspicious, a quick search of the number in several free apps available online, would tell the customer if the number is a part of any ongoing scams or not. Several Fraud Management tools are readily available in the market to detect and prevent Wangiri.
- Customer Experience Management
As the customer is the king of any business, and hence Telcos need to manage the customer complaints effectively, which will, in turn, reduce customer churns. All employees in the customer care department should be well informed about the Wangiri fraud and how the customer care executives should manage the complaints related to this fraud.
- IVR (Interactive Voice Response) Facility
IVR Facility is a pro-active approach that can be adopted by the operators. Whenever a subscriber calls back to a high-risk destination upon receiving a missed call, the operator should have an IVR voice informing him about his called destination. This IVR voice message would make the subscriber cautious to drop the call.
- Removal of International Services as the default service for a Subscriber
In India, Telecom Regulatory Authority of India (TRAI) has announced a new mechanism to effectively protect the common interest of mobile subscribers. TRAI has said that international service calling facility should not be activated on prepaid SIM cards without the explicit approval of the consumer. This measure is yet to be adopted by several other regulatory bodies globally.
- Technology
To protect customers from phone scams, T- mobile has introduced a new network technology. They have rolled out a scam ID by which customers are automatically alerted when an incoming call is likely a scam.

Several other vendors are also coming out with similar technological solutions.
- Routing Management of carrier:
When a fraudster carries out the Wangiri fraud and gives missed calls to multiple subscribers, high amount of increased traffic can be observed on the carrier who routes these calls. If an operator monitors this activity, there will be a repetitive trend of increased traffic observed on the same carrier to route these calls. In such cases, an operator must take necessary precautions to route all the traffic through an alternative carrier. Routing the calls through a different carrier will help in breaking the chain between the fraudster and the linked carrier.
- Control designing through FMS tool:
Control designing through an FMS tool is required as it helps in early detection of Wangiri activity. An FMS tool assists in the discovery of Wangiri cases by monitoring the number of calls made by the fraudster. Artificial Intelligence & Machine Learning can play a significant role in detecting the Wangiri fraud.
- Negative Margin Prevention
In case of a negative margin occurrence, the number needs to be blocked by the operator immediately as it leads to direct impact in the revenue.

I would conclude by saying the famous quote by Bill Gates, “Treatment without prevention is simply unsustainable”- though Wangiri fraud can never end completely, right preventive measures can minimize it significantly.

If you are interested to learn how AI /ML techniques can help you combat Wangiri Fraud

Contact Us
September 10, 2018
Are You Ready to Unravel the Digital Billing Maze?
Ever guessed who will be your next partner in wholesale, digital or OTT? Seeing the pace at which partnerships are burgeoning across the length and breadth of the industry, it seems you won’t get an easy answer to this question. In this rat race, growing partners is the need of the hour, and that too across categories of entertainment, security, gaming and more; there won’t be much time to analyze the partner’s background or work on the business logic. But you are confident that your digital journey is on track, with newer business and revenue opportunities.… Hurray!

Now, things turn upside down when you realize after a few days that there’s a difficulty with managing the partner account, faulty content delivered to subscribers, disputes arising from agreements, or you find out that there’s a serious problem in the way business terms are being executed. Why do these happen?

Well, the issue could be arising from a lack of preparation and foresight; no one is to be blamed either, the rapidly evolving business landscape throws a curve ball. With several thousands of digital companies forming a complex maze of partnerships, challenges are certain. These challenges could arise from all quarters, not from your partners alone, but your customers or external sources as well.

Let’s look at some of the typical challenges you may confront in your engagements with new types of partners:
- There is a content provider and a partner who deals with a variety of content types including OTT video and mobile apps, but you find it difficult to integrate all types of services on one platform.
- The content offered by your partner is incomplete or corrupt, and the charges need to be reversed to a customer. How will you settle the deal in this context?
- A customer engages in fraudulent activities; for example, after downloading the content, he/she defaults the payment arguing that the content is of poor quality.
- Partner settlement becomes difficult as your partner engages in unethical practices like using a fraudulent platform for tracking the number of downloads or the impressions.
- A phishing fraud affects your customers, forcing you to compensate massively.
- An inadvertent regulatory violation from your end leads to a serious legal complications, leading to financial loss and damage to reputation.
And the list goes on…

Where does the problem lie? Who is to be held responsible? How to overcome these challenges?

