By Joel R. McConvey

Large financial institutions are coming to terms with the new world of tech-driven fraud and adopting digital identity tools as an increasingly necessary defense – but also for customer service, accessibility, and other use cases. Mastercard has launched a new suite of AI-driven tools to protect customers against scams. LexisNexis Risk Solutions is reporting a correlation between spiking fraud rates and customer trust. And Feedzai is seeing significant growth in its behavioral biometrics business.

Mastercard AI security suite aims to foster trust in the digital world

Mastercard’s offering, Scam Protect, combines its digital identity, biometric, AI and open banking capabilities to safeguard consumers from a wide spectrum of scams, from card-based and account-to-account payments to fraudulent account openings using fake or stolen identities. A press release from the credit giant says the system provides comprehensive protection by performing identity verification throughout the lifecycle of an account, and benefits from partnerships with organizations across the ecosystem of financial services, telecommunications, consumer advocacy and more.

“Scammers are exploiting new technologies, making their deception and impersonation scams increasingly difficult for consumers to recognize,” says Chris Reid, Mastercard’s EVP of identity solutions. “Building on our innovations in AI and key partnerships, we are supporting financial institutions with insights to better detect and prevent scams, while helping consumers learn how to spot them. This holistic approach means more people will be protected, fostering trust in our digital world.”

Verizon is among Mastercard’s larger partners in implementing new protections against multichannel attack vectors. The two companies will collaborate to leverage Mastercard’s AI-based identity tools with Verizon’s network technologies, to get ahead of scammers and fraudsters. Kyle Malady, CEO of Verizon Business, says that while the security landscape and scamming tactics are constantly evolving, one constant has been social engineering – using texts and phone calls to coerce people. “By combining our expertise, we’re building solutions to identify and thwart scammers before they initiate contact.”

The first banks to use Mastercard’s AI-powered consumer fraud risk tools are in the UK, and include NatWest. Another early partner is Entersekt, a South Africa-based financial authentication company that will deploy Mastercard’s behavioral biometrics to enable financial institutions to step up security for high-risk and high-value transactions.

Mastercard has also joined the Global Anti-Scam Alliance (GASA), to share knowledge and define joint advocacy for safe and secure consumer protection.

LexisNexis fraud report underscores threat of losses beyond revenue

The latest Financial Services and Lending Report from LexisNexis Risk Solutions detailing the cost of fraud shows that its impact is not just financial, but also affects businesses ability to win customer trust. The True Cost of Fraud Study – U.S. and Canada Edition is based on a commissioned study conducted by Forrester Consulting.

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A press release summarizing the report says it shows scams accounting for 65 percent of fraud losses for North American organizations, with digital channels accounting for half of overall fraud losses, and synthetic identity fraud as now the most common type of fraud in the financial sector. Perhaps most damaging, however, is how fraud erodes trust: nearly 80 percent of respondents acknowledged a negative impact of fraud on customer trust.

“New forms of fraud elevate the risk of loss for both financial institutions and their customers,” says Kimberly Sutherland, vice president of fraud and identity strategy at LexisNexis Risk Solutions. “Our study shows that organizations are facing challenges in combating fraud from international transactions and scams, despite efforts to educate consumers. Across industries, geographies and customer journey stages, firms have implemented more advanced identity authentication and transaction verification solutions, especially behavioral intelligence, device identification, physical biometrics and browser tracking solutions.”

For close observers of the biometrics and digital identity industry’s crusade to eliminate fraud, it is an increasingly familiar refrain: new technologies bring new business opportunities, but those same technologies bring threats that necessitate more investment in protections, as well as more formal guidelines and standards. LexisNexis’ report highlights a need for best practices to ensure the correct balance of risk, cost, customer experience and fraud management.

Feedzai’s behavioral biometrics operation expanding quickly

An announcement from Feedzai, an AI data science and risk management firm that makes AML and fraud prevention software to fight financial crime, highlights a major expansion in its behavioral biometrics business among positive results posted for its 2024 fiscal year. A press release says the biometrics unit has grown 88 percent year-over-year, spurring revenue growth acceleration and positive free cash flow margins – a sign of growing interest in behavioral biometrics as a potential safeguard against fraud.

The year saw Feedzai form a strategic partnership with a major global systems integrator, and sign a multi-year, multi-million ARR (annual recurring revenue) transaction to migrate a US government agency’s fraud detection system to the cloud. On the distribution side, it built a reseller relationship with a major player in the risk, compliance and identity space – an unnamed multibillion dollar media and data company with large international sales channels to promote and sell Feedzai’s behavioral biometrics tools to new markets.

The year also saw product and technology improvements to Feedzai’s RiskOps vision product. Notably, it introduced Railgun, a patented AI engine to enable enhanced fraud detection accuracy and improved decisions with low latency and scalability. The Railgun patent is one of six granted to the company, which also submitted eight new patent applications in fiscal 2024.

Feedzai now supports over 1 billion people in preventing financial crime, at a value of more than US$6 trillion in transactions each year.

“The past year was a successful one for us as we’ve significantly expanded both our operations and product offering, while delivering strong positive cash flow,” says Nuno Sebastiao, CEO of Feedzai. “The need for our RiskOps solutions continues to grow as criminals become more sophisticated, leveraging new technologies like generative AI, and as fraud levels continue to rise globally. As a result, we’re laser-focused on helping our customers succeed by providing the world’s best RiskOps technology and expertise, so they can deliver innovative banking solutions secure from financial crime.”

Source: Biometric Update

Joel McConvey is a creative content producer and digital specialist who helps people and organizations tell their story across platforms, and meet the challenges of a digital culture that changes quickly and often. Reach him on Twitter @jrmcconvey.

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