These latest recognitions highlight Feedzai’s groundbreaking contributions to artificial intelligence and machine learning for enhanced financial risk management. As an AI-first organization, our risk technology is built to be highly responsive to new fraud and scam patterns.

Feedzai Places in Top 5 in RiskTech AI 50 2024 Report

It’s an honor and a privilege to be recognized as the top AI-driven anti-fraud platform in the Chartis Research RiskTech AI 50 2024 report. This recognition highlights our commitment to helping the financial sector by providing real-time fraud detection and prevention that delivers unmatched accuracy using cutting-edge AI and machine learning technology. 

We are equally honored to rank #4 overall in AI, especially in a competitive industry. This ranking highlights Feedzai’s unique approach and contribution to fighting fraud and financial crime. 

Leading Financial Services with an AI-first Mindset

This recognition is the result of Feedzai’s AI-first origins. Since our inception, we’ve built our technology with AI at its core, not as an afterthought. From Day 1, our platform has been designed with flexible, responsible, and well-governed AI models that set us apart in fraud and financial crime prevention. 

Many mature legacy systems were initially built long before AI and machine learning became prevalent. They operate using rules-only models and require re-engineering to integrate machine learning effectively, resulting in increased complexity. 

Rules-based systems are still effective for long-standing fraud patterns such as account takeover attacks or card-not-present fraud. However, these systems often struggle to address more nuanced fraud typologies like authorized push payment fraud and scams. Legacy systems also struggle to support various use cases without compromising their original design during their AI adoption efforts.

Understanding customer behavior is increasingly important as this activity is highly complex and individualized. Rules alone struggle to address more nuanced fraud situations, such as purchase scams or elder fraud incidents. 

Several patented technologies underpin Feedzai’s technology, which is designed for a single purpose: fraud and financial crime prevention. We recognize that model-building in data science is a highly complex field. Our AutoML solution sits at the heart of our technology, enabling machine learning models to be deployed in days instead of weeks or even months.

Further Honors for Feedzai’s Game-Changing AI Technology

This recognition from Chartis Research is further evidence of our commitment to keeping commerce and financial services safe using AI and machine learning. It’s also the latest in a series of recognitions that confirm our position as a market leader in fraud prevention.

We were recently named a Leader in the 2024 IDC Worldwide Enterprise Fraud Solutions 2024 Vendor Assessment. The IDC MarketScape report noted that our solution is “designed to be omnichannel, enabling its fraud solution to monitor different customer interaction methods. Feedzai utilizes real-time customer interaction and transaction data to increase accuracy and improve the customer experience.”

Additionally, we were also recently named a Leading Contender in Datos Insights’ Behavioral Biometrics Market Analysis for our groundbreaking work in behavioral biometrics and device fingerprinting. Our biometrics solution was also recognized in the SPARK Matrix: Behavioral Biometrics, 2023 report from Quadrant Solutions. 

Read on to learn ten essential fraud prevention tips for businesses.

1. Embrace the Power of AI

Businesses need advanced fraud prevention tools to protect themselves against AI-driven threats. AI-powered fraud detection systems allow organisations to analyse massive amounts of transaction data in real time, uncovering hidden patterns and red flags that traditional methods might miss. AI-generated alerts should include clear explanations so human analysts can understand the rationale behind potential issues and make informed decisions.

2. Make Human Insights Part of the AI/ML Analysis  

AI is incredibly effective at spotting patterns and unusual activity in massive amounts of data. However, AI algorithms can be biassed and need constant monitoring and improvement. That’s why human expertise is still an essential part of AI-based decisioning. A trained human analyst should make the final call on any suspicious financial transaction. 

3. Implement Strong Model Governance Frameworks 

Strong model governance frameworks are essential for ensuring that AI and machine learning models work as expected, are fair, and don’t cause problems. These frameworks regularly check how well models perform, whether they’re accurate, and whether they’re reliable. Keeping models accurate, fair, and up-to-date to reduce AI risks must be a priority.

4. Collaborate Across the Industry

When it comes to fraud prevention, there’s strength in numbers. Businesses can connect with strong industry players by forging strong alliances and partnerships and joining industry consortiums to stay ahead of the latest fraud threats. These partnerships can grant businesses access to the latest technologies, real-time threat intelligence, and expert insights into how bad actors commit fraud.

5. Use Transactional Data to Turn the Tide Against Fraud

Criminals relentlessly attempt to exploit weak spots in data security. However, businesses can use their transaction data to detect fraud and catch fraudsters. By carefully analysing transaction data, businesses can uncover patterns that indicate suspicious activity. By detecting these patterns, companies can implement safeguards to stop attacks before they happen.

6. Implement Transparent, Intelligent Fraud Detection

Fraud detection and prevention are vital tools to stop criminal activity. But remember, not all fraud detection and prevention systems are the same. Top-performing systems do more than flag suspicious-looking transactions. They also provide clear, transparent explanations for their decisions to allow businesses to take action for themselves.

7. Vigorously Defend Data Privacy

Protecting customer data is non-negotiable. If businesses fail to uphold regulations, including GDPR and PCI DSS, they risk significant fines and damage to their reputations. However, implementing strong security measures does not necessarily require sacrificing customer privacy. 

