Fraud-protection company Featurespace uses behavioral analytics to catch new fraud attacks as they happen, to better protect financial services companies and their clients.

Featurespace showed its ARIC fraud manager at FinovateEurope 2016 in London. ARIC—an acronym for Adaptive, Real-time, Individual, Change Identification—uses the real-time behavior of a bank’s customers to quickly stop fraud by detecting anomalies in user behavior.

The recently launched ARIC Sandbox lets financial institutions train and test their fraud models in an easy-to-use interface within their own production environment, thereby eliminating the need to export batch data to test updates. Featurespace’s CTO Dave Excell explains the key aspect of the Sandbox: “Most importantly, [bank clients are] able to visualize the impact of those changes on historic data before they actually go and impact live customer transactions.”

Company facts:

• Headquartered in Cambridge, United Kingdom
• Martina King is CEO
• Awarded a Top 100 company in Red Herring Europe Awards

Featurespace’s Commercial Director Matt Mills and Dave Excell, co-founder and CTO, presented at FinovateEurope 2016

We interviewed Dave Excell, Featurespace co-founder and CTO. Dave has more than eighteen years’ experience transferring technology into practical business applications. Under his leadership, Featurespace has grown from a concept to a commercial success with many blue-chip customers. David has been awarded 11 prizes and scholarships for his academic and commercial achievements, including the 2011 ITC Enterprise Award for Young Entrepreneur.

Finovate: What problem does Featurespace solve?

Excell: Featurespace’s ARIC engine provides a leading real-time, machine learning system for fraud and cyber risk for organizations in financial services (including retail banks, payments providers and card issuers), insurance and gaming. We enable our clients to monitor every individual customer in real-time. ARIC (Adaptive, Real-time, Individual, Change Identification) uses Adaptive Behavioral Analytics to detect anomalies in individual behavior to spot new fraud attacks as they occur, while also reducing the number of genuine customers blocked when attempting to catch fraud. Clients are spotting and blocking new fraud types, reducing genuine transactions declined by over 70% and improving operational efficiency by 50%.

Finovate: Who are your primary customers?

Excell: We are currently working with major U.K. Card Issuers and global high street banks to improve their fraud-detection rates while enabling them to improve revenue by accepting more good business. From our experience working with high street retail banks, we recognized that organizations in the financial services sector are turning to automated, machine learning solutions to combat problems with inflexible and inefficient fraud systems that rely on pattern-matching against known, past fraud types. The ARIC engine has been implemented as the fraud hub for Vocalink’s new mobile payment platform, Zapp, and we built Magna with KPMG to identify rogue trading. We are also firmly established in the gaming sector, working with companies including Betfair, William Hill, Camelot (that runs The National Lottery U.K.) and the Responsible Gambling Trust.

Finovate: How does Featurespace solve the problem better?

Excell: Most fraud-reduction systems work by looking for ‘bad’ behavior based on past, known fraud types. Featurespace’s ARIC engine has revolutionized this approach by understanding the normal, ‘good’ behavior of each individual customer, and detecting the importance of the subtle anomalies that indicate someone is acting out of character. This enables ARIC to spot and block new fraud types in real time. It also means ARIC understands the context of normal behavior, reducing the number of transactions that get unnecessarily blocked in an attempt to block fraud. This improves customer experience by accepting more transactions in real-time, maximizing revenue growth.

Finovate: Tell us about your favorite implementation of your solution.

Excell: We were pleased to announce a 5-year agreement with Vocalink to be the sole provider of fraud protection for Zapp, their new Pay by Bank app. Zapp wanted a fraud system which can protect their customers in real time and they chose Featurespace. We delivered the ARIC system on time and on budget. ARIC will be monitoring fraud activity across thousands of transactions per second, seven days a week. We are proud to be enabling financial institutions to deliver a great customer experience, whilst providing some of the highest levels of fraud protection in the industry.

Finovate: What in your background gave you the confidence to tackle this challenge?

Excell: ARIC was developed out of Cambridge University’s engineering department by Professor Bill Fitzgerald and me, his PhD student. Our roots started in the gaming sector, helping organizations like Betfair detect and block fraud to protect their customers. We found that the financial services industry is facing similar challenges around fraud prevention and customer management, which can be solved using the ARIC engine and Adaptive Behavioral Analytics. Our results prove the success of this approach for financial services, by reducing genuine transactions declined by over 70% and improving operational efficiency by 50%.

Finovate: What are some upcoming initiatives from Featurespace that we can look forward to over the next few months?

Excell: In response to demand from our financial services clients, we continue to add new functionality to our ARIC products, including the ARIC Fraud Hub. This includes enabling decision-making around in-session behavior and web-tagging, and ensuring these new features are easy to interpret and manage from the user interface. We have also been working alongside a leading national bank on transactional fraud and spotting fraudulent transactions before they have gone through to completion. As our ARIC Fraud Hub becomes even more advanced, our clients will get an extra barrier of security for catching fraud as it occurs.

Finovate: Where do you see Featurespace a year or two from now?

Excell: Featurespace is set for global expansion. Our aim is to continue to be adopted by the most significant global financial institutions, not only to improve their revenues, but also to help build a better experience for their customers. For our clients, this means protecting their business and their customers, so that, for their consumers, the embarrassment of getting a card rejected (at the till or online) becomes greatly reduced, while retaining consumer confidence that financial service institutions are actively working to protect their customers against fraud.