Carding Action 2020 is an operation led by law enforcement agencies from Italy and Hungary and supported by the UK and Europol. It targets fraudsters selling and purchasing compromised card details on websites selling stolen credit card data, known as card shops, and dark web marketplaces. According to a press release issued by the Europol, during the three-month operation, 90 000 pieces of card data were analysed and prevented approximately €40M in losses.
Banking fraud is ever-prevalent and on the rise. The evolving technology is helping both the parties – the victim and the fraud – alike. According to the Global Banking Fraud Survey conducted by KPMG, “Over half of survey respondents globally experienced increases in both external fraud total value and volume. Increasing fraud typologies globally from 2015 to 2018 include identity theft and account takeover, cyber-attack, card not present fraud and authorised push payments scams.”
The report also suggests that “Fraudsters are becoming more sophisticated and can quickly change and adapt their approaches. Banks need to be agile to respond to new threats and embrace new approaches and technologies to predict and prevent fraud.”
This is exactly what Swiss fintech NetGuardians is known for. The startup is renowned for its smarter AI-based enterprise risk platform for combating banking fraud. In a recent development, the company announced that it has raised CHF 17M (nearly €15.7M) in a new round of funding.
Funds to prevent fraud
According to the company, the new capital is more than double each of the previous rounds. Lead investors include the Pictet Group, a NetGuardians client, as well as private investment group ACE & Company, headquartered in Geneva with offices in London, Cairo, Hong Kong and New York.
The startup claims that the new funds will be deployed to support meeting the rising demand for its fraud-mitigation software. “NetGuardians will do this by strengthening its position in existing markets and further developing its software-as-a-service (SaaS) subscription model,” says the company.
Raffael Maio, NetGuardians’ chief strategy officer, says: “NetGuardians is excited to announce continued investment in the company. Since our first round of funding, we have been able to grow and strengthen our fraud-mitigation platform worldwide, serving institutions in more than 30 countries. This latest round of funding will help us to reach more clients and explore new markets with our Collective AI technology provided as software-as-a-service.”
Modus Operandi
According to the company, although the pandemic-based digital transformation of the banking sector has opened up new avenues for servicing its customers, it has also helped the fraudsters to hit in new ways. The increase in people working from home hasn’t helped either. Both these developments have let to an increase in banking fraud cases. The company refers to a report that suggests that there has been a 66 per cent hike in scams in the first six months of this year, compared with the final half of 2019.
NetGuardians provide fraud-prevention technology for major banking software companies. It claims to enable fast deployment so that banks can protect themselves and their customers from scams, social-engineering fraud, account takeover fraud, cyber fraud, internal fraud, and more. It claims that its AI-based solution prevents fraudulent payments in real-time.
“NetGuardians’ managed learning technology doesn’t endlessly learn about any given type of fraud. It prevents AI from continually diving down just a few avenues. This avoids overfitting and makes it smarter and more dynamic, able to spot new types of fraud,” claims the company.
Here’s how the company claims to be different: “We don’t stop fraud by focusing on the fraudsters. We stop it by getting to know the habits and behaviours of banks’ customers and staff so we can spot out-of-character financial transactions. While fraudsters constantly change their behaviour to avoid detection, real customers form habits. By learning these habits and building up customer and staff profiles, we can accurately spot suspicious activity and stop it – before any money has left the bank.”
Headquartered in Switzerland with offices in Singapore, Kenya, and Poland, NetGuardians employs more than 90 staff. It claims that more than 60 banks, including UOB and Pictet & Cie, rely on its solution.