Using device recognition or gauging the speed at which people type allows businesses to identify users without using sensitive information. Measures like these protect customer privacy, access to sensitive personal information, and a business’ financial security.

8. Prioritise the Customer Experience

Security should undoubtedly be a top priority. However, it may require compromising customer experiences. Requiring customers to undergo vigorous, complicated, and frustrating security checks will result in frustrated customers, as well as cart abandonment. Instead, businesses must strike the right balance between strong security and a seamless customer shopping experience.

9. Work with Experts

No business should be forced to tackle fraud threats in isolation. Consider seeking expert help from your payment processor. Partnerships like these can help you understand the changing nature of data privacy and implement the best security measures for your business.

10. Stay Ahead of the Game

Fraud is an ongoing battle. Criminals will always invent new tricks, so businesses must stay ahead. 

Read industry news, attend security conferences, and attend webinars to keep up with the latest fraud trends. Share what you learn with your team so everyone can spot suspicious activity. And remember to update your security plans regularly to protect against new threats.

Protect Your Transactions with Fraud Prevention

Businesses need a strong defence plan to effectively combat fraud and earn customer trust. This plan should include implementing the latest technology, partnering with experts, and constantly learning about new fraud threats. 

Remember, security is a fluid process, not a one-and-done task. By focusing on these critical strategies and creating a security-conscious workplace, you can build a powerful defence against today’s digital dangers.

Vietnamese banks are correctly using facial recognition for security, but recent events suggest they should improve their efforts. Learn why Vietnamese banks must invest in behavioral biometrics to tackle new fraud threats.

Is Facial Recognition Losing Face?

Decision 2345/2022 of the State Bank of Vietnam (SBV) mandates facial authentication for online and card payments. This technology has proven helpful in many cases, but a new wave of sophisticated fraud exposes its limitations.

Deepfakes, spoofing attacks, replay attacks, and even identity theft are becoming commonplace. The Ministry of Information and Communications in Vietnam has warned about the rise of deepfake scam calls.

This poses a significant threat to the public and is becoming more prevalent. People should be cautious and vigilant.

There have been significant cyber attacks. Chinese hackers stole facial recognition data. Trojan viruses like GoldDigger and GoldPickaxe attacked Vietnamese banking apps and users, highlighting the need for more robust security measures.

 

Details of New State Bank of Vietnam (SBV) Regulations
Decision 2345/2022	Emphasizes the need for strong security measures in banking operations, particularly focusing on fraud prevention and protecting customer data.
Circular No. 09/2020/TT-NHNN	Requires banks to implement measures for risk management in electronic banking transactions.

Behavioral Biometrics: The Missing Piece of the Puzzle

This is where behavioral biometrics enters the picture. This technology uses patterns in user behavior, such as typing speed and swipe patterns, to enhance security. Hackers find it difficult to replicate these patterns. 

Here’s how augmenting facial recognition with behavioral biometrics can transform fraud prevention for Vietnamese banks:

• Continuous Authentication. Behavioral biometrics regularly confirm the user’s identity during their session instead of just once at login, making it difficult for someone to pretend to be the user.
• Real-time Anomaly Detection. Behavioral biometrics can detect subtle deviations from a user’s usual patterns, raising red flags for potentially fraudulent activity even before completing a transaction.
• Enhanced Customer Experience. Unlike intrusive security measures, behavioral biometrics operates in the background, ensuring a seamless user experience while providing robust protection.
• Regulatory Compliance. Vietnamese banks can enhance their fraud prevention abilities by utilizing behavioral biometrics. This will help them meet SBV’s security standards and adhere to industry best practices. Banks must go beyond mere compliance with regulations.

5 Actionable Steps for Vietnamese Banks to Get Started with Behavioral Biometrics

 

1. Start with High-Risk Use Cases

Don’t try to implement behavioral biometrics everywhere at once. Begin by concentrating on high-risk areas, like new account openings and logins. These are where deepfake, spoofing, and identity theft are most likely to occur. This focused approach will give you faster results and allow you to fine-tune your models before expanding.

2. Prioritize Passive Behavioral Biometrics

Detect fraud by analyzing how users type, move the mouse, and interact with devices without disrupting customers. Banks can use facial recognition to comply with SBV rules. They may also consider using voice recognition and signature verification for added security.

Feature	Passive Behavioral Biometrics	Non-Passive (or Active) Behavioral Biometrics
Collection	Data is gathered silently and continuously in the background as the user interacts with the device or application.	The system collects data through specific actions or challenges it initiates.
User Experience	No additional actions are required from the user, making it seamless and frictionless.	Users must perform a task, which can introduce some friction.
Use Cases	Continuous authentication and risk assessment	Step-up authentication or high-risk transactions
Examples	Keystroke dynamics (typing speed, rhythm, pressure) Mouse movements (speed, acceleration, patterns) Device orientation and motion Scrolling and touchscreen interactions	Signature verification (signing on a screen) Voice recognition (speaking a phrase) Behavioral challenge questions (answering questions based on past behavior) One-time passwords generated based on behavioral patterns
Key Differences	Passive biometrics operates in the background, analyzing user behavior without explicit user engagement. This approach provides a seamless and frictionless experience.	Active biometrics requires explicit user interaction, involving a conscious action to verify user identity. This approach intentionally engages the user, necessitating a deliberate action. While introducing some friction, it is typically minimal.

