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SEON and the Fight against Cyberfraud in Financial Services

SEON and the Fight against Cyberfraud in Financial Services
By David Penn Posted on
Categories: Finovate Global

How have financial services companies coped with the rising challenge of cybercrime in the Work From Anywhere era? We caught up with Tamas Kadar, co-founder and CEO of SEON, a cybersecurity startup based in Hungary, to learn how the company – featured in Forbes’ Hottest Young Startups in Europe – helps firms meet regulatory obligations and better defend themselves against fraud.

Tell us about SEON. When was the company founded and what problem was the company founded to solve?

Tamas Kadar: Founded in 2017, SEON was born out of necessity. Prior to its launch, co-founder Bence Jendruszak and I owned a budding crypto exchange, which was repeatedly hit by instances of fraud. We urgently needed a solution that would help us resolve the problem, but found that there were none on the market suitable for our business structure.

The problem was that most anti-fraud solutions in the industry had long integration times, lengthy contracts, and different packages for different sized businesses. We needed a solution that was more flexible and could be integrated and functional almost immediately. So we took matters into our own hands and developed a solution that would meet these needs. This later became SEON.

SEON’s services remove the barriers to fraud prevention that many companies face today. The solution can be integrated into business structures in minutes – a far cry from the usual weeks it takes for many mainstream solutions. It is suitable for businesses of any size, has a free trial period, and works on a rolling monthly contract, meaning that businesses can cancel and take up our services without being bound by long contracts – much like a Netflix for fraud prevention. 

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

Kadar: Having studied Deep Info Comms at the elite Corvinus University, where Bence studied General Management, we both had the knowledge needed to get SEON off the ground. It was there that I learned about the fraud tactics being used to get around the latest fraud prevention strategies. Having this insight, along with my technical know-how and Bence’s managerial skills, we had the confidence to move forwards with SEON.

It was clear that there were some pain points in the fraud prevention industry that needed addressing. We felt that we were the right people to do so.

Who are your primary customers in financial services and how do their needs differ from those of your customers in other industries?

Kadar: Neo banks, traditional banks, PSPs, buy now pay later (BNPL) and other fraud tech companies, account for about 25% SEON’s portfolio. The rest is made up of a whole range of different industries, including some of the most high-risk. Other sectors we serve include iGaming, eSports, cryptocurrencies and online trading, and travel.

The services we provide to financial institutions differ from others as they focus more on regulatory compliance, reducing cost when it comes to Know Your Customer (KYC) checks, and preventing money laundering. We also protect account openings, reduce customer acquisition costs, decrease bonus abuse, and flag fraudulent merchants using stolen credit cards.

By contrast, other industries use us to protect themselves against fraudulent activity such as account takeover, while we mitigate chargebacks for ecommerce merchants. We also prevent fraud surrounding ticketing in the airline industry.

Tell us a little bit about the technology behind your solution. What are the most effective tools for combating cybercrime?

Kadar: SEON has a number of solutions that are highly beneficial for helping businesses prevent fraud, including the SEON Sense Platform and Intelligence Tool. We draw on data from across the internet to establish customers’ digital footprints, weaning out false accounts and actively preventing fraudulent transactions from taking place. 

Driven by transactional data, the SEON Sense Platform provides a comprehensive end-to-end solution for fraud managers that can be tailored to the individual needs of a company.

Meanwhile, our Intelligence Tool increases fraud detection accuracy with just one click. Users can simply enter an email address, IP address, phone number or location into the browser extension to get background information, which then enables fraud managers to see complete user profiles and flag suspected fraudulent ones. As a result, companies can detect fake accounts with ease.

These solutions address a number of problems in the fraud prevention industry. They can be integrated via a Google Chrome link or API within minutes, and as they work in entirely in the back-end, there are no added layers of friction for consumers.

In addition, our solution acts as a marker for the move away from the industries overreliance on artificial intelligence (AI) and machine learning (ML) alone. AI and ML are often seen as a magic pill that will solve all of a business’ fraud woes and are left to resolve issues without the proper supervision. This impacts reportability because it isn’t always easy to establish the reason for certain decisions that a solution has made. Instead, our solutions are based on a supervised learning approach, giving fraud managers the information needed to make effective decisions. 

How has COVID-19 impacted your company and its customers? What are your biggest takeaways from the experience?

Kadar: The flexibility of our solution has meant that we have been able to easily adapt to changes imposed by the pandemic. One of the largest changes we’ve seen in terms of fraud is the amount that is taking place. Many businesses moved into the online space in order to survive lockdowns and social distancing measures. The problem is that online fraud grows in line with online activity, so the amount of fraud that is taking place there has rapidly grown. As a result, our main focus has been on industries that have felt these changes the most – especially high-risk industries such as iGaming and eSports.

The solutions developed by SEON have made an enormous impact on the way our customers can manage, monitor, and mitigate fraudulent activity. Key to our ability to provide such solutions has been our open lines of communication with our customers. It’s important that newly digitised businesses understand that fraud prevention is an evolving practice and their feedback is vital to its success.

For example, our customers know they are encouraged to contact us whenever something changes within their business, be that a release of a new software update or simply a realisation that their customers often use other social registries that we haven’t been monitoring. With this knowledge, we can quickly begin developing new lines of defence.

What is the most important thing about the technology scene in Hungary that many people outside of the area might be surprised to learn?

Kadar: Setting up SEON wasn’t all plain sailing. Bias can often hamper the growth of startups outside of traditional European hubs such as London and Munich, meaning it’s difficult for businesses to secure the investment needed in order to scale.

This is especially true for Central Europe. Bence and I found this out the hard way. When getting SEON off the ground, we found that many European investors were skeptical when it came to startups from Central and Eastern Europe.

Still, we see launching SEON in Hungary as not only a blessing, but an advantage when it came to creating a unique product that the fraud prevention industry was desperately in need of. Being outside a typical startup hub has resulted in the company being more creative, more agile and, contrary to many seed level businesses, more resilient.

Establishing SEON in Hungary also greatly reduced our outgoings, allowing us to use the initial investment we secured to grow. This is because the talent pool in Eastern Europe met the needs of the business. It’s naturally abundant in people with mathematics, computer science, and AI-based skills, which has provided us with the human capital necessary to develop and maintain our fraud solution, without initially having to set up offices elsewhere. 

You recently received a major investment – the biggest Series A round in Hungarian history. How important was this funding and what will it enable SEON to do?

Kadar: As part of the funding round, which was led by leading European early-stage investor Creandum, we secured €10 million (USD 12 million) in series A investment. This is a pivotal point in our company’s growth and will drive us in our mission to democratize fraud prevention by removing the barriers that many companies face.

With the investment, we plan to expand our presence in the U.S. and U.K., with the aim of having our London headquarters account for more than 30% of our revenue. We will also be shortly announcing the launch of our new U.S. office, along with our plans for the region.

In all, this investment will take our company to the next level, enabling us to not only better serve our existing customers but also provide our services to even more businesses across the globe.

Here is our look at fintech innovation around the world.

Asia-Pacific

Sub-Saharan Africa

Central and Eastern Europe

Middle East and Northern Africa

Central and Southern Asia

Latin America and the Caribbean

Photo by Andrea Piacquadio from Pexels

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