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Finovate Global Germany: Investing in Embedded Finance, Open Banking in Payments, N26 in France

Finovate Global Germany: Investing in Embedded Finance, Open Banking in Payments, N26 in France
By David Penn Posted on
Categories: Alumni News, BioCatch, Daily news, Envestnet, Finovate Global, Temenos, Yodlee

This week’s edition of Finovate Global features the latest fintech news from Germany, where investors are backing innovations in embedded finance, payments companies are taking advantage of open banking, and the green shoots of crypto spring are growing ever more apparent.

Solaris secures funding

Germany’s embedded finance platform Solaris secured $103 million (€96 million) in a Series F round this week. The investment was led by SBI, one of Solaris’ earliest investors, with other existing investors also participating. Solaris will use the additional capital, which takes the firm’s total funding to more than $486 million (€450 million), to onboard its ADAC (Allgemeiner Deutscher Automobil-Club) credit card program, strengthen its core capital, and invest further in its platform.

“This is a significant milestone for Solaris on our path to sustainable, profitable growth,” Solaris CEO Carsten Höltkemeyer said. “The funding underlines the high level of confidence our investors have in the transformation of our company.”

In addition to the investment, the Series F also included a financial guarantee of up to $108 million (€100 million) capital equivalent.

A pioneer in the banking-as-a-service business for nearly a decade, Solaris has grown into a major banking and technology provider with more than 750 employees at ten locations in both Europe and India. The company’s BaaS solution enables businesses to embed digital banking services – including payments, lending, and identity verification – directly into their platform. In addition to making it easier for companies to launch customized financial products and services, Solaris has secured the requisite licensing – including an e-money license for both the UK and EEA – to help companies navigate the regulatory complexities of doing business across the region.

Headquartered in Berlin, Solaris realized net revenues of $140 million (€130 million) in 2022. Last fall, the company issued a study – Disrupting the value chain for financial services – How to drive revenue growth with embedded finance – that highlighted “easier access to services” as a major driver of demand for embedded financial solutions.

Micropayment partners with Tink for Pay by Bank

Berlin-based payment processor Micropayment has turned to open banking platform Tink to add Pay by Bank to its payments offering. Live in Germany, Austria, and Switzerland, Micropayment’s Pay by Bank enables consumers to initiate payments directly from their bank account to the seller’s account when purchasing goods and services. A growing preference for both merchants and consumers, account-to-account (A2A) payments provide a secure and streamlined experience for customers and lower costs for merchants.

“The DACH region is a key market for us, and Tink’s dedication to serving merchants across various industries has been invaluable,” Micropayment CSO Thomas Knoth said. “Their payment method offers consumers the speed, reliability, and security they expect, making it a seamless experience for both merchants and consumers.” In a statement, Micropayment noted that it plans to take further advantage of Tink’s pan-Europe connectivity in the future.

Founded in 2005, Micropayment is a full-service payment provider that provides its customers with software implementation, payment processing, detailed analysis, and more. The company offers nine different payment options designed specifically for e-commerce and paid content services. Micropayment customers can integrate the technology via ready-made payment windows and preconfigured shop logins, as well as white-label APIs and interfaces.

“Collaboration with Micropayment has got off to an excellent start and we are gaining traction in a highly competitive landscape, by offering merchants a payment method that offers everything a consumer has come to expect – familiarity, speed, reliability, and convenience,” Tink DACH Payments Director Thomas Gmelch said.

A Finovate alum since its Best of Show winning debut in 2014 at FinovateEurope, Tink returned to the Finovate stage three years later to earn its second Best of Show award. Most recently, the Sweden-based company announced a partnership with German modern mobility sharing services provider Deutsche Bahn. The company will deploy Tink’s Account Check solution to enable instant, secure account onboarding.

Berlin’s N26 launches cryptocurrency product N26 Crypto

Crypto spring is alive and well in Europe as the region’s most prominent digital bank, N26, announced that its first cryptocurrency product, N26 Crypto, will be available to its customers in France. N26 began the year with the unveiling of its new Stock and ETF trading product – and the bank’s crypto solution already has been available in seven of N26’s 24 European markets. This week’s announcement adds French traders and investors to the ranks of those N26 customers who will be able to transact in nearly 200 cryptocurrencies on the N26 app.

N26 Crypto will be available to all eligible customers in France, or at least with a French or a German IBAN. All membership tiers will be able to access the technology, including customers using free accounts. There will be no additional charge for using N26 Crypto, which the bank says will offer the broadest range of cryptocurrencies for trading and investing compared to all other European banking apps.

“Last summer, we installed our local French Iban to be able to accelerate the deployment of the global banking offer that we want to provide to our approximately 3 million customers in France,” N26 General Manager France & Benelux, Jérémie Rosselli explained. “With this, customers can go beyond managing their money simply and intuitively on their smartphone to also invest within the N26 ecosystem,” Rosselli said.

The new offering is made possible via a partnership with Bitpanda GmbH, which manages the execution of trades as well as the custody of coins. With only €1 to get started, N26 Crypto users pay 1.5% in fees on Bitcoin and 2.5% on other cryptocurrencies. Users can upgrade to N26 Metal to take advantage of reduced transaction fees, as well as other perks.