3. Combine with Existing Solutions

Behavioral biometrics should complement your existing fraud prevention measures, not replace them. Integrate it with facial recognition software and other tools to create a layered defense. This approach will help you reduce false positives and improve overall detection accuracy.

4. Focus on Explainable AI

To address regulatory compliance concerns, choose a behavioral biometrics solution that offers explainable AI. The system can explain why it flagged a behavior as suspicious, making it easier to justify decisions and prevent legal problems.

5. Partner with a Proven Vendor

Collaborate with a reputable vendor with experience in behavioral biometrics. They can help you design and implement a solution to address your specific needs and help you stay compliant with local regulations.

A Call to Action for Vietnamese Banks

Vietnam’s financial services landscape is rapidly evolving. To stay ahead and protect both customers and reputation, embrace a multi-layered security approach. Augmenting facial recognition with behavioral biometrics is not just a technological upgrade; it’s a strategic imperative.

By adopting this powerful combination, Vietnamese banks can build a more resilient defense against the ever-evolving threat of fraud, ensuring a safer and more secure financial ecosystem for everyone. 

The future of banking security is taking shape – embrace the evolution and stay ahead of the curve. It’s not a time to stay still.

Feedzai recently hosted a private movie screening for banking and fraud prevention community members in New York. After the movie, I chatted with attendees and got their reactions and impressions. 

Clearly, “Thelma” struck a nerve with many people. Attendees shared their real-life tales of elder fraud experiences, how the ordeal impacted them, and the lengths they go to daily to protect their elderly loved ones.  

We’ll share some of these stories, but first, here’s a rundown of what the “Thelma” movie gets right about elder fraud. 

Many Elder Fraud Scams Start by Phone

The scam scene in “Thelma’ begins with a phone call. Thelma receives a call from an unknown number, with what sounds like her grandson Daniel on the other end, in great distress, telling her that he was in a car accident and passing the phone to a lawyer who needs $10,000 to keep him from going to jail.

The scene is an excellent depiction of how a grandparent scam works. Scammers prey on their victim’s fear and concern for their grandchild and send them into a state of panic. This fear is a powerful motivator and a key reason these scams are effective. 

The true life story of Thelma happened before the age of generative AI and deepfakes. Today, these scams are extremely convincing, as the voice on the other end sounds precisely like their grandchild.

Cash is Still a Common Payment Method for Elder Scams

Following the scammers’ instructions, Thelma collects stacks of cash hidden around her home and puts it in the mail. 

Ask a fraud fighter, and you will hear stories of an elderly customer coming into a branch with an empty shoebox that they fill with cash withdrawn from their accounts. For every story of a bank teller who skillfully and successfully convinces the elderly customer to stop, think, and call a loved one, many more follow through and lose their money. 

Emotional Aftermath of Elder Scams

Realizing she has been tricked, Thelma goes through a range of emotions and reactions, which aligns with what many elder fraud victims experience. She feels shame, guilt, anger, dread, and a loss of confidence over getting tricked.  

A Feedzai survey of elder fraud victims found most (81%) grappled with rage following their scam. Over a third (36%) said they felt shame. A quarter (24%) hid and never revealed their experience to friends or family. 

Family Concerns Following Elder Fraud

The film skillfully demonstrates why many elderly fraud victims don’t want to tell their families they were scammed. Following the incident, Thelma overhears her family, including her daughter Gail (Parker Posey), son-in-law Alan (Clark Gregg), and Danny (Fred Hechinger), discussing whether she’s capable of caring for herself anymore.  

An elder scam can trigger these challenging conversations among families about what’s best for the elderly relative. For some, it’s a point to consider moving their loved one to assisted living or getting power of attorney over their finances.

Real-life Stories of Elder Fraud

After the credits rolled, it became clear that “Thelma” had struck a chord with many attendees over their personal elder fraud experiences. 

One attendee shared how they happened upon their loved one’s scam. After their grandparent fell ill, they began going through their financial records and learned that their loved one had been making regular payments as part of a romance scam. They were shocked at the discovery and at the complete lack of recourse for recovering any of the funds.

Another guest discussed how their parents fell victim to a scam and lost a significant sum. The most challenging part was when it became clear that their bank or the police could not help.

Stories like these are difficult enough, but another attendee revealed that their older loved one had fallen for scams on three separate occasions. This person is likely on a “sucker list” in which scammers continue to target them because they believe they can be tricked again and again.

How the ‘Thelma’ Movie Can Shift the Elder Fraud Conversation

“Thelma” is not the first Hollywood feature film depicting an elder scam, but the first to truly humanize and focus on the aftermath and impact on our elders and their loved ones. I hope this film further opens and expands an essential dialogue in our society about scams on the elderly and vulnerable. 

