German banks establish joint venture to share fraud intelligence

Commerzbank, Deutsche Bank and the German Savings Banks Association, known as DSGV, have established a German banks financial crime joint venture to develop shared tools for exchanging fraud-related information. The founding partners say the venture will seek to help financial institutions identify attempted fraud affecting retail and corporate customers earlier, though its first application remains in development.

According to a November 11 release from Deutsche Bank, the company is intended to provide a secure, consistent and lawful route for financial-sector customers to share relevant details of suspected fraud across institutional boundaries.

The partners say fraudsters can use accounts at several banks and move funds between them quickly. A bank will generally have visibility only over the activity it handles itself, which can limit its view of a wider suspected scheme.

How will the German banks' fraud-sharing platform work?

The venture's initial product will focus on phishing, investment fraud, merchandise fraud and love scams. It is at an advanced stage of development, Deutsche Bank said, but the partners did not provide a launch date, pricing or a number of expected participants.

Under the proposed model, an institution that identifies an account being used fraudulently could make relevant information available through the platform to other participating institutions. Recipients could consider those findings in their own fraud controls and decide whether protective measures are appropriate.

The joint venture will not make those decisions for them. Each institution will remain responsible for assessing information it receives and determining its response, according to the release.

For the planned technical design, the founders intend to use cryptographic techniques including multi-party computation, or MPC. This method is designed to allow parties to compare specified information without disclosing all of the underlying data to one another. The partners identified data protection, purpose limitation, data minimisation and controlled disclosure as elements of the planned system.

Who can use the new venture's services?

Commerzbank, Deutsche Bank and DSGV say they intend to offer the venture's current and future products to other financial institutions and other entities subject to relevant obligations. The founders expect a broader group of users to enlarge the information available through the network, although that anticipated benefit remains an aim rather than a reported outcome.

The partners also plan to add further fraud-prevention functions and compliance-related applications over time. They said the service is meant to complement existing government and supervisory measures against financial crime, rather than replace them.

Retail Banker International separately reported that the three organisations had formed the venture and that its platform would allow institutions to exchange information connected with fraud cases.

This story draws on original reporting from Finextra Research.