Founded in 2013 by Valentin Stalf and Maximilian Tayenthal, N26 has eight million customers and operates in 24 different markets. The bank’s crypto product announcement follows a slew of recent headlines from the German bank. These include the launch of its Instant Savings solution in 13 new markets, and the appointment of Mayur Kamat as new Chief Product Officer.

Here is our look at fintech innovation around the world.

Central and Eastern Europe

  • German challenger bank N26 launched new cryptocurrency trading product N26 Crypto.
  • Flowpay, a Czech-based fintech that provides financing for small businesses, raised $2.3 million (€2.1 million) in seed funding.
  • German embedded finance platform Solaris raised $103 million (€96 million) in a Series F round led by SBI Group.

Middle East and Northern Africa

  • Israel-based BioCatch and Google Cloud partner to bring fraud prevention solutions to expanding markets.
  • UAE-based Tungsten secured a license from the FSRA to operate at the Abu Dhabi Global Market (ADGM).
  • Bahrain’s Eazy Financial Services joined forces with Tabby to provide BNPL services via its EazyPay POS terminals network.

Central and Southern Asia

  • Business Recorder’s Syed Yousuf Raza looked at how Pakistan’s banking and fintech industry is dealing with evolving fraud threats.
  • The Indian government signed a $23 million loan agreement with the Asian Development Bank (ADB) to enhance access to fintech education, research, and innovation at the Gujarat International Finance Tec-City.
  • FinTech Alliance Nepal joined the Asia FinTech Alliance.

Latin America and the Caribbean

  • Colombian fintech Addi secured $86 million in a combination of equity and debt financing.
  • Uruguayan digital payments firm dLocal anticipates record total payment volumes in 2024.
  • Nubank Brazil CEO Livia Chanes talked with Bloomberg News about the state of fintech in Latin America.

Asia-Pacific

  • Singapore-based cross-border payments company Thunes expanded its strategic partnership with Visa.
  • Australia’s HeirWealth integrated with Envestnet | Yodlee to bring open banking data sharing to its wealth register for high net-worth families.
  • HSBC and the Hong Kong Science and Technology Parks startup hub announced the first “public-private cooperation between the city’s largest innovation and technology ecosystem and leading global bank.”

Sub-Saharan Africa

  • Ethiopia’s Cooperative Bank of Oromia partnered with Temenos to launch its CoopApp and CoopApp Aluhuda for both conventional and Islamic digital banking experiences.
  • dLocal teamed up with Ebury to bring African customers optimized payment solutions.
  • Safaricom, a telecom based in Kenya, partnered with Onafriq to offer remittance services to Ethiopia.

Photo by Kai Pilger

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BioCatch and Google Cloud Bring Fraud Prevention Solutions to Expanding Markets

BioCatch and Google Cloud Bring Fraud Prevention Solutions to Expanding Markets
By David Penn Posted on
Categories: Alumni News, BioCatch, Daily news, Google Cloud Platform
  • Digital fraud detection innovator BioCatch has forged a partnership with Google Cloud.
  • The two companies will leverage their new relationship to bring fraud prevention solutions to expanding markets, starting in Southeast Asia.
  • Israel-based BioCatch made its Finovate debut at FinovateFall in 2014.

A new partnership between financial crime prevention specialist BioCatch and Google Cloud will help extend fraud prevention solutions into emerging markets, starting with markets in Southeast Asia. The move comes in the wake of a report from the digital fraud detection innovator that noted rapidly growing incidents of financial cybercrime in the APAC region. BioCatch’s 2023 APAC Digital Banking Fraud Trends Report underscored one threat in particular: authorized push payment (APP) attacks – which the report noted accounted for 54% of all confirmed fraud cases.

APP fraud occurs when a fraudster fools a victim into transferring money to an account controlled by the fraudster. Social engineering-based fraud such as APP has grown in recent years. This is due to both the rise in popularity of peer-to-peer payment networks, as well as successful efforts to defeat previously dominant forms of fraud such as remote takeover of victim devices.

“The APAC market has seen a massive rise in advanced financial cybercrime, with criminals adopting sophisticated social engineering tactics that have proved difficult to foil in real-time with legacy security controls,” BioCatch’s head of the APAC market Richard Booth explained. “Pre-crime logistics visibility and criminal network intelligence are vital to combatting these threats.”

BioCatch helps companies deal with this shifting landscape of digital fraud threats. The company leverages behavioral biometric intelligence and machine learning to deliver real-time threat detection and prevention. Its signature solution, BioCatch Connect, offers integrated digital fraud, AML, and impersonation detection to help banks and financial services companies detect and identify both traditional and emerging fraud threats.

BioCatch Connect works on three levels. First, the solution’s fraud telemetry collection includes thousands of app, behavioral, device, network, and transactional signals from more than eight billion individual user sessions. Second, continuous behavioral sequencing applies advanced cognitive behavioral science, data modeling, and deep learning algorithms to analyze and score data from the solution’s fraud telemetry collection. Third, BioCatch Connect leverages predictive intelligence using AI models to validate user motivation and identify the risk of potentially fraudulent activity.

Headquartered in Israel, BioCatch made its Finovate debut at FinovateFall in 2014. In the years since, the company has grown into a leader in digital fraud detection and a pioneer in applying behavioral biometric intelligence, cognitive science, and machine learning to the challenge of fighting financial crime. More than 30 of the world’s biggest 100 banks and 180+ of the biggest 500 banks use BioCatch’s technology to manage fraud risks, facilitate digital transformation, and better engage their customers. Gadi Mazor is CEO.