It’s an opportunity for all of us to step up and advocate for protecting our most vulnerable citizens. The problem is universal and will require participation from banks, law enforcement, lawmakers, and many sectors of society. 

Here are some critical lessons we suggest to keep our senior citizens safe.

Add Conversation with Family Members into Payment Approval

One idea being implemented to protect older customers is to prompt them to discuss high-value transactions with a family member first. Call center staff and tellers can communicate this directly, or automated messages can be sent during an interaction on the web or in-app. Customers can pause before they release their funds. Measures like this are an opportunity for banks to add additional security layer to protect their older customers. 

Talk to Your Loved Ones About Elder Fraud

We must protect our loved ones as financial services, fraud professionals, and everyday people. Have these conversations before a crisis impacts your loved ones.

Hollywood’s value in making movies like “Thelma” is that they encourage essential discussions. Consider taking your grandma to see the film. Talk to your loved ones about how scams operate and what they should do if a scammer contacts them.

Educate Customers About Elder Fraud Threats

Banks can continue to invest in customer education about the scope of the threat, how to spot it, and how to report it. Educate your entire customer base about the threat—most of them have elderly family members—to get everyone involved in the effort and on the lookout for red flags.

Hollywood rarely creates a movie that is both heartwarming and topical. But the “Thelma” movie has done more than delight audiences. It has put elder fraud at the center of public discussion. Let’s take advantage of this opportunity to further the conversation, and keep our loved ones safe.

What is the Buy2Build Strategy? 

The advantages and disadvantages of building your own machine learning platform or buying one from a vendor are well-documented. But what if instead of wavering back and forth over the pros and cons of each option, there was a way to harness the best of both worlds? 

That’s where Buy2Build comes into play. Buy2Build is a strategic hybrid approach to data science that blends the efficiency of purchasing a pre-built and configured machine learning platform while still gaining the flexibility of customizing it to meet your financial institution’s unique priorities and growth strategy. 

This approach allows financial institutions to purchase an off-the-shelf solution and tailor it to their organization’s specific needs. Organizations can enjoy their independence and control without worrying about having the proper infrastructure, technical resources, team members with the required expertise (from software developers to coders and more), or the ability to quickly add new controls.

Buy vs. Build: The Final Debate?

Let’s first examine (hopefully for the last time) the familiar argument about buying versus building your own platform.

Buying: A Quick Win with Strings Attached

There are several benefits of buying your own platform. For example, you can purchase vendor software and quickly deploy it. Regular updates and maintenance often come with and are handled by the vendor. However, buying a solution might limit customization options. In other words, you wind up with less control over the platform’s future development.

Some organizations may have legitimate reasons for wanting to build or buy their machine learning platform in-house. However, these approaches come with serious risks instead of following the familiar path of analysis paralysis. Instead, consider working with a risk analytics partner. A strong partner can teach you how to build, manage, and maintain your own data science platform.

Build: Total Control, High Risks

Meanwhile, building a machine learning platform ensures complete independence and control over the solution. You can tailor this custom solution to your organization’s unique needs, enabling seamless integration with existing systems. 

However, this strategy involves developing a platform from scratch. This process is time-consuming, expensive, and requires specialized expertise. Additionally, ongoing maintenance and updates become your responsibility. You’ll also have to ensure that the platform can respond to new fraud threats, not just the ones considered when the platform was built.

Feedzai: A Buy2Build Champion

By offering a hybrid model that blends a pre-built AI platform with customizable elements, Feedzai empowers financial institutions to accelerate their fraud prevention initiatives without sacrificing control.

Here’s how we deliver a Buy2Build strategy:

Accelerated Implementation

Feedzai’s platform is designed for rapid deployment, often measured in weeks rather than months. This significantly reduces time-to-market compared to building a solution from scratch.

Flexible Deployment

Feedzai prioritizes cloud infrastructure for scalability and efficiency. This approach provides a balance between on-premises control and cloud-based agility.

Data Segregation 

Feedzai ensures robust data privacy by maintaining strict data segregation and protecting sensitive customer information.

Customizable Configuration 

Buy2Build platforms are built with configuration and maintenance in mind, allowing clients to tailor the solution to their specific needs and even manage certain aspects independently.

AI-First Focus

As an AI-centric company, Feedzai embeds advanced machine learning capabilities into its platform, enabling clients to benefit from cutting-edge fraud detection techniques without the complexities of AI development.

Built-In Responsible AI 

Feedzai takes the lead on ensuring model fairness and ethical AI practices, freeing clients from the burden of implementing these critical components themselves.

Shared Insight

By analyzing aggregated data trends and insights, Feedzai provides valuable information to clients, helping them stay ahead of evolving fraud tactics.

Avoid Vendor Lock-In

Feedzai’s partnership-oriented approach and focus on client autonomy prevent vendor lock-in, allowing for flexibility and future adaptability.

