Signicat: Organisations Are Still Unprepared to Fight AI-Driven Fraud

Signicat: Organisations Are Still Unprepared to Fight AI-Driven Fraud

Fraud prevention decision-makers across Europe are acutely aware of the rising threat posed by AI-driven identity and financial fraud, but many remain unprepared to address it, according to a new report from Signicat, a European digital identity and fraud prevention solution provider, as highlighted in The Fintech Times. The study, titled «The Battle against AI-driven Identity Fraud,» surveyed over a thousand fraud decision-makers from banks, insurance providers, payment providers, and fintechs across Belgium, Germany, the Netherlands, Norway, Spain, Sweden, and the UK. The findings reveal significant concern about AI’s role in facilitating fraud, with 73% of respondents agreeing that AI is a major driver of identity fraud. Signicat’s research indicates that 42.5% of detected fraud attempts involve AI, and approximately 29% of these attempts are successful. Alarmingly, one in nine respondents estimated that AI is used in up to 70% of fraud attempts within their organizations, with AI-driven attacks accounting for 38% of revenue loss due to fraud. Asger Hattel, CEO of Signicat, highlighted the severity of the issue, stating, «Fraud has always been one of our customers’ biggest concerns, and AI-driven fraud is now becoming a new threat to them. It now represents the same amount of successful attempts as general fraud, and it is more successful if we look at revenue loss. AI is only going to get more sophisticated from now on. While our research shows that fraud prevention decision-makers understand the threat, they need the expertise and resources necessary to prevent it from becoming a major threat.» Despite recognizing the threat, many organizations lack the necessary tools and strategies to effectively combat AI-driven fraud. David Birch, director of Consult Hyperion, emphasized the importance of robust identity systems, stating, «Identity is the first line of defense. Identity systems must be able to resist and adapt to ever-changing fraud tactics, to protect legitimate customers and ensure the reputation of the service.» Signicat suggests that a layered approach to fraud prevention, incorporating data enrichment, verification solutions, and ongoing identity monitoring, is essential to stay ahead of AI-driven fraud. The firm warns that account takeover attacks, often exploiting weak or reused passwords, are the most common type of fraud, while deepfakes are becoming increasingly popular for impersonating account holders. While organizations are aware of the dangers posed by AI-driven fraud, there is a pressing need for them to adopt advanced fraud prevention technologies and strategies to mitigate these risks effectively.

Bowhead Specialty and Kalepa Improve AI-Driven Underwriting

Bowhead Specialty and Kalepa Improve AI-Driven Underwriting

Bowhead Specialty, a prominent provider of casualty and professional liability insurance, has announced a strategic partnership with Kalepa to deploy its Copilot underwriting platform. This move leverages advanced AI to enhance risk selection and customer experience, as stated in Fintech Global. Following Bowhead’s successful $128 million oversubscribed IPO last week, this collaboration aims to keep the company at the forefront of technological advancements in the insurance industry. By integrating Kalepa’s innovative AI technology, Bowhead Specialty expects significant improvements in its top and bottom lines. Stephen Sills, CEO of Bowhead Specialty, expressed his enthusiasm, stating, «Our partnership with Kalepa allows us to stay on the cutting edge. Many companies make big claims in their demos and talk about the potential of AI, but no one has impressed us as much as Kalepa.» Kalepa’s Copilot platform uses AI to streamline the underwriting process, enabling underwriters to bind more policies more profitably. Jeff Saunders, Head of Casualty at Bowhead Specialty, highlighted, “Using Copilot helps us bind more policies, more profitably – it’s that simple. Our underwriters love Copilot because it helps them focus on submissions with the highest profit potential, analyse every risk to make an informed decision, and ultimately win more business.” Kalepa CEO Paul Monasterio added, “We are delighted to collaborate with Bowhead Specialty, and we are proud of the many benefits that Copilot has already provided. Commercial insurance is a trillion-dollar industry on pace to double within the decade, but it has been left behind technologically for several decades. Copilot’s groundbreaking AI is changing that by delivering tangible improvements to growth, efficiency, and profitability for insurers of all sizes.” This partnership marks a significant step forward for Bowhead Specialty in harnessing the power of AI to drive business growth and efficiency.

