Behind Galileo’s payments fraud management revamp

Today, digital fraud is a multi-billion-dollar problem, and legacy solutions are struggling to keep pace with the scale, speed, and extent of modern, bot-powered attacks. 

Fraudsters’ approaches are becoming more sophisticated, and payment card fraud transactions are forecasted to rise 20% to $38.5 billion by 2027, as bad actors continue to deploy more advanced techniques and outsmart conventional prevention.

Fraud attacks on financial institutions are nothing out of the ordinary – what's different this time is the rise in their frequency and intensity. The complexity of the challenge and the scale of demands in today’s fast-paced environment are getting the better of economic growth and innovation.

A recent survey by PYMNTS shows that 64% of FIs reported an increase in credit card fraud attacks, and 52% of FIs noticed increased attacks on debit or prepaid cards. The research also shows that FIs using artificial intelligence and machine learning report the lowest levels of financial crime, including fraud.

Technology can help in fraud detection in its early stages, which is why strategic tech-fintech partnerships are becoming relevant, especially today. There are plenty of examples in the industry where fintech and AI platforms tackle fraud through collaboration.

One such recent example is of Galileo Financial, which teamed up with fraud management solutions provider DataVisor to bolster its payment risk mitigation platform.

Through this collaboration, the fintech aims to offer fraud management solutions that mitigate payment risk across a range of payment methods: debit and credit card transactions, ACH, as well as provisioning/onboarding to its customers.

As B2C and B2B customers are increasingly expecting real-time payments, DataVisor provides real-time decisioning and end-to-end workflows using AI and machine learning capabilities to make payments secure.

“DataVisor’s orchestration and data enrichment engineering platform supports both batch and real-time data to offer a more holistic view, which becomes the foundation to support downstream decision engines. Additionally, our operational tools like Identity Graph enable customers to construct and visualize connections and relationships across users, accounts, cards, transactions, devices, addresses, and other sources in real time,” DataVisor’s co-founder and CEO, Yinglian Xie, told Tearsheet.

Prior to the partnership, Galileo’s payment security offering was based on analyzing each client’s traffic and providing analytical insights and rules-based blocking based on that client's traffic, according to David Feuer, Chief Product Officer at Galileo Financial Technologies.

The new integration allows the fintech to access the entire payments ecosystem to gain increased visibility into the end-to-end financial journey of all its clients. This provides insight into customer spending patterns and potential fraudulent and higher-risk activities across B2C and B2B ecosystems before they occur.

If a client comes across a pattern of high-risk transactions generated from one merchant, Galileo can collect that feedback from its entire network about that merchant and enable clients to act on it, for example.

“The new risk platform has proactive controls around a common point of purchase, merchant risk assessment, and client-tailored ML model that let clients run the models in real time and near-real time,” Galileo’s Feuer told Tearsheet. 

Payment fraud is targeted in particular by hackers using emulators to look like legitimate transactions and through account takeovers. These are increasingly successful because of the industry’s ongoing shift to real-time payments. The instant settlement gives the attackers instant monetization, which means risk protection and decisioning must be real-time too.

Mobile and web applications are susceptible to these types of fraud attacks, where fraudsters use advanced tactics to change device identifications and launch large-scale attacks to log into accounts that were taken over. This is a recent trend as consumers and businesses alike are using their cell phones more frequently for a variety of tasks – from music and socializing to dating and shopping. 

FIs seeking to protect their clients against modern forms of financial crime should take precautions to stay a step ahead of bad actors, including awareness of emerging fraud trends and having a proactive mindset to mitigate fraud risks in real time.

“Businesses need to understand that when they offer a new form of payment, they have increased fraud susceptibility. When companies grow quickly, they risk not having a strong fraud mitigation plan in place. By setting risk strategies in advance, a company can grow with confidence,” said DataVisor’s Xie.