The underlying problem with most Telcos pursuing digital opportunities is sometimes the lack of preparation both in terms of technology, infrastructure and awareness. With constant changes to the digital landscape, regulatory pressure and escalating CAPEX, anticipating everything that could go wrong is a downward spiral. An upgrade to your Business and Operations Support System (BSS/OSS) could be a solution, but how far and to what extent the upgrade should go? Most Telcos have already initiated the BSS/OSS transformation, but has not yet achieved the level of digital maturity which they are supposed to. Why so?

Well, the scenarios discussed above indicate that the technology infrastructure you are building to protect your digital business should be capable of addressing not only the current challenges but also the future events that are likely arise. In other words, it should be capable of predicting the future scenarios to an extent and address the problematic ones before they impact the system. And be future compatible so that it can adapt quickly.

Broadly speaking, an encompassing OSS/BSS strategy that addresses different aspects like revenue management, billing & partner management and customer experience in a proactive manner is the need of the hour.

Stay tuned to understand how Subex can help you build a digital billing strategy that helps you rise to the status of a successful Level 4 digital service provider (DSP). If you want to know how Subex’s solutions can help you build a digital ecosystem that boosts your revenue streams and enhances customer value, contact us.
September 5, 2018
Account Takeover – Fraudster Intelligence

Account takeover fraud is one of the most common fraud types across the world. Fraudsters use the various methods to takeover an existing open account within the mobile operator or the banking instrument. The commonly used method of committing this type of fraud is vishing or smishing. As per CFCA fraud survey, account takeover accounted for an estimated fraud loss of 1.7 Billion US Dollars in the year 2017.

In all these scenarios, the primary goals of the fraudster are to gain access to the account and (by-) pass the validation steps. In many situations, such validation may only require low-level knowledge-based authentication, so basic information obtained by the fraudster is used to validate and by-pass controls in place and to takeover the targeted account.

I was investigating an Account takeover fraud case for one of the leading telecom operator in the APAC region wherein the fraudster used a different type of methods to commit this fraud. Many customers lost millions of dollars from their bank accounts without the knowledge after their account was taken over by the fraudster. On investigation, we identified that the fraudster’s primary motive was to takeover both mobile and banking account and then initiate multiple fraud transactions. He used Social Engineering, CLI spoofing, Spoofed website & Malware to commit the fraud.

The Fraudster sequentially executed his schemes. He targeted only the high-profile subscribers in a region. He acquired all the information of the subscribers using social engineering methodology and called up the subscribers pretending to be a Bank executive and Mobile operator security officer. He asked the subscribers to download a malware-infested application from a spoofed website, following which he gained remote access to their mobile phones.

The malware would read the SMS’s & call logs from the subscriber’s mobile and forward the details to fraudulent server. It also deleted the SMS & call logs from the mobile handset before the subscriber knew the same. The intention behind the reading of the SMS & Call log is to Bypass the second level authentication for completing the banking transactions. With this method in place, he was able the execute multiple transactions without the knowledge of the subscribers.

Impact to Telcos?

When subscribers approached law enforcement agency, the Law penalized both Telco and the bank and recovered from them, the amount lost by the subscriber. The Law took this action to protect the interest of the customers and secondly it was negligence from the service provider that led to the revenue losses of the subscribers.

Telecom & banking service need to protect the subscribers from such fraud attacks by providing awareness to subscribers. Fraud management systems need have intelligence built into them to detect the fraud attack and control damages at an early stage.

August 24, 2018
“Roam like Home”: Cost Optimization for Profitable Margins
Before I begin my story, let’s go back and revise some elementary school math concepts on profits and losses. I would often wonder why Mathematics would be right before the break and our bellies would often be rumbling with hunger and curiosity over what was packed for lunch……. Sigh! Those good old days…well coming back…

Profit = Selling Price – Cost Price

Easy wasn’t it? Well guess what, this formula does hide great secrets to being sustainable in business. Now, getting back to my story…

Last year, in September one of the larger and popular global telecom service providing giants from APAC introduced the concept of “Roam like home” where the international roaming was almost made free for incoming calls while the prices for out-going local and international calls were kept very nominal. The introduction of this concept was after the realization of the fact that international roaming was no longer a profitable revenue stream. It was a huge opportunity loss to the telco when its customers procured SIMS with local operators at the international destinations to use data or make calls. Data usage, which otherwise is quite expensive at international destinations was a dominant driving force for procuring local sims at international destinations.

