Financial scams are rising, with losses amounting to $8.8 billion in 2022 alone. According to the United States Federal Trade Commission, losses from
Financial scams are rising, with losses amounting to $8.8 billion in 2022 alone. According to the United States Federal Trade Commission, losses from financial fraud have increased by 30% from 2021 to 2023. This paints a dire portrait of the dark underbelly of digital advancement, with scammers now leveraging generative artificial intelligence (AI) to craft increasingly complex and realistic scams.
Multiple reports suggest scammers can create chatbots that mimic human conversation, ask for personal financial details, create malware, write sophisticated phishing emails and even mimic human voices. The immediacy of instant payments via digital banking also presents an opportunity for fraudsters to deceive users into transferring money instantly, leaving defrauded users with little to no hope of getting their money back.
Risk management platforms like Feedzai are part of the ongoing fight against financial crime. Powered by machine learning and big data, platforms like these boast advanced technology and high-level security to combat sophisticated financial scams.
What is Feedzai, and how does it work?
Feedzai is a risk operations (RiskOps) platform that leverages machine learning technology and AI to provide retailers, banks and payment providers with fraud prevention solutions. The platform has a global reach and aims to protect people from the risks associated with e-commerce and banking.
Initially founded in Portugal in 2011, Feedzai is now based in California and offers services in 190 countries. Considered a market leader in its field, the company was originally developed by its founders, Nuno Sebastião, Paulo Marques and Pedro Bizarro, to offer operational intelligence and fraud detection solutions.
Today, Feedzai has evolved into a suite of AI-based solutions specifically targeted at detecting fraud and preventing financial crime. Feedzai’s main clients are established banks and financial institutions like Citibank, Standard Chartered and Lloyds Banking Group.
Feedzai, a RiskOps platform that uses machine learning
Feedzai is based on the concept of RiskOps, a practice that operationalizes risk through fair and customer-centric approaches. RiskOps also empowers financial institutions to detect suspicious behaviors, identify scammers and combat fraud.
RiskOps helps financial institutions manage identity, data and foster collaboration across various systems more efficiently — allowing institutions to provide their customers with superior and reliable services.
Technically, what RiskOps platforms like Feedzai do is provide financial institutions with a framework for more effective financial risk management. Standardizing the risk management and fraud prevention approach makes it easier to assess abstract and difficult-to-define concepts like risk. As such, these institutions can confidently measure and analyze risk and make smarter decisions based on these findings.
Feedzai’s platform uses machine learning to process events and transactions quickly while providing easily understandable results through an added human-readable semantic layer. Its learning model processes and transforms multiple data streams and insights from various sources to create highly detailed customer profiles, making identifying fraudulent activities and potential victims easier.
Feedzai minimizes the risk of fraud and money laundering for financial institutions by collecting data from various sources, such as cross-channel, cross-product and third-party data.
This helps to distinguish between authentic and fraudulent transactions, and it provides a comprehensive view of how each individual interacts with the bank. These profiles also make it easier to identify customers more likely to fall victim to scams — even before a scam targets them.
The platform detects fraud quickly and in real time for different payment types, such as cards, instant transfers, digital wallets, withdrawals and deposits. The solution also offers production-ready application programming interfaces (APIs) for various payments to give real-time transaction recommendations, such as whether to approve or decline them.
What is Feedzai used for?
There are several threats and weaknesses that Feedzai helps address:
Addressing the shortcomings of legacy solutions
Financial institutions often use several outdated point solutions that use rules-based approaches to detect fraud but do not specifically focus on scams. Traditional approaches have three main limitations. First, they are restricted to siloed channels, making them vulnerable to fraud schemes that spread across various banking products or payment platforms.
Second, legacy solutions detect fraud by analyzing either behavioral activity (like app and device usage patterns, malware incidence, biometrics and network activity) or financial activity (transactional data across banking platforms). However, their analysis does not consider both types of activity together, reducing the ability to quickly identify an ongoing…
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