Market Opportunities for Behavioral Biometrics

The sixth episode of Digital Tells: A BioCatch Podcast examines the market for behavioral biometrics. What are the top challenges in preventing fraud in digital channels, and what technologies are on the radars of fraud practitioners? How do organizations like BioCatch partner and innovate with financial institutions to identify and isolate the Digital Tells that can help detect fraud? And how may behavioral biometrics evolve in the metaverse?

Digital Tells’ host Peter Beardmore opens with an account of his recent conversation with Billy Beane from The Oakland A’s baseball organization. His discussion draws parallels between the evolution of baseball in the 21st Century with the game-changing digital analytics that have changed nearly every industry. Tom Field, SVP of Information Security Media Group, discusses the 2021 Fraud Transformation Survey: Detecting and Preventing Emerging Schemes. BioCatch Chairman, Howard Edelstein and BioCatch Co-founder, Uri Rivner share stories of innovating with customer development partners. And Peter Beardmore reflects on future opportunities for gleaning emotional insights in impassive online transactions.

Transcript:

Peter Beardmore

When first introducing the concept of Behavioral Biometrics back in episode 1 of this podcast, we drew a parallel to the story of Billy Beane - the Oakland Athetics baseball team general manager whose adherence to Sabermetrics, a statistical and analytical approach to the game, revolutionized the sport. A few weeks ago, shortly after recording episode 1, I actually had the opportunity to speak with Beane in an event BioCatch hosted. I blogged about it shortly thereafter, there’s a link in the shownotes. 

Anyway, I took the opportunity to challenge Beane a bit. Because while he became famous following multiple division championships, a best-selling book and a hit movie (starring Brad Pitt) ~ there’s been a lot of criticism about Sabermetrics kind of - well ruining the game of baseball. There’s this pace of play problem, games are running longer, attendance is down, the fan base is older than those of other sports.

And Beane was - unapologetic. He said look - data analytics is revolutionizing everything. It’s not just baseball. It’s every industry. And the game is different. Everyone has access to the same data he has. So a part of the game is now the analysis of every minute decision he and his in-game managers make / on the internet, on sports talk radio. And while Beane didn’t mention them - there’s also fantasy sports and sports betting. In fact in 2019, the last full season before the pandemic, Major League Baseball earned record revenues ~ despite the complaints of purists that attendance is down 14% from its highs. 

The game of baseball didn’t end in the early 2000’s and start anew. It evolved, and continues to. And so too does human engagement with the digital world continue to evolve.

In this, the final episode in Season 1 of Digital Tells - we’re taking a look at how the market that BioCatch serves - the business of preventing fraud - is evolving. What are their greatest needs? How are their needs changing? And how is BioCatch innovating to meet some of those evolving needs? And finally, how might behavioral biometrics be applied to future opportunities and requirements that stem from the metaverse.

That’s a lot to do, so let’s jump right in with a recent discussion I had with Tom Field. Tom is head of editorial operations with Information Security Media Group. Since launching their original property, Bank Info Security about 15 years ago ~ ISMG has expanded to 34 media properties and an audience of 950 thousand security leaders.

ISMG recently published a study that BioCatch sponsored, there’s a link in the show notes, about the latest fraud trends, and the top priorities and challenges for fraud practitioners.

I asked Tom about the challenges fraud practitioners are dealing with ~ particularly around choosing and implementing technology that prevents fraud ~ while ensuring that that same technology isn’t also preventing business. 

Tom Field

Well, great question, because we asked, what are your top challenges in preventing fraud attacks, particularly in the digital channels and tied for number one, were the lack of resources or budget to be able to adopt new fraud prevention tools? And that's no surprise. Nobody ever has enough financial resources and there are more tools out there now than anyone could can hope to account for. So lack of resources, number one. Tied with that limited visibility into the risks introduced by new digital technology, for instance, faster payments platforms. And again, so much of this comes back to the digital transformation where your employees and your customers alike are more remote, more digital than ever before, and you're just challenged to be able to understand which users, which devices, which applications you're dealing with. So no surprise with visibility that's consistent. But coming right behind that, a percentage point behind that was increased customer friction due to multifactor authentication or other controls. And it tells the story that our respondents are challenged because they do want to add extra controls, but they're extremely concerned about putting off their users to the point where they abandon a transaction or abandon the company altogether. So it's a top three challenge.

Peter Beardmore

So that friction issue is a recurring one, right? We seem to be at this point in the evolution of our digital lives where it’s easy to apply technology to stop the bad stuff, but if you can’t apply it with some degree of surgical precision, you can easily kill the patient / or perhaps to be less dramatic / ruin the relationship.

Tom Field

You know what doesn't come out in the survey, but we understand is that the landscape has changed considerably. Customer expectations now are whether I'm dealing with my bank, whether I'm dealing with my grocery store, whether I'm dealing with my favorite Chinese restaurant. I expect the same digital experience I get from Netflix, Hulu and Amazon.

Peter Beardmore

So are these problems insurmountable? Are financial institutions confronting the challenge?

Tom Field

You know, I think there's a couple of things you can be encouraged about. One is that of all the respondents we had, only three percent reported that they would see a decrease in funding for anti-fraud in 2022. So 97 percent of respondents are expecting at least level funding, if not significant increases. So I celebrate that, first of all. Next, when you look to what they want to add in the next 18 months, transaction analysis and monitoring tools, behavioral biometrics and analytics, device ID and intelligence, cross-channel fraud detection, physical biometrics, voice, facial fingerprint. And so that tells me that there's a much smarter approach to anti-fraud controls, looking less at what somebody knows and more who somebody is. 

Peter Beardmore

Financial institutions are moving forward. They are confronting challenges. They’re looking beyond the limitations of historically binary account data and credentials (what somebody knows - inherently stealable information) - and bridging that data with ‘who somebody is’ - for purposes of preventing fraud - yes - but there’s much more opportunity that comes with understanding your customer. Speaking of customers ~ 

How do organizations like BioCatch evolve to meet customer needs? How can behavioral biometrics evolve to identify new opportunities and solve new problems for financial institutions and digital channels.

You may recall meeting Uri Rivner in our first few episodes. Uri is one of BioCatch’s founders. When I interviewed Uri he told me a story that illustrates how BioCatch and our customers collaborate, share relevant data, and use that information to zero-in on the Digital Tells that indicate out-of-the-ordinary behavior.

In this case, BioCatch was working with a new customer, a big online payments provider, It was the early stages of implementation, and we were fine-tuning behavioral biometrics on an ecommerce platform servicing small business websites. One of those businesses was a manufacturer of paper straws. Here’s Uri.

Uri Rivner

This was an e-commerce company in San Diego selling paper straws. And of course, in California, you have to use paper straws rather than plastic straws. Right? Normally you buy a pack. You know, if you're a restaurant, you can buy a crate. Full crates, OK? Ten thousand straws. There was a huge order that was made using that platform. I'm talking about twenty five thousand dollars worth of straws, all sorts of straws. Sixty two crates. And all of these crates had to be shipped very urgently with a huge shipping bill. Ten thousand dollars of shipping to the island of Tuvalu. Where is Tuvalu? It's an island in the Pacific Ocean. It is eleven thousand people. They don't need that many straws.

Peter Beardmore

Ok, so once you know where and what Tuvalu is, any human being can deduce that there may be fraud afoot, right? But