This operator leveraged on its multi-national presence and introduced multiple plans with base prices of less than 10 dollars a day, which provided unlimited data usage. The plans instantly became a hit with the consumers, and the utilization of home sim-cards at international destinations grew exponentially. However, we must not forget that to have pulled off such a successful offer it did take months of planning on restructuring the costs to maintain an optimal state of profitability without compromising on the Quality of Services.

If one were to decode the CSP’s margin assurance strategy from a cost perspective, to ensure continued sustenance of the offer made, the telecom service provider must have restructured and optimized the costs under the following cost heads:
- 1. Incremental Cost Optimization:
  This cost head includes all the fixed and the variable costs that go into the conception of a product. While not much could have been done to the fixed costs, the operator played around with the variable costs such as labor charges or the costs associated with transmission. Introduction of shared & centralized services for revenue management of international roaming for various subsidiaries can really play an effective role in optimizing the workforce-related costs which majorly contribute to the cost addition of services.
- 2. Joint and Common Costs (JCC) Optimization:
  These costs have a compliance aspect associated with them and occur when the costed item is produced efficiently only in combination with other items. The sum of each item’s allocated JCCs cannot exceed the total of all items’ JCCs. To optimize on this aspect, on some home-like roam packs, the CSP, with consent from the end consumer, by default, deactivated some Value-added services and third-party costs like CRBTs, VOD, access to premium content and other high bandwidth services. Re-activation of these services at international locations were made on advance payment of add-on fees over and above the base pack activations.
- 3. Fully Distributed Cost & Historically Embedded Cost Optimization:
  Services like Last mile connectivity, equitable service distribution through efficient route optimization, cost of laying of infrastructure are some of the contributors to the FDC component while all hardware maintenance and replacement costs contribute to the HEC component.
The operator took advantage of its presence at international destinations to restructure the revenue sharing model by enabling international customers to latch onto the subsidiary’s network to enjoy the full band of services available at home. For areas where the operator did not have its subsidiaries, it tied up with local internet service providers that provided public & private Wi-Fi hotspots for seamless data connectivity through Wi-Fi offloading or revenue sharing with preferred local and regional CSPs through its well-placed steering strategies.

For optimization of Historically embedded costs (HEC), the CSP planned for traffic load balancing through intelligent route optimization while simultaneously looking for technology alternatives where the cost of replacement was nominal when compared with the benefits provided. The operator indulged in asset sharing for signaling optimization. As per sources, the service provider of late has been seen entering into an agreement with vendors who could deploy SDNs and support NFVs for load balancing over the cloud infrastructure to reduce the impact of additional long-distance traffic over underlying network and systems.

While cost-optimization is one of the many techniques to maintain a healthy bottom line for sustainability, it indeed is of paramount importance. As Clive Humby rightly puts it – “data is the new oil,” we will continue to observe many such systemic changes in Telecom players regarding the perception of margins soon. For more insights on what Margin Assurance holds for telecom providers of the future, do check out our Point of View on Margin assurance.
August 14, 2018
Network Capacity Planning – it’s time to stop getting bamboozled!

Network capacity planning is not a piece of cake! It’s a complicated effort that demands several considerations – not just the capacity of the network, but also the type and volume of the traffic at different periods. Network planners should also be able to estimate the current and future capacity needs and make investments wisely.

Capacity planning involves identifying the areas of network congestion and underutilization and distributing the traffic evenly across the available networks. Considering the sheer number of users across the network, it would require considerable effort from the operators to achieve the results. This is important because the ROI from your network investments depends on how efficiently you utilize the resources. Not just that, it also depends on how accurately you estimate future capacity needs.

Well, abnormal traffic scenarios crop up out of nowhere. A catastrophe, a sensational video or a political upheaval can be the cause of a sudden increase in network traffic. In such cases, all your network planning strategies can go haywire. As you know, it is utterly impossible to predict such situations, but unfortunately, the likelihood of such instances is also very high. The only way out for Telcos is to prepare the networks to confront such challenges before they impact the customer experience.

On the contrary, there are scenarios when the networks remain underutilized for several hours a day or night. This pattern is often cyclic and driven by user habits. For example, network utilization is minimal during nights for almost all customers. For business users, the usage is less during weekends. For network planners, these idle hours translate into a significant business loss. Though they are aware of these facts, many Telcos are still not able to drive strategies to optimize the network during the idle hours.