Critical Advantages of Feedzai’s Buy2Build Approach

Feedzai’s Buy2Build approach empowers financial institutions to optimize their fraud prevention strategies, gain a competitive advantage, and effectively protect their customers. By taking the Buy2Build approach, banks can achieve: 

• Faster Time-to-Market: Rapid deployment and configuration accelerate fraud prevention initiatives.
• Reduced Costs: Leveraging a pre-built platform can lower overall development and maintenance expenses.
• Enhanced Agility: The ability to customize and adapt the platform allows for quick responses to emerging threats.
• Focus on Core Competencies: Clients can concentrate on their core business while Feedzai handles the complexities of AI and infrastructure.
• Mitigated Risk: Benefit from a proven platform with a strong track record in fraud prevention.
• Access to Shared Intelligence: Gain valuable insights from industry trends and peer experiences.

Why Choose Feedzai as Your Buy2Build Partner?

Feedzai is uniquely positioned to help you execute a successful Buy2Build strategy for fraud and financial crime prevention. Our platform is designed with the customer in mind, prioritizing ease of use and customization. The intuitive Data Science Studio, powered by OpenML, streamlines data analysis and model development, allowing your team to focus on high-value activities.

By partnering with Feedzai, you gain access to a dedicated team of fraud prevention experts. We understand the intricacies of the financial industry and can provide tailored support when needed. This frees up your internal resources to tackle other critical business initiatives.

We may never be able to agree on the pros of buying versus leasing or whether the dress was blue and black or white and gold (black and blue, of course)! But it’s high time to retire the buy or build debate. With Buy2Build, there’s no longer any need for banks to compromise on control or flexibility. The Buy2Build approach is designed to deliver the best of both worlds: a robust, pre-built platform combined with the ability to adapt and innovate as your needs evolve.

Feedzai’s James Hunt recently joined Tom Pilling, Chief Risk Officer of Trust Payments. The pair discussed how businesses and merchants can deliver an online payment experience that achieves the delicate balance of security and a seamless user authentication experience. 

Read an excerpt from the conversation below. Find the full Q&A here.

Tom Pilling (TP), Trust Payments: Is it possible to have both robust security and a user-friendly experience in online payment checkouts?

 

James Hunt (JH), Feedzai: Security shouldn’t equate to unnecessary hurdles during checkout. Instead, it’s about applying the right controls at the right time based on the transaction’s risk level.

Extra security checks might be unnecessary if you buy a new Fortnite avatar skin on your usual device from a familiar location. But when buying a TV from a new website and a different shipping address, an additional level of security measure like two-factor authentication (2FA) is appropriate.

TP: It’s impossible to achieve 100% harmony. However, there are certainly ways and means to ensure merchants reach a “more than happy” medium using consumer data. The key to merchant success is understanding its transactional data by working alongside your Acquirer or Payment Processor. Good acquirers will have a solid solution in place to understand their transaction data better. 

Sometimes it’s challenging to see the “wood for the trees.” Taking a step back, looking at your transaction data, and spending time to understand where there could be false positives is a really worthwhile exercise to fully optimise payments.

TP: Is Two-Factor Authentication (2FA) cumbersome?

JH: Different types of user authentication methods fall into the 2FA bracket, either Active or Passive.  For example, asking the user to input a username and password or code would be an example of active user authentication.  

An example of passive user authentication could be something as simple as recognising that the device, either a laptop or phone, is the same device the consumer always uses. Active user authentication is the one that gets bad press for being cumbersome. If I forget the password I’ve set up on 3D Secure with my bank, or for some reason, I don’t receive a text message containing the code I need to input to complete my transaction.

Also, consider if 2FA is necessary. In Europe, where Strong Customer Authentication (SCA) is mandatory, merchants or their acquirers can actively request several exemptions.

While a consumer’s bank might reject a request to remove 2FA, it’s helpful to understand Transaction Risk Analysis (TRA) exemptions. These exemptions eliminate the need for 2FA on low-risk transactions, streamlining the process for such purchases.

TP: The original 3DS allowed cardholders to add merchants to a “positive list” to make the process smoother for certain “approved” merchants. But this element of “self-certification” seems to have disappeared. For instance, if you buy from a trusted store, you might be able to set it up so you don’t need to use 2FA for future purchases.

Users should be more free to decide what transactions require more security and which don’t. I believe there needs to be a better balance between the two. Currently, it’s 2FA or forget the transaction. Ultimately, this is not good for anyone in the payments ecosystem.

The Right Mix of Enhanced Security and Strong User Authentication

JH: According to the latest UK Finance Fraud Report, Remote Purchase Fraud (Card Not Present / CNP Fraud) has continued to fall since the rollout of Strong Customer Authentication in the UK, with losses at their lowest level since 2014.  

Unfortunately, fraud isn’t going away. Remote Purchase Fraud still represents a significant value of fraud within the UK ecosystem, at £360M. The numbers also show that fraud is migrating to other channels, such as Card ID Theft, which has increased 53% in the last year.

While 2FA can be a useful tool to prevent fraud, it’s one of many components that should be combined to create an effective fraud strategy that balances risk mitigation and a positive customer experience.

Increased security doesn’t have to mean a bad consumer experience. Instead, it’s about using the right verification methods at the right time, appropriate to the risk involved.