Retail: Adopting POS Systems, Digital Wallets, BNPL

Retail: Adopting POS Systems, Digital Wallets, BNPL

In recent years, the retail payment landscape has undergone a significant transformation, driven by the rise of digital wallets, Buy Now, Pay Later (BNPL) services, and advanced point-of-sale (POS) systems, as outlined in FinTech Magazine. Digital wallets are projected to reach over $16 trillion in transaction value globally by 2028, reshaping consumer spending habits. McKinsey & Company highlights how advanced POS systems now incorporate instant payment technologies for seamless shopping experiences. This shift is largely due to growing consumer trust in digital-first payment solutions provided by tech firms over traditional banks. The retail payments market in the Euro area showed strong trends in 2023, with non-cash transactions up by 10.1% and contactless card payments surging by 24.3%, according to the European Central Bank. Olivier Sery of Giesecke+Devrient predicts that by 2027, digital wallets will account for 28% of all non-cash transactions, driven by the rise of e-commerce and mobile wallet transactions. Sery explains: «Digital wallets are evolving beyond simple payment tools. Banks have a unique opportunity to harness their capabilities fully, transforming banking applications into comprehensive payments solutions.» He also envisions «super wallets» integrating various services, from environmental insights to social media, particularly in emerging markets. Pinar Koygun from Worldpay forecasts that by 2027, digital wallets will represent 61% of online transaction value and 46% of in-store transactions, especially in the APAC region. BNPL services are becoming increasingly popular, especially among younger consumers who prefer flexible financial solutions. According to Elena Bazhenova from Exactly, the BNPL sector is stabilizing due to regulatory frameworks and market maturation. This trend extends to B2B applications, enhancing traditional trade credit practices with digital solutions. Louis Carbonnier of Hokodo discusses the challenges and growth of BNPL: «BNPL has seen significant ups and downs. While it has become a preferred consumer payment method, major players struggle with profitability.» He anticipates regulatory changes and market consolidation, with B2B BNPL gaining traction as a secure trading mechanism. Sery also highlights the potential for traditional financial institutions to compete in the BNPL space by adapting their offerings to meet the demands of digital-first consumers. Retailers are innovating their payment systems with technologies like scan-free checkouts and mobile POS systems. Brad Hyett of Phos discusses the impact of SoftPoS, which uses NFC technology to transform any device into a payment terminal, enhancing customer experience and operational efficiency. George Sinanis of Viva.com elaborates: «Mobile POS systems represent a major shift in commerce. With Tap on Any Device technology, any mobile device can become a checkout point, eliminating long lines and enabling transactions wherever the customer prefers.» Retailers are integrating loyalty programs into payment systems, using real-time data to personalize rewards and improve customer experiences. Pinar Koygun emphasizes the importance of offering exclusive discounts and unified loyalty points, while Alan Holcroft of Cegid stresses the need for advanced POS technology to manage promotions efficiently. The digital wallet landscape is poised for significant growth and transformation, driven by technological advancements and changing consumer preferences.

Swift Is Testing AI to Fight Fraud

Swift Is Testing AI to Fight Fraud

Swift, the banking cooperative, is collaborating with global banks to pilot artificial intelligence (AI) technologies aimed at combating cross-border payment fraud, according to Finextra. In the initial pilot, Swift is enhancing its Payment Controls service, which currently helps financial institutions detect potential fraud by identifying anomalies. The enhancement involves integrating an AI model to create a more detailed and accurate picture of potential fraud based on historical patterns within the global messaging network. This model will be tested using live traffic data from member banks to assess its real-world applicability. Additionally, Swift has brought together 10 leading financial institutions, including BNY Mellon, Deutsche Bank, DNB, HSBC, Intesa Sanpaolo, and Standard Bank, to experiment with advanced AI technology. This initiative will focus on using secure data collaboration and federated learning technologies to analyze anonymized data and detect potential fraud. The goal is to leverage a more extensive dataset to gain insights and identify fraud patterns. «AI has great potential to significantly reduce fraud in the financial industry. That’s an incredibly exciting prospect, but one that will require strong collaboration. Swift has a unique ability to bring financial organisations together to harness the benefits of AI in the interests of the industry, and we’re excited by the potential of both of these pilots to help further strengthen the cross-border payments ecosystem,» said Tom Zschach, chief innovation officer at Swift.