Let’s now think about the investment. One of the major concerns for an operator is to identify and prioritize the investment areas. Well, you must have identified hundreds of coverage holes where investments are urgently required; however, you may not be able to throw money in all of them at one go, right? How do you prioritize them and pick the best area suitable for your budget? How do you ensure that these investments will yield immediate returns?

It’s a well-known fact that capacity constraints severely impact the customer experience. Today’s on-the-go customers do not compromise quality. Any network issues can result in customer frustration. Hence, identifying the potential areas of capacity constraints becomes a priority in network planning.

Come to the case of VIP customers. They are the elite group not just due to their social status but also because of their relevance in your business. With several thousands of followers, they make an impact with everything they speak or do. If the poor network affects their day’s activities, it will turn out to be a disastrous deal for you. Think how they will directly or indirectly boost your customer base if things happen as per their wish.

Next, is your capacity planning strategy designed in line with your marketing goals? Why should it be so? Well, the first and foremost goal in any marketing strategy is to identify the potential customers. Before launching a promotion, you should first determine who are the best targets for the products. This requires a proactive marketing approach, which means that you should have the products designed with these customers in mind. For example, before launching a 4G offer, you should understand the availability/affordability of 4G phones among your target group. How will you achieve this?

Gaining insights into network traffic, customer usage habits, marketing metrics, and market pulses require a dedicated network planning.

Stay tuned to know how Subex’s approach to capacity planning helps Telcos address these challenges.

August 13, 2018
Boost your Campaign ROI through Promotion Assurance
“Why do you love your service provider?”

At the end of the day, this is the billion-dollar question which drives the entire telecom industry. When one ponders the answers, quite a few would emerge – flawless connectivity which helps my business flourish, a well-priced model which keeps families closer than ever, providing a backbone that keeps a country productive, etc. But in most surveys (and in my personal experience), it is the attempt at focused engagement that keeps most of us linked to the same Telco. Giving me freebies on my birthday, suggesting I change my plan to one which suits my business travel (even though the rental might be lesser) or even the act of proactively passing me some benefit during a network downtime adds that human element which tends to create brand loyalty.

From the above, it is clear that successful promotional campaigns can do wonders in terms of customer retention as well as acquisition. With the plethora of analytics tools powering the marketing departments across most Telcos, differentiated, qualified, and value-driven campaigns are a reality. Of course, some have gone farther than others in this regard. But the question which I will explore in this blog is whether this practice creates risks and brings in more issues than it solves.

Now, I look at Promotions and Campaigns from a more general perspective. It’s like eating at Dominos. While Dominos makes some decent pizzas and has a large customer base, it faces the same issue as all other eateries – consumer fatigue. This is not just caused by the limited choices (assuming a market where you could only eat Dominos pizzas), but also the sheer banality of the process. In this environment, if one offers a package deal (drink + pizza + lava cake) at 50% of its list price pursuant to a customer also purchasing a premium feast pizza, the break from the monotony of the pizza ordering process itself drives a sense of “anticipatory need.” Now, this is the easiest level. Going beyond, if Dominos were to use analytics to understand and anticipate my ordering behaviour and suggests a ready cart with one click check-out, I would be delighted. Too much to ask? Well, the reality is, this is what subscribers expect from their service providers today.

The Inside-Out of Promotions

With promotions emerging as a major business strategy in today’s competitive telecom environment, targeted campaigns can help Telcos increase revenue, margin, customer retention, customer satisfaction, and overall brand stickiness. However, the differentiation comes with its own challenges, and so does the ROI. The returns from the campaign greatly depend on how the Telco addresses each one of the challenges. Globally Telcos have allocated a significant portion (around 8%) of their budget for promotions and advertisements, but the results, in terms of campaign ROI, are not as expected. The ineffectiveness of campaigns could occur due to several reasons including lack of planning, improper budget allocation, incorrect metric measurement, wrong promotion qualifiers, incorrect target list, and many more.