Photo by Haley Black

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BioCatch Secures $40 Million Minority Stake Investment from Permira Growth

BioCatch Secures $40 Million Minority Stake Investment from Permira Growth
By David Penn Posted on
Categories: Alumni News, BioCatch, Daily news, Funding
  • Behavioral biometrics and fraud detection innovator BioCatch has raised $40 million in funding.
  • The investment gives Permira a “significant minority stake” in the Tel-Aviv-based company.
  • BioCatch made its Finovate debut at FinovateFall 2014.

Behavioral biometrics innovator BioCatch has raised $40 million in funding courtesy of an investment from Permira Growth Opportunities. The capital gives Permira a “significant minority stake” in the New York and Tel Aviv-based company. In fact, along with Bain Capital and Maverick Capital, this week’s capital infusion makes Permira BioCatch’s third largest shareholder.

“Permira is one of the leading global private equity firms in the world, with particularly strong experience in the technology space,” BioCatch CEO Gadi Mazor said. “We believe its deep sector expertise and company-building capabilities will help us to expand our business and strengthen our global position.”

The funding takes BioCatch’s total capital raised to more than $213 million. No new valuation information was provided. BioCatch will use the capital to help support geographical expansion, product development, and potential M&A.

BioCatch is a pioneer in behavioral biometric intelligence and advanced digital fraud detection. Its technology leverages AI and machine learning to collect thousands of data signals to analyze the cognitive intent of users. This enables BioCatch to provide highly accurate insights into the legitimacy of a user’s identity and behavior. Financial institutions using BioCatch’s technology have been able to better fight fraud, accelerate digital transformation efforts, uncover new revenue opportunities, and boost customer satisfaction.

Founded in 2011, BioCatch made its Finovate debut at FinovateFall in 2014. In the years since, the company has grown into a fraud detection leader with a global footprint of 22 countries. More than 100 international banks rely on BioCatch’s technology to fight financial crime and defend themselves against fraud. BioCatch announced early this year that 2022 had been the firm’s “most successful” – with annual recurring revenue growth of more than 40%. BioCatch also revealed that the company added more than 100 leading global banks as customers in 2022 and detected more than $1.5 billion in fraud, saving banks nearly $1 billion.

Photo by Quang Nguyen Vinh

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Cryptocurrencies, Financial Inclusion, and a Look at El Salvador’s Big Bitcoin Bet

Cryptocurrencies, Financial Inclusion, and a Look at El Salvador’s Big Bitcoin Bet
By David Penn Posted on
Categories: BioCatch, Finovate Global, MasterCard, Nordigen, Scalable Capital

One of the biggest experiments in bringing cryptocurrencies to the mainstream is taking place in the small Central American nation of El Salvador. Earlier this summer, the country’s legislative assembly authorized granting Bitcoin status as legal tender inside El Salvador beginning September 7th. One month after Bitcoin joined the U.S. dollar as the second official currency in the country, what can be said of the project so far?

This morning, Reuters took up the question of Bitcoin adoption in the country and discovered that the initiative has boosted use of the cryptocurrency, but that increase in use has come with more than a few “headaches” for many Salvadorans who have attempted to withdraw cash from Bitcoin wallets or make other transactions with the digital asset.

On the adoption front, Forbes reported late this week that the Bitcoin project has resulted in more Salvadorans having digital, Bitcoin wallets than traditional bank accounts. According to the article, approximately three million Salvadorans have downloaded Chivo, the new, government-sponsored digital wallet to facilitate Bitcoin transactions. This adds up to 46% of the country’s 6.8 million population. “By contrast,” Forbes noted, “as of 2017, only 29% of Salvadorans had bank accounts.” The Forbes account also observed that Chivo is not the only option available to those seeking to transact in the cryptocurrency; the availability of other digital wallets suggests that the estimates on early Bitcoin adoption by El Salvador’s citizens could be significantly higher.

El Salvador president and long-time Bitcoin backer Nayib Bukele boasted recently of negotiations with the country’s largest gas stations to offer reduced prices for those paying for gasoline using the Chivo app. But widespread adoption by the country’s retailers will still be one of the initiative’s biggest hurdles. Part of this issue is likely timing- a Reuters story reported that, according to the Salvadoran Foundation for Economic and Social Development, 12% of consumers have used Bitcoin in the month since the Bitcoin Law was implemented, and that 93% of the 233 companies it surveyed were reporting no payments in Bitcoin over the same time period. But another part of the issue may be easily explained by Chivo itself, which provides instant conversion from Bitcoin to dollars – meaning Salvadorans who own Bitcoin can still readily pay for transactions in dollars if they choose to.

Nevertheless, early indications are that the project may accomplish its most important role of promoting financial inclusion – especially among the country’s poorer, rural-based citizenry. While some in the business community remain skeptical – and more aggressive opponents of the measure have resorted to vandalizing and defacing Chivo ATMs – others point to the possible use of Chivo as a way for expat Salvadorans living in places like the U.S. to send money to family still in El Salvador as a use case that could help drive Bitcoin adoption in the country. Potential cost savings of using Chivo instead of traditional money transfer services – as well as the Salvadoran government’s willingness to incentivize Chivo use with Bitcoin bonuses of up to $30 – could help Bukele’s Bitcoin brainchild sustain the momentum it already has achieved in its first 30 days.