How Should Financial Institutions Transform Their Operations Using Gen AI

How Should Financial Institutions Transform Their Operations Using Gen AI

At the MoneyLIVE Summit 2024, Red Hat’s Monica Sasso and Richard Harmon discussed how banks can leverage Gen AI for transformation and shared best practices for its implementation, as stated in FinTech Magazine. Richard Harmon, Red Hat’s VP & Global Head of Financial Services, highlighted that while Gen AI shows promise, the hype around its adoption will persist. He emphasized the need for banks to understand how to best apply Gen AI while collaborating with regulators to evolve regulations. “When it comes to Gen AI, there’s still constant innovation coming across,” Harmon stated. He noted that banks must comply with the EU-AI Act, which places AI-based creditworthiness and risk assessments in the ‘high risk’ category, requiring strict compliance. Harmon shared an example from Banco Galicia, an Argentinian bank that used predictive AI and natural language processing to streamline corporate onboarding. The bank significantly reduced processing time and provided personalized onboarding experiences for customers. Harmon suggested that Gen AI could further enhance these processes by reducing time and offering embedded financial products. Monica Sasso emphasized the importance of integrating Gen AI into cybersecurity measures. “AI is already here, we’ve been using it for years,” she said, highlighting the need for real-time operational resilience. Sasso pointed out that Red Hat is helping clients integrate AI with threat-hunting software to automate cybersecurity activities, crucial for banks facing massive hacking attempts. “It is so critical because these things keep the lights on,” she added. Sasso stressed the need for simplifying AI applications and upskilling the workforce. She underscored the importance of understanding software supply chains and ensuring malware-free code. “This comes down to having the right expertise and skills to effectively understand the new risks that are created,” she said, emphasizing Red Hat’s role in educating clients. Sasso and Harmon discussed the gradual process of overhauling banking infrastructures. Red Hat’s OpenShift hybrid cloud platform helps banks modernize software on legacy systems and migrate to cloud-native systems. Harmon noted that hybrid multi-cloud services reduce technology duplication and cognitive load on developers, allowing for enterprise-wide application deployment. The integration of AI in banking holds immense potential, but banks must navigate regulatory challenges and ensure robust systems for AI integration. As Sasso concluded, “It’s really about educating them on the things they need to know, the things they need to be aware of and have some kind of control over.”

Business-to-Business Innovation: Leverage, Artificial Intelligence, and Embedded Experiences

Business-to-Business Innovation: Leverage, Artificial Intelligence, and Embedded Experiences

The B2B landscape is being revolutionized as firms fully embrace digital innovation to compete in new markets and transform existing commercial relationships, according to PYMNTS. This shift towards digital is creating a more agile and responsive business environment, where data-driven decision-making is crucial. Additionally, organizations are adopting a collaborative, innovative, and flexible mindset to drive growth opportunities. This week, PYMNTS explored themes such as embedded innovations, operational leverage through AI, small business transformations, and the shift from manual to automated processes. Digital solutions are challenging traditional methods, from B2B payments to treasury management. VoPay introduced TXB, a digital transaction and cash management platform designed for banks and credit unions to offer «API-first transaction banking and cash management services.» Nue launched a platform that unifies configure, price, and quote (CPQ) and billing, accelerating finance operations across B2B models. API-driven innovation is transforming the B2B space by enabling seamless integration between systems, leading to automated data exchange and streamlined processes. Vendor risk mitigation and governance remain crucial, as highlighted by the collapse of banking-as-a-service provider Synapse. Relay raised $32.2 million in Series B funding to enhance its business banking platform. Leveraging AI across B2B operations is a priority for many businesses, enhancing efficiency, accuracy, and strategic decision-making. Transcend raised $40 million in Series B funding to grow its privacy and AI governance solutions. Billtrust unveiled AI tools within its accounts receivable software platform.  High interest rates, SMB growth, and alternative capital interest are influencing the B2B landscape. SMBs face challenges due to limited access to capital, leaving them vulnerable and less able to invest in necessary innovations. The «Small Business Real-Time Payments Barometer: Restaurants Edition» report found that instant payments are becoming more prevalent among restaurant SMBs. Visa and Jotform discussed best practices to protect small businesses from fraud and cyberattacks. Financial Information Technologies acquired Nexxus Group to enhance its B2B payment capabilities. Elavon partnered with Woo to facilitate online payments for European SMBs. Sunrate and Voxel collaborated on travel industry B2B solutions, while Ramp and Ascenda partnered to offer more redemption options for Ramp’s customers. Banco Inter plans to acquire the remaining 50% of merchant acquirer Granito, expanding its services to over 100,000 SMBs in Brazil.