Let’s examine some of the challenges associated with driving successful campaigns and see how Telcos can mitigate them to gain maximum return from their campaign investments. I will broadly classify them as:
1. Data Access and Integrity – Each stage in the promotion launch process is critically dependent on the accuracy of the facts from the previous stage. It is of paramount importance to ensure that the raw datasets are accurate, complete, and integral. Unfortunately, most marketing teams do not have access to a comprehensive data integrity engine.
2. Promotion Complexity – Promotions can widely vary in nature (i.e. the device, vouchers, services, etc.), and most operators do not have a ready-to-use promotion risk matrix or checklist. This leaves assurance teams at a disadvantage to deal with the volume and velocity of new promotions.
3. Time to Market – Competitor pressure in most regions leads to a very short release/launch time for new promotions. In the absence of automation, this means pre-launch testing is usually sample based, and the test results are contaminated by confirmation bias.
4. Lack of Automation – Many of the checks required to ensure high ROI on promotions require a high level of automation as manual interventions usually introduce errors.
5. Regulatory Hurdles: Regulators may apply a cap on certain promotional offers announced by Telcos. For example, In India, there is a 90-day cap on such offers, so the Telcos find it difficult to optimize the market spend and achieve the target within the short span of time.
So, why invest in a Promotion Assurance program?

Having the right product does not always guarantee revenue. Telcos may be losing out to competition due to lack of visibility into how efficiently promotions are rolled out. Promotion assurance programs, which build around modern analytics and intelligent automation techniques, emerge as a winning solution in this context because it helps the Telcos define the campaign KPIs and measure ROI from each on a near real-time basis, so they can take corrective measures appropriately.

Challenges inherent in the current approaches and the evolving marketing conditions pose higher risks to campaign ROIs, and more importantly, might impact the customer experience. It is the need of the hour for Telcos to implement a promotion assurance strategy that focuses on the business, system, process and customer aspects of the campaign.
July 23, 2018
Direct Carrier Billing : A Massive Revenue Opportunity for Telcos
In the last few years, OTT players taking away a sizable chunk of the telco revenues. To deal with this, it’s time the operators harness the potential of new streams of revenue. Direct Carrier billing is one such avenue.

Direct Carrier Billing is a telco driven payment model, for the digital services. Direct Carrier Billing (DCB) opens the possibility of generating a new revenue stream for operators, by leveraging on the existing telco network and the billing relationship with the customers. Direct Carrier Billing, enables telcos to allow its wireless subscribers (both prepaid and postpaid) to purchase goods and services using their handsets. The cost of purchased good and services are added to their monthly phone bill or deducted from the prepaid balance, thereby providing a seamless & secure payment mechanism. This medium enables a very simplified online payment experience with just a click to complete a transaction.

Why is Direct Carrier Billing beneficial for the Telcos?

Juniper Research found that operator revenues derived from carrier billed purchases will rise from USD $2.9 billion in 2017 to USD $9 billion in 2022, an average annual growth of 25%. With growing purchases via DCB, operators enabling their customers to buy all kinds of goods and services using their mobile services subscription will add a new revenue stream for the operators.
- The operators can take a % of the revenue from the transactions, and their customers don’t have to look for a financial relationship with another company.
- It is a win-win situation for both the operator and the merchant since it also helps the merchant extend their reach by using the operators existing customer base.
- The higher conversion rate in DCB transactions will lead to an increase in ARPU for operators.
- The payment method is extremely simple and secure leading to better user experience and reduction in customer churn.
Leading Technology firms like Google, Apple and Amazon are also investing in building DCB relationships with operators and vendors (like Fortumo, Bango, Boku etc.). They strongly believe that DCB will allow the unbanked to better engage and participate in the digital economy. The increasing desire to enable payment across Smart TVs, Xbox and IoT devices emerging in the market, widens the opportunity for Direct Carrier Payment.

With most of the transactions completed via DCB, the problem is that maintaining Direct Carrier Billing functionality sometimes fails due to settlement involved between the multiple parties and the frauds in the DCB chain. Subex Direct Carrier Billing Assurance program protects the entire DCB chain providing end to end Risk and Fraud Management.

Stay tuned to know more about Subex Direct Carrier Billing Assurance.
July 18, 2018
Digital Transformation: The Art of War!

Straight from the Board Room

15^th Jan, 16:00 Hours: The Board Room at the Telco HQ

The silence is deafening, and the breathing heavy. Everyone is waiting with heavy anticipation. The top comes off the Mont Blanc, and the only sound is of the pen on the paper. The VP-Sales surreptitiously pulls out his iPhone, and drafts a text “Deal Done! Congrats…”. The finger is playing near the send button, with every passing second feeling like an eon.