Here is our look at fintech innovation around the world.

Central and Southern Asia

Latin America and the Caribbean

Asia-Pacific

Sub-Saharan Africa

Central and Eastern Europe

Middle East and Northern Africa

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BioCatch Unveils Age Analysis Capability to Defend Seniors Against Fraud

BioCatch Unveils Age Analysis Capability to Defend Seniors Against Fraud
By David Penn Posted on
Categories: Alumni News, BioCatch, Daily news

Behavioral biometrics innovator BioCatch launched its latest fraud-fighting solution this week. Age Analysis is a new account opening protection capability especially designed to help protect older consumers from fraud and other forms of cybercrime.

“We developed Age Analysis with enhancing customer protection and user experience as our guiding principles,” BioCatch Chief Operating Officer Gadi Mazor explained. “At BioCatch, we work closely with our clients to develop the most forward-thinking behavioral solutions to solve the ever-evolving challenges in combating fraud. Age Analysis empowers financial institutions with the behavioral verification protections most needed to address the growing threat of application fraud.”

The new offering, currently deployed by a number of international organizations as well as a “major credit card issuer,” was developed after noting that 40% of confirmed fraudulent credit card applications involved an applicant above the age of 60. BioCatch also discovered that a significant number of these applications ended up in manual review, increasing both the time spent processing the application as well as diminishing the user experience for older applicants.

Age Analysis works by extracting physical, cognitive, and other behavioral characteristics as the user engages in the account opening process. The technology monitors the activity continuously, predicting what BioCatch refers to as the user’s “approximate behavioral age” and compares it to the applicant’s declared age. If there are significant differences between the two, BioCatch adjusts the user’s risk score to reflect the anomaly.

The technology is based on the finding that certain behavioral characteristics involved in data input tend to change as individuals age. These include factors such as mouse click duration, mobile device orientation preferences, and even actions as specific as the time it takes for a user to shift from the CTRL key to a letter key when inputing data. Learn more about how Age Analysis works, and how it has helped increase company’s ability to detect account opening fraud and boost ROI, in BioCatch’s case study, Top Card Issuers Partner with BioCatch to Protect Senior Citizens from Fraud and Saving Millions.

A Finovate alum since its debut at FinovateFall 2014, BioCatch was founded in 2011 by Avi Turgemen, Benny Rosenbaum, and Uri Rivner to leverage insights derived from Turgemen’s experience in military intelligence to fight online fraud and other cybercrime. Most recently, the company announced joining Alkami Technology’s Gold Partner Program to bring its behavioral biometric technology to Alkami’s bank and credit union customers. In August, BioCatch teamed up with digital financial solution provider MoData to help the company’s clients in Africa better defend themselves against online fraud.

BioCatch has raised more than $213 million in funding from investors including Barclays and HSBC. The company has offices in both New York City and Tel Aviv, Israel.

Photo by Yan Krukov from Pexels

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BioCatch and the Unfinished Business of Cybersecurity

BioCatch and the Unfinished Business of Cybersecurity
By David Penn Posted on
Categories: BioCatch, Interview

From fears of a cyberspace-based New Cold War between Russia, China, and the U.S., to emerging fraud threats to financial services companies, small businesses, consumers, and work-from-anywhere employees, the issue of cybersecurity is likely to loom large over all technology discussions in 2021.

To this end, we caught up with Uri Rivner, Chief Cyber Officer of BioCatch. Headquartered in Tel Aviv, Israel, and a Finovate alum since 2014, BioCatch offers an AI-driven behavioral biometrics-based platform that enables online identity verification and reduces fraud by providing account opening and account takeover protection, as well as defense against social engineering scams.

I would be remiss if I didn’t take this opportunity to ask a cybersecurity expert about the massive breach involving SolarWinds and, allegedly, Russian hackers. How do you think about this incident as a professional and how should we think about it as individuals, consumers, etc.? 

Uri Rivner: This is the broadest, deepest cyber espionage campaign in a decade; the last wave of this magnitude was attributed to China, which launched a massive industrial espionage campaign some 10 years ago against hundreds of major U.S. and global corporations. I was on the receiving end of that attack during my time at RSA, which was breached in March 2011, and it was a watershed event with far-reaching implications. It galvanized the U.S. intelligence community to action, brought cyber awareness in Corporate America to the Board level, and injected a real sense of urgency to the cyber security industry.

The SolarWinds campaign has a similar effect. When FireEye – the gold standard in endpoint protection and cyber intelligence against state-sponsored attacks – is itself breached, people take notice. When dozens of high-security networks deploying every imaginable combination of state-of-the-art tools and security procedures are compromised, everyone raises an eyebrow. Those who wonder whether the cyber security scene is growing into a new “bubble” received a very clear message: listen, folks, let’s get something straight – cyber security is still unfinished business.

What was the big theme in cybersecurity in 2020? Do you believe this trend will remain as strong in 2021?