Emerging Trends in Insurance and Financial Technology

Emerging Trends in Insurance and Financial Technology

The insurance sector is undergoing a significant transformation driven by insurtech and fintech innovations, as highlighted in FinTech Magazine. These advancements are reshaping the industry, enhancing operational efficiencies, and improving customer experiences through technologies like machine learning, AI, and embedded insurance. Predictive modeling is revolutionizing risk assessment by analyzing extensive historical data, leading to more accurate policy pricing. AI-driven tools are refining claims processes, reducing time and operational costs while enhancing fraud detection and customer personalization. Richard Hartley, CEO of Cytora, emphasizes the industry’s shift: «Insurers are actively embracing innovative technologies through strategic partnerships and investments, fundamentally enhancing their operational efficiencies and customer service capabilities.» Lavanya Kaul, Head of Insurance in EMEA, adds, “Most insurers have recognized the value of technology in transforming data usage and delivering substantial business benefits.” The incorporation of sensors, smart devices, and third-party data sources simplifies risk monitoring and prevention. Rajeev Gupta, Co-founder and CPO of Cowbell, highlights a surge in startups using generative AI to automate the entire policy lifecycle. Manoj Pant, Senior Director at Pegasystems, notes, «The insurance market is increasingly looking to onboard new insurtech capabilities that improve customer experience and engagement.» Fintech firms are vital in transforming the insurance industry through innovations such as advanced data analytics, AI-driven risk assessment, and streamlined claims processing. Tim Hood, Vice President at Hyland, explains how fintech firms drive intelligent automation technologies, enhancing operational efficiency and data management. Piers Williams, Global Insurance Manager at AutoRek, points out the dynamic competition from new market entrants like technology-enabled MGAs and MGUs. Parker Crockford, Chief Revenue Officer at Qover, foresees significant growth driven by strategic collaborations and advanced technology adoption. Nelson Castellanos, Chief Partnerships Officer at HDI Embedded, emphasizes the importance of leveraging deep analytics and customer data to deliver personalized, transparent, and responsive services. This trend includes embedded insurance and parametric models that simplify the claims process. Tim Hood advises that insurers must embrace digital transformation and foster a culture of continuous innovation to stay competitive. “To keep pace with or outpace digital-first competitors, insurers must invest in technological upgrades and foster a culture of continuous innovation.” The integration of fintech and insurtech is expected to deepen, with significant growth in sectors like B2B financial services. As insurers navigate this evolving landscape, they must continue to invest in technology and innovation, focus on customer-centric solutions, and form strategic partnerships to remain competitive.

Simplifying Cross-Border Payments: Fuse Technology’s Impact in the GCC

Simplifying Cross-Border Payments: Fuse Technology’s Impact in the GCC

Fuse Technologies, a company launched in January 2023, aims to simplify cross-border payments for global businesses, with a particular focus on the Gulf Cooperation Council (GCC) region, as stated in The Fintech Times. George Davis, co-founder and CEO of Fuse Technologies, has a rich background in machine learning and payments. He previously built and sold a machine learning company and worked on payment solutions in London. These experiences led him to co-found Fuse with James, focusing on overcoming infrastructure barriers in the Middle East. Fuse targets large international payment businesses, helping them expand into the GCC region by facilitating «last mile payouts,» or local currency payments from abroad. Davis notes that the Middle East offers immense growth potential but setting up the necessary infrastructure is often complex and time-consuming. Fuse simplifies this process by operating under their local license, allowing businesses to bypass regulatory and logistical hurdles. Unlike local providers such as Nymcard and GPS that cater to local fintechs, Fuse focuses on international enterprise businesses without a local presence. Their major client, DLocal, exemplifies the type of large companies they target. Fuse provides virtual IBANs and ensures compliance with local regulations, enabling seamless transactions. The regulatory landscape in the Middle East is particularly challenging. Unlike Europe or the UK, where regulations are well-defined, the Middle East often relies on supervisory frameworks with no objection certificates. This flexibility creates uncertainty for businesses. Davis emphasizes the importance of building strong relationships with regulators and maintaining transparency. Hiring a Chief Compliance Officer with extensive regulatory experience has been crucial for Fuse’s alignment with local requirements. Looking ahead, Fuse plans to enhance its offerings by enabling payments both into and out of the GCC region, including facilitating local payments in dollars and euros. The company is also expanding its infrastructure to support local payments in other markets, such as the US and Singapore. Compliance has been a cornerstone of Fuse’s strategy. Recognizing the region’s sensitivity to issues like money laundering and fraud, the company built its operations with a compliance-first approach, which has been positively received by regulators. Despite regulatory complexities, Fuse has found a welcoming market. By focusing on bringing new revenue to local banking partners without cannibalizing existing business, Fuse contrasts with many fintechs that compete directly with traditional banks. Targeting smaller banks for initial partnerships has benefited both Fuse and its banking partners. Fuse Technologies stands out for its strategic focus on the GCC region, addressing significant market gaps in cross-border payments. With a compliance-first approach and a clear vision for future expansion, the company is well-positioned to facilitate seamless payments into and out of one of the world’s most dynamic markets.