2FA doesn’t have to be cumbersome, but its implementation often depends on it. Again, it is critical to use the right methods at the right time, appropriate to the risk involved.

Whilst 2FA can be effective, it doesn’t spell the end of fraud. Consider the rise of APP fraud (specifically, scams) after SCA debuted.

In summary, 2FA can effectively stop fraud. However, it should be one out of many layers of security to help maximise the consumer experience.

In this article, we’ll outline how banks in the Philippines can keep their customers and the financial services sector secure and trustworthy.

The State of Fraud and Scams in the Philippines

A heartbreaking story sheds important light on the scope and severity of scams in the Philippines. It also reveals an uncomfortable truth: some scammers are victims themselves.

Authorities in the Philippines recently rescued hundreds of people from working in a scam center. Victims were forced into romance scams, gaining their targets’ trust over time for a more significant financial payout—a practice known as “pig butchering.”  

This arrest brings to light the severity and complexity that the scam threat in the Philippines takes on human beings. Criminals prey on real people both as targets and as unwilling accomplices in their schemes.

But the harrowing tales from this rescue are not the whole picture. The following data provides further insights into how prevalent scams have become.

• The number of fraud attempts in the Philippines surged by a staggering 4,500% from 2022 to 2023. This rate surpasses countries like Vietnam, Japan, and even the United States.
• The Philippine National Police Anti-Cybercrime Group (PNP-ACG) reported a 12.2% increase in cyber identity theft cases in 2023, with 2,999 incidents, up from 1,402 cases in 2022.
• In the first eight months of 2023, more than 8,000 Filipinos fell victim to various scams, resulting in a collective loss of P155 million.

Securing the Financial Landscape: BSP’s Anti-Fraud Initiatives

In response to these trends, Bangko Sentral ng Pilipinas (BSP) is taking a proactive stance against the escalating threat of fraud, implementing a multi-pronged approach that includes:

• Enhancing fraud risk management frameworks
• Educating customers on fraud prevention and awareness
• Encouraging industry-wide cooperation to prevent fraud

The BSP is ramping up its fight against fraud to protect the financial system’s integrity and maintain public trust. In 2022, the BSP advised the public to utilize multiple security features for online transactions, including multi-factor authentication (MFA), one-time PINs (OTPs), biometric authentications, and mobile banking PINs (MPIN), to bolster cybersecurity.

Looking ahead to 2024, the Philippines is poised to intensify its crackdown on phishing scams with the impending passage of the Anti-Financial Account Scamming Act (AFASA). This landmark legislation grants the BSP enhanced law enforcement powers, significantly boosting the country’s anti-cybercrime efforts. AFASA introduces robust safeguards to combat financial cybercrimes, including money mule schemes, social engineering tactics, and economic sabotage.

Notably, the law holds financial institutions accountable for ensuring the security of their clients’ accounts, mandating the implementation of effective risk management systems. By adopting a forward-thinking approach, the BSP is ensuring the financial system’s integrity and protecting the public from the ever-evolving threat of fraud. In the words of Senator Mark Villar, “Through the AFASA, we are looking forward to the future of a scam-free Philippines.”

The Philippines’ Top 3 Cybersecurity Threats

According to Senator Villar, citing data from the BSP, the top three cyber incidents in 2022 were:

1. Phishing and its variants (6,595 incidents), amounting to PHP 623 million in losses
2. Card not present or fraud (5,211 incidents), resulting in a total loss of PHP 467 million
3. Account takeover or identity theft (3,104 incidents) totaling PHP 409 million in damages

These figures emphasize the importance of enhanced cybersecurity measures to protect individuals and financial service providers from the escalating threat of cybercrime.

How Philippines Banks Can Stay Ahead of Scammers

As scams increasingly threaten consumers and banks, financial institutions need new approaches to secure the banking experience. It’s crucial to deliver a seamless and secure banking experience that doesn’t block legitimate people from opening accounts and delays legitimate customers’ transactions.

Here are two ways banks can avoid scammers, protect their reputations, and secure  their customers’ assets. 

Securing Online Account Creation

The online account creation process is a high-stakes balancing act – one that requires welcoming new customers while keeping fraudsters at bay. Invest in solutions that strike this delicate balance by harnessing the power of device and network intelligence, non-human pattern detection, and behavioral biometrics to prevent fake accounts and financial losses. 

The best part of this strategy? Legitimate customers get a seamless experience while bad actors get left at the door. 

Real-time Risk Scoring

In the digital banking space, it’s not always easy to trust the users behind each transaction. Banks need to achieve peace of mind during online sessions to ensure customers are both who they claim to be and behaving normally. Authenticating customers at each touchpoint ensures they are who they claim to be.

Banks need real-time risk-scoring solutions to analyze device intelligence, behavioral biometrics, and malware threats to prevent fraud and build customer trust – all without introducing any friction. 

The result? A secure and seamless banking experience that puts customers first. 

Uniting Against Fraud: A Collective Effort to Secure Digital Banking

Building a secure digital banking ecosystem requires collective expertise. By combining cutting-edge fraud prevention solutions with technology and specialized expertise, Philippines banks can effectively shield themselves and their customers from digital fraud threats.