Rivner: The big theme in cybercrime in 2020 was the impact of the global pandemic on fraud and identity management. Fraud teams worldwide had to operate from home, resulting in deficiencies that fraudsters were quick to exploit. Online account opening and account takeover fraud surged, and potentially billions of dollars were scammed through government stimulus package fraud. When the dust settles in 2021, we should see the financial sector adopt new, automated fraud controls to close those gaps. 

With banks accelerating their mobile-first strategy and releasing new, high-risk functionality available only for mobile platforms – e.g. P2P payments – we should expect 2021 to feature more mobile-based social engineering and malware attacks. Mobile authenticators such as fingerprint and selfie biometrics will suffer from the same fate as any other “strong authentication” technology – they’ll be circumvented using end-users as “moles” to tunnel below the security fences.

You have outlined a variety of cybersecurity trends you think we will face next year. You talk about the rise of “mule detection” as a priority for fraud detection teams. Can you elaborate on how widespread this has become and what is being done to fight it? 

Rivner: Thousands of bogus U.S. bank accounts are opened each day online for the purpose of serving as “mules”. Opening a fake bank account is easy as identity records are traded in the dark web, and it’s cheaper to create your own digital mule account than to recruit a living-and-breathing collaborator to funnel your funds. Fortunately, banks use new, next-generation technologies. Device reputation highlights compromised devices used by criminals, while behavioral biometrics can identify when a genuine user uses long-term memory to enter personal information; whereas fraudsters are not familiar with the victim’s personal data and can’t type it the same way. 

Outside the U.S., “work from home” mule recruitment is surging given the constant lockdowns and economic crisis caused by the pandemic. But consider this: say a user normally holds their device in a certain way, has a certain typing cadence and finger press size. All of a sudden you spot a different personality inside their account, with new habits and gestures, and the “guest” always checks in shortly after money is received… You just detected a mule, sharing their account with a “controller.” Often these “mule herders” control dozens, or even hundreds of mule accounts.

You’ve also noted that regulators worldwide are taking greater notice of social engineering scams. We’ve known that these are some of the most powerful ways that systems have been penetrated. What are regulators doing to help fight social engineering scams? 

Rivner: Social engineering isn’t new, but deep social engineering is a new and dangerous mutation. This is when cybercriminals convince the user to log into their bank account and simply move money to another account belonging to the fraudster. This is done so cleverly that it has become a real epidemic – first hitting U.K. banks a few years ago, and then spreading to mainland Europe and Australia. It’s likely to reach North America in 2021, and banks are far from being ready to deal with this massive problem.

Global regulators are paying close attention to what’s happening in this front. They’re likely to demand strict and immediate measures to protect the vulnerable population from such scams using a combination of traditional transaction monitoring and next-gen capabilities such as detecting signs of hesitation, duress, distraction or being guided based on subtle behaviors measured on the user’s PC or mobile device.

On the technology front, you’ve pointed to the growing attention fraudsters are giving to fintechs and the emerging industry of mobile-first banks. What are the vulnerabilities here and what can fintechs and neobanks do to fix them? 

Rivner: The mobile transformation in the financial sector is not evenly spread geographically. In Europe and Asia, mobile-only banks, payment apps and fintech are old news. In North America, the revolution is much more recent, and revolutions are always the best drivers for financial crime. Many U.S. banks offer Zelle, a peer-to-peer payment service, only through mobile apps and not yet via online banking. Additionally, the number of mobile-only financial services, loan providers and other fintechs is skyrocketing.

Crime rings that have focused their online fraud strategy solely on web applications have to adapt fast. Expect to see heavy showers of Mobile RATs and help desk scams, mobile-focused social engineering, mobile overlay malware, rogue apps, mobile emulators and other nasty fraud schemes. Fintechs and neobanks use a risk-based approach in which passive, frictionless device and behavioral biometric controls trigger active biometric controls in case of an anomaly.

You’ve said that one interesting development in fraud technology is the greater role they are playing in “trust and safety.” What do you mean by this and why is it happening now? 

Rivner: The banking industry has been using advanced device and behavior analysis to fight fraud, but those technologies are also poised to play a major role in trust and safety. The problem is not stopping cyber criminals, but rather identifying genuine end-users who misuse the system, circumvent controls, gain unfair advantage over other end-users in, say, a marketplace or a gaming site, and generally breach trust and safety controls.

The global pandemic accelerated digital transformation and exposed many of these risks. For example, remote workers who have been vetted and background checked can share their accounts with others who haven’t so they can punch in more hours, creating new security exposures for the company that employs those workers. Once something like this happens, a company can lose things that are sometimes more important than actual money: accountability, fairness, trust and reputation.

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BioCatch Secures $20 Million to Drive Innovation in Behavioral Biometrics

BioCatch Secures $20 Million to Drive Innovation in Behavioral Biometrics
By David Penn Posted on
Categories: BioCatch, Funding

A new investment of $20 million takes the total capital raised by behavioral biometrics innovator BioCatch to more than $213 million. Participating in this week’s funding were a quartet of major global banks: Barclays, Citi, HSBC, and National Australia Bank (NAB). The funds add to BioCatch’s Series C round, which brought $145 million to the company’s coffers in April.