The last dot underneath the signature is placed, and without missing a beat, the send button is pressed. The room is filled with a sense of relief, and the muted claps soon turn into backslaps and congratulations…The multi-million $ deal for Digital Transformation is now underway….

15^th Jan, 22:05 Hours: The Conference Room at the Vendor HQ

1000s of miles away, the CEO phone beeps discretely. All the weary eyes turn towards the CEO. A faint smile emerges. With the “Yes” and the fist-pump, the room erupts. Years of arduous work has come to fruition. The clinking of the glasses, and the pops of champagne bottles could not drown the enthusiasm, and the spirit of the crowd.

The Chief Marketing Manager sneaks out, to work the PR lines. Minutes left before the item makes into tomorrows’ news.

16^th Jan, 06:00 Hours: Leading Media Publications

“Vendor X inks a multi-million $ Digital Transformation deal with Telco Y”

Telco Y, one of the leading telecommunications services providers, has signed a multi-million $ partnership with Vendor-Y, for Digital Transformation. Digital Transformation is a strategic initiative of the Telco Y and is aimed at offering an extensive portfolio of services to its customers, enhance customer experience & engagement, and quality of services delivery.

01st Jul, 10:00 Hours: The Board Room at the Telco HQ

The silence is deafening, and the breathing heavy. Everyone is waiting with heavy anticipation. The Head of Billing is pouring through the recent twitter reactions to the Digital Transformation.

The VP-Sales surreptitiously pulls out his iPhone, and sends a text “Bad, looks very bad…”. 1000s of miles away, the exasperation sets in …

Let’s look at one of the major transformation challenges faced by telcos

Digital transformation has become the norm now, and it is nothing short of a war – the war to win over customers, to stay profitable, and survive amongst the fiercest competition. However, studies indicate that most of the migration attempts have resulted in an increase in revenue leakages and has negatively impacted the brand and customer experience.

The unfortunate reality is that a majority of telcos are currently seeing issues in their transformation process leading to negative impact aspects around revenue and non-revenue. Reasons for this vulnerability are quite straightforward – the controls that existed with a set process get disrupted, and start to diminish once the transformation begins, thus leaving the operators in a bit of a handicap.

As per the recent reports, a leading telecom operator was fined for serious breaches of consumer rule due to inconsistencies in the new billing system and incurred a financial loss of close 4.6 Million Euros. There are also reports of operators losing up to 50 million due to migration failures.

“Victorious warriors win first and then go to war, while defeated warriors go to war first and then seek to win”.

– Sun Tzu, the famous Chinese general, military strategist, philosopher, and the writer

Which side are you on? The Victorious warrior or the Defeated warrior? Download the datasheet to find ways of becoming proactive in your transformation, and being a victorious warrior.

July 11, 2018
Dealing with Bypass Fraud : Think beyond the boundaries

Amid the fierce competition facing the telecom industry, sometimes we listen to stories how lack of forethought of one Telco brings on illegal traffic on the network, leading to aggressive open wars and blame games among the operators affected by the fraud. The Telecom Regulatory Authority could intervene in such scenarios and encourage a competitor to block suspicious outgoing traffic if it finds out that not enough care is being taken to avert the fraud.

Interconnect Bypass fraud is one such telecom scam costing the industry several billion dollars every year. It brings collateral damage to the networks involved, and the impact will be huge. The Telco could be imposed hefty penalty for its failure to detect and resolve the issue on time. Further, it could bring serious business implications for all participating telcos. In the process of rampant blocking of suspicious traffic, sometimes traffic of genuine customers could get blocked, leading to customer dissonance and dissatisfaction along with loss of other business opportunities.

Here’s an example of a West African Telco who suffered massively due to Bypass fraud.

Why did this happen?

The West African telecom operator had been massively impacted by off-net Bypass fraud where the network of the operator was being misused to land fraudulent calls on the competitor’s network. Over time, the problem became so grave that the Regulatory Authority of the country had to step in and take charge of things. This eventually ended with the competitors blocking both fraudulent and genuine traffic from the Telco affected by the interconnection fraud.

Investigations conducted confirmed that the huge differences between the International termination rates and local termination rates made the environment suitable for fraudsters to run their schemes. There aren’t enough KYC controls in the country to facilitate certain onboarding checks which distinguish a genuine customer from a fraudulent one.