Here’s what the IDC MarketScape had to say about Feedzai. 

An Omnichannel Approach to Fraud Prevention

The IDC MarketScape report notes that our solution “designed to be omnichannel, enabling its fraud solution to monitor different customer interaction methods. Feedzai utilizes real-time customer interaction and transaction data to increase accuracy and improve the customer experience.” 

Learning from Behavioral Digital Patterns

The report also notes, “The risk scoring process used by Feedzai is based on behavioral and transactional patterns that continuously learn and evolve over time, which is beneficial given the nature of fraud typologies to change rather quickly. Users of the Feedzai fraud solution can also adjust parameters and thresholds to better align with the business risk appetite of their financial institution.” 

Flexible Rules for Different Channels and Regions

More than a one-size-fits-all approach is needed. Financial institutions need a fraud prevention solution tailored to their local geography, the most common fraud types they encounter, and the banking channels they utilize. The IDC MarketScape report noted, “The Feedzai fraud solution can also adjust fraud countermeasures with rules and machine learning models that can leverage data across all channels and geographies, enabling either a globally consistent approach or a regionally tailored approach to fraud prevention.” 

Innovative Pricing

The IDC MarketScape report stated, “Feedzai received the best rating from customers regarding total cost of ownership, possibly due to the contract option that structures part of Feedzai’s compensation to be based on a proportion of the reduction in fraud losses by using Feedzai’s fraud solution. This innovative approach to pricing its fraud solution may attract additional customers and provide a competitive edge.” 

About the IDC MarketScape Report 

The market for fraud risk management solutions has expanded in recent years, incorporating new payment methods and types that require new fraud detection and prevention solutions. The IDC MarketScape report noted, “The marketplace for fraud risk management solutions has been growing in recent years, as the payments types and payment methods have expanded due to growing numbers of online retailers and financial technology companies that are involved in the payments process.” 

“Feedzai’s solution offers an omnichannel approach to fraud prevention, a notable market differentatior. Utilizing real-time customer interaction and transaction data enables financial institutions to improve both accuracy and the customer experience,” said Thomas Shuster, Research Director, Capital Markets at IDC Financial Insights at IDC.

“Their dynamic risk-scoring process continuously evolves, adapting to new fraud tactics and allowing institutions to adjust parameters to match their unique risk appetite. IDC’s recognition underscores Feedzai’s commitment to keeping transactions safe and secure using its tailored approach to fraud prevention.”

This rise in fraud risk management solutions is necessary as bad actors increase and innovate their efforts. The US Federal Trade Commission recently reported that consumers lost over $10 billion USD to fraud and scams last year, with losses from investment scams greater than any other fraud or scam category.

Feedzai’s Commitment to Safer Commerce

We believe this latest recognition further solidifies Feedzai’s position as a fraud prevention leader. We were recently named a Leading Contender in Datos Insights’ Behavioral Biometrics Market Analysis for our groundbreaking work in behavioral biometrics and device fingerprinting. Our biometrics solution was also recognized in the SPARK Matrix: Behavioral Biometrics, 2023 report from Quadrant Solutions. Meanwhile, the analytics firm Chartis named Feedzai Best Enterprise Fraud Solution in RiskTech100. 

We believe our most recent recognition from the IDC MarketScape reaffirms our commitment to making payments and commerce safer, more secure, and more convenient for everyone. We remain laser-focused on helping fraud analysts stay a step ahead of fraudsters by putting AI and machine learning at the forefront of fraud prevention efforts. We are committed to helping financial institutions protect their brands, bottom lines, and customers from fraud by rapidly detecting and responding to suspicious activities.

In this article, we’ll explore why behavioral biometrics is increasingly vital to keeping real-time payments secure. 

3 Key Real-Time Payment Challenges

Despite the conveniences of real-time payments, some core challenges remain. These include: 

1. Fraud and Security Concerns

The speed of real-time payments benefits fraudsters as much as legitimate customers. Bad actors can exploit the speed of transactions, resulting in financial losses for both consumers and their financial institutions. Traditional security protocols are not enough to protect customers in such a fast-paced environment.

How Current Solutions Address Fraud and Security Challenges

• Multi-Factor Authentication (MFA). Multi-factor authentication adds an additional layer of security by requiring a second form of verification to enhance protection. This may include passwords, PINs, and one-time passcodes (OTPs). It can also include biometric data like facial recognition or fingerprint scans.
• Device Fingerprinting. This technique profiles a user’s device based on characteristics such as operating system, IP address, and browser type. The system flags any major deviations from this profile as potentially suspicious.
• Transaction Monitoring and Risk Scoring. Advanced analytics, which combines machine learning and rules-based systems to review large volumes of data and make future predictions.  detects fraud by reviewing transaction activity for unusual patterns. This may include activities like strange transaction amounts, purchases at unusual locations, or engagement with risky merchants.

2. Technological Infrastructure

Real-time payment systems are at various stages of development around the world. Many countries still depend on rules-based systems that can’t meet the demands of real-time payments. Building the necessary infrastructure for these services often requires major investments from governments, which can be a complex and challenging process.