In addition to its funding announcement, BioCatch also unveiled a new BioCatch Client Innovation Board. The Board is a collaborative, invitation-only forum where members can discuss and develop new approaches to leveraging what the company called in a statement “the unique attributes of behavior.” BioCatch’s signature innovation in behavioral biometrics is a cognitive behavioral approach that focuses on the way a user interacts with their device, as well as online and mobile applications in order to combat fraud. The company’s Invisible Challenges mechanism operates without the user even being aware of it, enabling BioCatch to provide strong authentication with minimal friction for the user.

As part of the funding, each of this week’s investing banks, as will existing BioCatch investor, American Express Ventures, will have two seats on the Innovation Board.

“We have already seen the power of collaboration in solving difficult problems in other areas of the financial services industry, such as clearing corps, transaction networks, post-trade processing, margin calculation, and collateral management, when banks work together and share knowledge, workflow, and data in the common interest,” Edelstein said. “We are extremely excited that five of the largest and most important global financial institutions are working with BioCatch to jointly address today’s most pressing problems in the areas of online fraud, account authentication and digital identity.” 

Founded in 2011 and based in both New York City and Israel, BioCatch was named to CB Insights’ Fintech 250 list of the fastest-growing fintechs earlier this month. Over the summer, the company announced that it had created anonymous behavioral profiles for more than 150 million individual online banking users, and now analyzes more than one billion digital sessions a month in real-time.

Learn more about BioCatch in our June profile, COVID-19 and the Fight Against Cyberfraud.

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COVID-19 and the Fight Against Cyberfraud

COVID-19 and the Fight Against Cyberfraud
By David Penn Posted on
Categories: BioCatch, Finovate Fintech Halftime Review

Crises, such as the current coronavirus pandemic, often bring out the best in us. But troubled times can also provide opportunities for unscrupulous and malevolent actors to take advantage of people’s anxieties and fears.

The hoarding of personal protective equipment that occurred early in the coronavirus crisis and the spread of crazy conspiracy theories about the origins of the virus have helped create a climate of fear and suspicion. This can make dealing reasonably and confidently with the crisis that much more challenging for all of us.

Unscrupulous and malevolent actors are also taking advantage of people’s financial anxieties and fears during this time. Our Fraudtech Digital Day – part of Finovate Fintech Halftime Review – will take a close look at how the cybersecurity threats before the crisis struck have intensified in many ways in the weeks and months since.

How big is the current cybersecurity problem for financial services firms and their customers? What technologies are being deployed to help financial firms and other businesses stay one step ahead of the fraudsters? How can businesses defend themselves against fraud while still providing the kind of seamless, digital experience consumers demand? These are some of the topics we’ll discuss as part of our FraudTech Digital Day.

To whet your cybersecurity whistle, we’re sharing excerpts from our conversation earlier this month with BioCatch co-founder and Chief Cyber Officer Uri Rivner. We spoke with Mr. Rivner about the new threats to cybersecurity that have arisen with the global public health crisis of COVID-19.

“Fraud isn’t going away and, in fact, we anticipate a surge in account takeover activity as criminals scale up their cash-out operations,” Rivner said. “They already have the data they need to steal more money, but they need to scale their infrastructure.”

BioCatch specializes in providing behavior-based authentication and threat detection solutions. Headquartered in New York and Israel, and founded in 2011, the company demonstrated its Passive Biometrics/Invisible Challenge technology at FinovateFall. BioCatch’s platform analyzes 2,000 behavioral parameters based on user-device interaction, and leverages this data to build real-time risk scores that provide continuous authentication and a superior defense against account fraud, social engineering scams, and more.

“We’ve taken a scientific field in cognitive studies, something that was working in the lab, and made it extremely practical for use in solving the biggest issues in online fraud,” Rivner explained. “(A)cross dozens of banks, credit card issuers and companies outside the financial sector, (we are) protecting over 100 million online and mobile users. We’ve tackled issues that were initially deemed impossible to solve.”

Here are some key takeaways from our conversation.

On the threat of increased fraud and cybercrime during the pandemic

If I had to pick one community that is definitely going to thrive during a global virus outbreak, it’s online fraudsters. They have a golden opportunity to scale their operations while entire companies move their fraud operations and analytics teams to a work from home model, which is not an easy process for, say, a major bank. 

On the danger of identity theft and why behavioral-based authentication is key to fighting it

The most scalable fraud operation is opening credit card or personal loan accounts. All you need is to buy a bigger list of stolen identity records, and have a team of people opening accounts in other people’s names. Identity theft is reported to sky-rocket, and it can be quite dangerous, especially if it’s a new digital service that is launching these days. If a new digital service is targeted by a massive campaign, there will be more fraud applications than real applications – that’s disastrous.

Traditional defenses such as checking KYC (know your customer) data and device recognition no longer hold, and new technologies such as behavioral biometrics are used to stop such fraud campaigns and reduce false rejections due to high security bars.

On the role of enabling technologies and “the right kind of AI” to help fight fraud

Machine Learning can instantly look at thousands of features, resulting in an extremely accurate model that predicts fraud and can adapt itself when cyber criminals change their strategy. At BioCatch we have over 2,000 such features.

An important consideration though is that some machine learning models are a black box and don’t really provide insights into why a certain action is risky. BioCatch, for example, uses Explainable AI models to make sure customers can get the reasons why a score was high, as well as many negative and positive behavioral factors observed during a session. 

Read the rest of our conversation with Uri Rivner. And learn more about how to join us for our Finovate Fintech Halftime Review at our digital event hub.