Impact on business

There were multiple warnings and memos issued to the operator from the Regulator, indicating that the operator would have to face penalties if amendments are not made in time.

Customers flooded the operator with complaints saying that their off-net calls were being barred without prior notice and for no fault of theirs and threatened that they would eventually churn out of the network if their services weren’t restored.

The atmosphere grew so tense that instead of cooperating, the operators became more aggressive and indulged in a rat-race in trying to prove a point to the Regulator as to how better and efficient they were from the rivals in terms of detecting Bypass fraud cases.

The solution

With the understanding that Bypass scams are rampant, Telcos need to direct their efforts towards building knowledge-sharing forums where they can share insights on fraudster behavior and geographical locations from where most of the fraudulent calls are generated and what kind of products tend to get misused by these fraudsters to nip things in the bud.

Telcos should understand that indulging in rat race or blaming each other will not help solve issues arising from such frauds; rather they should adopt a proactive approach to identify and prevent such scenarios in future. Instead of the Regulatory authority dictating terms to the operators, the operators must drive the authority to create nationalized framework for user identity governance.

June 20, 2018
Why Artificial Intelligence Powered Fraud Management
Artificial Intelligence (AI) is not new and it has been around for decades. However, with the advent of big data and distributed computing that is available today, it is possible to realize the true potential of AI. From what started as an interesting story line in SCI-FI movies to programs like Alpha-Go which has been beating humans, AI has been evolving. AI also has branched out into multiple sub categories such as Machine Learning, Deep Learning, Re-enforcement learning etc.

An effective Fraud Management (FM) strategy includes 3 important pillars: Detect, Investigate & Protect. We believe AI can positively influence all the 3 pillars of fraud management, from reducing false positives to helping in mining root cause analysis to creating enhanced customer experience in protection.

In this post I would like to look at the starting pillar of the Fraud Management strategy – “Detection” and look at AI’s influence in this very important step. A traditional approach to Fraud detection has been through Rule Engines which could be:
- If-Else Conditions
- Thresholds
- Expressions
- Evaluating Data Patterns
These are widely known as deterministic solutions where an event triggers an action. The biggest pros and cons with this approach is that human intervention is needed to feed the logic.

For eg: for a threshold based detection humans have to feed the rule engine that count of records above a certain threshold is suspicious.

Following diagrams shows how this looks like

After looking at the diagram above an important question arises, should this threshold value be a straight line or can it bend based on how data behaves. Now there are ways for rule engine to behave like mentioned in the diagram,
for eg, instead of having a single rule lets have multiple rules
- Per Customer Category
- Per Destination
- Per Age of Customers
And multiply that with other dimensions in data which are
- Phone Number
- Caller Number
- Called Number
- Country Code
And multiple that with other set of measures per dimensions
- Count
- Duration
- Value
And throw an additional billion volumes at the datasets
Quickly FM teams ends up with something like this

But what they wanted or dreamt was this

Now I am not saying FM teams are not skilled enough to fly, but a fraud team in a modern Digital Service provider should be more focused on other important factors.

So, let’s look at how a very evolved class of Artificial Intelligence known as Machine Learning looks at this problem statement. Rather than humans feeding domain information or thresholds, Machine Learning Algorithms mine data from historic fraudulent behaviors and create models. These models are then used to evaluate real production datasets to score whether they certain activity is fraud or not. An advantage is that these models are very good at looking the datasets from multiple dimensions and measures at the same time and concluding whether event is fraud or not.
This approach thereby helps in achieving multiple KPI’s of fraud management teams there by increasing efficiency.
- Higher Accuracy – Because AI can learn and adapt to Business scenarios faster, AI can significantly increase True Positive ratio
- Reduced time to detect – How fast a fraud event can be detected
- Self-Learning – How over a period changing business scenarios and seasonality in data can be adopted to Fraud detection
- Fraud Intelligence– How customer or any other entity behaviors can be learnt and categorized for better fraud detection
- Proactiveness – Ability to mine for unknown patterns not seen in the data earlier
Application of Artificial Intelligence has its own significant challenges and requires a new frame of thought, however looking at the Data Tsunami that has hit the fraud management teams, it looks an AI pro approach would only help Fraud Management teams to scale further.

To learn more about how AI/ML would transform the Fraud Management Systems, Join us on our two-part series of “AI Master Class for Fraud Management” to familiarize yourself with AI/ML through a live demo.

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June 12, 2018