How Current Solutions Address Technology Infrastructure Challenges

• Cloud-Based Solutions. Some existing market solutions leverage cloud computing that provides scalable and flexible real-time payment services without heavy investments in physical infrastructure. This is particularly useful in areas with older systems.
• Open APIs. Standardized APIs allow financial institutions and payment networks to easily connect with real-time payment systems, promoting wider adoption despite varying infrastructures.
• Incremental Upgrades. Some regions choose to enhance their current systems gradually. This means implementing real-time payment capabilities step-by-step to avoid the disruption of a complete system overhaul.

3. Friction in User Experience

Many existing real-time payment systems require multiple verification steps, especially for larger transactions. This can make the process cumbersome and frustrating compared to traditional payment methods. It also undermines the convenience of real-time payments that customers expect.

How Current Solutions Address User Friction Challenges

• One-Click Payments. Securely storing user credentials and payment information allows for single-click transactions with trusted merchants, simplifying the process for frequent purchases.
• Tokenization. By replacing sensitive payment details (like credit card numbers) with unique tokens, users can avoid entering this information repeatedly, making the payment process much faster.

How Feedzai Secures Real-Time Payments with Behavioral Biometrics

The rapid pace of fraud in the real-time payments ecosystem puts both financial institutions and consumers at risk. Fraud losses threaten both the customer’s experience and the financial institution’s bottom line. 

Financial institutions must build fraud prevention into their real-time payment capabilities. Feedzai’s Digital Trust solution addresses these pain points by focusing on three key areas: collect, reveal, and respond.

Banks protect customers with ongoing data collection, assessing customer risk, and acting promptly. This helps safeguard customers without causing inconvenience. Behavioral biometrics is crucial for collecting and studying data on how a user normally behaves. This includes their typing speed, mouse movements, and interactions with their device.

Here’s how Feedzai’s Digital Trust solution uses behavioral biometrics to keep real-time payment transactions secure.

Build a Unique Customer Profile

Behavioral Biometrics strengthens security by quickly analyzing how users normally interact with digital platforms, creating a baseline profile of their typical behavior, known as a BionicID. Banks can spot suspicious activities early before processing any real-time payments with this unique profile. The best part? It works silently in the background, providing seamless protection and maintaining customer privacy.

Standardize Authentication for Real-Time Payments

Traditional authentication methods often rely on specific platforms and multiple API calls, making them cumbersome. Behavioral biometrics, meanwhile, streamlines the real-time payment authentication process. By identifying fraud early and enhancing the customer experience, it encourages wider adoption of real-time payments, even in regions with different payment systems.

Reduce Customer Friction with Passive Authentication

Financial institutions can minimize risk and improve the customer experience by continuously analyzing user behavior to spot anomalies, without gathering personal information. This approach reduces the need for MFA, which delays transactions and frustrates customers.

Why Choose Feedzai?

Real-time payments are becoming the norm, but they bring significant security challenges. Traditional fraud detection methods can’t keep up with sophisticated cyber threats. Feedzai’s Digital Trust solution uses behavioral biometrics and advanced analytics to secure real-time payments effectively.

By choosing Feedzai, financial institutions can leverage behavioral biometrics to gain several key benefits:

Comprehensive Customer Verification

We examine customer BionicIDs at every interaction. BionicIDs consist of online biometric actions, behavior patterns, device data, account behavior, geolocation, and more. This holistic approach identifies abnormal activities and ensures that it authenticates each customer interaction, reducing fraud risk.

Hybrid AI Updates

Customer BionicIDs are continuously analyzed and updated with Hybrid AI technology. This dynamic process ensures that security measures evolve with emerging threats, protecting customers at every session and interaction.

Silent Customer Experience

Our solution silently authenticates users at every touchpoint, eliminating the need for constant verification checks. This ensures a seamless experience for customers while the financial institution can block fraudulent transactions and scam attempts.

Active Defense 

Our solution prevents ID-stealing malware and phishing attacks that trick users into revealing their credentials. It also protects against Remote Access Trojan (RAT) session hijacking malware through step-up authentication or automatic session logoff actions.

Real-time Implementation

All customer BionicID interaction data is pre-integrated into Feedzai’s Transaction Monitoring for banks. You can also integrate the data into other transaction monitoring systems or SIEM systems to improve transaction monitoring decisioning. The solution is easy to install and immediately ready to use, helping banks improve their security quickly and effectively.

Flexible Deployment Models

The solution is available pre-integrated with Feedzai for Transaction Fraud for Banking, as a standalone option, or in conjunction with other Transaction Monitoring solutions, SIEMs, or other fraud management systems via APIs. This flexibility allows financial institutions to tailor their security solutions to their specific needs and existing systems.

Financial institutions must stay ahead of fraud threats to ensure real-time payments remain safe. Behavioral biometrics combined with advanced AI provides a robust, adaptive, and user-friendly solution. 

Like their same-day deliveries and entertainment options, consumers expect their payment transactions to be convenient, seamless, and secure. Partner with Feedzai to put behavioral biometrics at the forefront of your real-time payments security efforts.