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BioCatch, the COVID-19 Crisis, and Winning the Race Against Cyberfraud

BioCatch, the COVID-19 Crisis, and Winning the Race Against Cyberfraud
By David Penn Posted on
Categories: Alumni profile, BioCatch
Photo by Roman Pohorecki from Pexels

We caught up with Uri Rivner, co-founder and Chief Cyber Officer of BioCatch, a leading cybersecurity firm that provides behavior-based authentication and threat detection solutions to banks, e-commerce platforms, as well as mobile and web applications.

We wanted to learn how the company, founded in 2011 and headquartered in Israel and New York, has fared in the wake of its major $145 million spring fundraising. We also wanted to hear about the new cybersecurity environment brought on by the global public health crisis and what BioCatch is doing to help institutions manage this challenge.

Finovate: You are one of the founders of BioCatch, and your current role with the company is Chief Cyber Officer? What does this role entail within the company?

Uri Rivner: I was actually head of new technologies at security giant RSA when, in 2011, a foreign state hacked into RSA. It was one of the most famous hacking incidents in history, and following that I was on the look for new technologies that can help the industry against cyber attacks and online fraud. BioCatch, then a very young company, came to us at RSA to present the tech, which sounded really sci-fi. I was impressed and introduced them to industry players who all said that if this was working as advertised, this is a game-changing technology.

At some point the founders of BioCatch asked me to join as a co-founder and help them build the business. I joined mid-2012 as VP of Cyber Strategy. My current role as Chief Cyber Officer is to identify new cybercrime business problems the technology can address, and provide internal and external thought leadership on the role of behavioral biometrics in digital transformation and fighting online fraud.

Finovate: When we last shared BioCatch news with our readers, it was in April on the heels of the company’s $145 million fundraising. How big of a moment was that for BioCatch?

Rivner: It was a major milestone. A vote of confidence that showed us how well the market appreciates what we have accomplished. We’ve taken a scientific field in cognitive studies, something that was working in the lab, and made it extremely practical for use in solving the biggest issues in online fraud across dozens of banks, credit card issuers and companies outside the financial sector, protecting over 100 million online and mobile users. We’ve tackled issues that were initially deemed impossible to solve. And we’ve done all of that with very happy customers and a highly scalable product. It was a proud moment, but at the same time also a commitment to work very hard to justify the trust of our new investors!

Finovate: What has BioCatch been up to in the weeks since then – specifically, how has the COVID-19 crisis impacted the work your company does?

Rivner: Our team has shifted to a work from home model; it was done quite efficiently, and we experienced no issues in continuing to serve customers. We run in the cloud, and there was no interruption to the service. The customers also moved to the same mode of operation.

Finovate: Let’s talk about some of the new security challenges that have developed during the pandemic. It seems like there are fraud “hotspots” everywhere: COVID aid/relief fraud, the security issues of Work From Home, and the potential for identity crime in any track and trace program. Can you talk a little about the cybersecurity landscape in the era of COVID-19?

Rivner: If I had to pick one community that is definitely going to thrive during a global virus outbreak, it’s online fraudsters. They have a golden opportunity to scale their operations while entire companies move their fraud operations and analytics teams to a work from home model, which is not an easy process for, say, a major bank. Here are some of the trends to watch for:

Stimulus Fraud 

American taxpayers get a direct deposit to their bank account using the information included in the last tax return they filed. If they haven’t filed a tax return for 2019 yet, it’s then a race with the fraudsters, who will try to beat them to it and provide a falsified tax return including a bank account that they control. This means the stimulus deposit will go to the bad guys. There are many people who do not file tax returns and go to a website where their information is validated and a check is sent to their address. That’s an easy venue for identity thieves who can obtain full identity records for all U.S. citizens in the dark web. Fraudsters are also impersonating small businesses to apply for stimulus loans using similar methods. In short, it’s a fraudster’s heaven.

Account Opening Fraud

The most scalable fraud operation is opening credit card or personal loan accounts. All you need is to buy a bigger list of stolen identity records, and have a team of people opening accounts in other people’s names. Identity theft is reported to sky-rocket, and it can be quite dangerous, especially if it’s a new digital service that is launching these days. If a new digital service is targeted by a massive campaign, there will be more fraud applications than real applications – that’s disastrous. Traditional defenses such as checking KYC (know your customer) data and device recognition no longer hold, and new technologies such as behavioral biometrics are used to stop such fraud campaigns and reduce false rejections due to high security bars.

Corona Tracker Rogue Apps

Cyber space is teeming with coronavirus scams. The most dangerous scams are the ones that manage to trick users into downloading rogue apps onto their mobile device. They’ll look like useful tools that alert you when a coronavirus carrier is in your immediate vicinity or providing CDC-approved virus contagion maps. But, in reality, they’re after your mobile banking app and mobile e-commerce purchases.

Social Engineering… From ‘Your Bank’ 

“Hey, we’re your bank, and wanted to reach out! The branch is closed, so we’re the friendly help desk. We’ve noticed some issues in your account, and would like to help you sort it out. Can you please install this utility to help us run some tests remotely?” You know the rest of this story.

Uri Rivner demonstrating BioCatch’s Passive Biometrics/Invisible Challenges technology at the company’s Finovate debut in 2014.