Thredd’s CEO Jim McCarthy on the Future of FinTech

Thredd’s CEO Jim McCarthy on the Future of FinTech

Defining “payments modernization” varies widely among experts, but for Thredd CEO Jim McCarthy, it means adaptability and flexibility, as highlighted in PYMNTS. In the “What’s Next In Payments” series, McCarthy emphasizes that staying ahead in FinTech requires nimbleness, particularly as Thredd expands into the U.S. market. “Being modern means having that flexibility and adaptability to react in near real time,” McCarthy said, underscoring the importance of compliance, risk management, and reliable payment capabilities in Thredd’s strategy. McCarthy notes that Thredd’s mission is to support clients entering new markets by focusing on the often overlooked aspects of FinTech, such as anti-money laundering (AML) and know your customer (KYC) regulations. “AML and KYC have been with us for a very long time, and you’ve got to do it,” he stated. Compliance ensures smooth operations and allows clients to concentrate on their core strengths without regulatory worries. Geographic expansion is also a priority for Thredd, with a keen focus on Latin America, Asia, and the U.S. “We see our role as an enabler to that and passporting clients across the globe into new markets as a significant differentiator for us,” McCarthy said. The company leverages its adaptable platform to facilitate international growth. Partnerships play a crucial role in FinTech, as exemplified by collaborations like Apple Pay. McCarthy highlights the importance of industry cooperation, especially in combating fraud. “Efficient sharing of information across the payments ecosystem, especially around identity and account takeovers, will require a degree of cooperation that we haven’t seen before,” he mentioned. Looking ahead, McCarthy sees opportunities in consumer credit and anticipates continuous advancements from major networks like Visa and Mastercard. “Consumer credit is an area that is ripe for disruption,” he noted, pointing to Thredd’s commitment to innovation and growth.

Revolut Expands Mobile Wallet Partnerships in Africa for Faster International Transfers

Revolut Expands Mobile Wallet Partnerships in Africa for Faster International Transfers

Revolut, the global financial app with over 40 million customers, has announced the expansion of its Mobile Wallets feature through new partnerships with Airtel, Orange Money, and MTN, as outlined in Fintech Global News. This initiative enhances the ease and speed of sending money from Europe to Africa, introducing 14 new payment corridors that cover nine African countries. These partnerships allow Revolut users in the UK and most European countries to send money to various African countries. Orange Money supports transfers to Botswana, Guinea-Bissau, Côte D’Ivoire, Madagascar, and Sierra Leone; Airtel Money facilitates transfers to Congo, Gabon, Madagascar, Malawi, and Zambia; and MTN enables transfers to Guinea-Bissau, Côte D’Ivoire, Congo, and Zambia. The Mobile Wallets feature redefines the remittance experience by offering a low-friction, intuitive process. Users can send money quickly using only recipient IDs such as their name and phone number or email address. This reduces potential risks associated with traditional payment methods, such as sending money to the wrong account or funds getting stuck in banks. Samuel Fairburn, product owner for remittances at Revolut, stated, “We’re delighted to launch Mobile Wallets so that Revolut customers can send money in a flash. Sending money home to Africa is a challenge many expats face, and it is essential to provide a service that simplifies this and facilitates affordable and convenient international money transfers.” Revolut’s expansion into the African market is timely, given the heavy reliance on Mobile Wallets for various transactions in these countries. The company plans to add more wallet routes in the coming months, further enhancing its international transfer capabilities. By leveraging strong economic ties between Europe and Africa, Revolut aims to empower individuals and families around the world to navigate the complexities of cross-border finance with ease.