Finovate: Earlier this year you were part of a conference presentation that highlighted the importance of machine learning and AI in fighting fraud. What about these enabling technologies is so beneficial when it comes to cybersecurity?

Rivner: My lecture talked about how Sherlock Holmes managed in A Case of Identity to identify an imposter based on a dozen or so “features” related to the typewriter they used to type love letters. Machine Learning can instantly look at thousands of features, resulting in an extremely accurate model that predicts fraud and can adapt itself when cyber criminals change their strategy. At BioCatch we have over 2,000 such features – and not even good old Sherlock could have managed that many in his identity model!

An important consideration though is that some machine learning models are a black box and don’t really provide insights into why a certain action is risky. BioCatch, for example, uses Explainable AI models to make sure customers can get the reasons why a score was high, as well as many negative and positive behavioral factors observed during a session. 

Finovate: What can we expect from BioCatch over the balance of 2020? Has the global health crisis made it more difficult to have visibility into the second half of the year? 

Rivner: Fraud isn’t going away and, in fact, we anticipate a surge in account takeover activity as criminals scale up their cash-out operations. They already have the data they need to steal more money, but they need to scale their infrastructure. Think of mule accounts for moving money out of victim’s account. The crisis makes it easy to recruit mules in work-from-home scams, and to open bogus bank accounts to which stolen money can be moved. Right now criminals are busy doing just that, preparing for a big wave of attacks that is likely to focus on real-time payments such as the relatively new Zelle infrastructure in the U.S., or similar services elsewhere. So demand for a frictionless control that stops fraud and highlights genuine behavior is going to increase.

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Behavioral Biometrics Specialist BioCatch Scores $145 Million in New Funding

Behavioral Biometrics Specialist BioCatch Scores $145 Million in New Funding
By David Penn Posted on
Categories: BioCatch, Funding

In a round led by Bain Capital Tech Opportunities, behavioral biometric innovator BioCatch has secured a major $145 million investment. The Series C round featured participation from new and existing investors including Industry Ventures and American Express Ventures, and boosts the company’s total capital to more than $186 million.

BioCatch chairman and CEO Howard Edelstein put the company’s news and recent accomplishments in the context of the challenges brought about by the COVID-19 global pandemic. “The current environment has spawned a large increase in bad actors seeking to take advantage of distracted individuals working from home or dispersed companies whose technologists are scattered in remote locations,” Edelstein said. “In such times, technologies like behavioral biometrics become more important than ever.”

In a post published at the company blog, BioCatch Product Leader Ayelet Biger-Levin noted that since the pandemic began and more people began social distancing and working remotely, “phishing and malware have been the primary source of scams and cyberattacks.” Biger-Levin added that financial institutions are especially vulnerable to social engineering schemes in which unwitting victims are tricked into making authorized but fraudulent transactions.

BioCatch leverages more than 2,000 bio-behavioral, cognitive, and physiological parameters to create real-time risk scores that enable institutions to defend themselves against both human and non-human cyber threats. The company’s technology provides identity proofing to fight new account and account takeover fraud, as well as continuous authentication to verify identity from login to logout.

“BioCatch has quickly established itself as the pioneer in the digital identity space by developing next-generation behavioral biometrics technology that integrates fraud detection and authentication capabilities to protect end-users and their most sensitive transactions,” Bain Capital Tech Opportunities Managing Director Dewey Awad said.

BioCatch demonstrated its Passive Biometrics/Invisible Challenges feature of its platform at FinovateFall. The company has secured more than 50 patents, has 90+ million users, and has provided more than 10x ROI based on testimonials from customers such as NatWest, American Express, and Itau Unibanco.

Earlier this year, the company acquired fraud and anomaly detection specialist AimBrain. Founded in 2011, BioCatch is headquartered in Tel Aviv, Israel.

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Finovate Alumni News

By Julie Muhn (@julieschicktanz) Posted on
Categories: BioCatch, nCino, Personetics

On Finovate.com

  • Blockchain-Based Payments and Rebooting the Financial System.

Around the web

  • BioCatch beefs up insights on behavioral biometrics platform.
  • Fujitsu partners with Personetics to leverage Personetics’ cognitive AI recommendation engine for its new personalized banking cloud service.
  • AutoRABIT partners with nCino to help banks deploy software solutions on the nCino Bank Operating System faster.

This post will be updated throughout the day as news and developments emerge. You can also follow all the alumni news headlines on the Finovate Twitter account.

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Finovate Alumni News

By Julie Muhn (@julieschicktanz) Posted on
Categories: Anorak, BioCatch, Fair Isaac FICO, FICO, ITSector, Q2, Q2 Holdings, Q2ebanking, Revolut, Zopa

On the web

  • Zopa Tests Savings Product Before Full Launch.
  • Starling Bank Offers Income Protection Insurance Via Anorak Partnership.
  • Q2 Closes Acquisition of PrecisionLender.

Around the web

  • Revolut unveils metal cards in silver and space grey.
  • Chief Administrative Officer of the Royal Bank of Scotland interviews BioCatch CEO.
  • ITSector inaugurates 6th Software Development Center that will focus on the financial sector, AI, and 5G.

This post will be updated throughout the day as news and developments emerge. You can also follow all the alumni news headlines on the Finovate Twitter account.

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