American Express Company (AXP) has recently rolled out a new anti-fraud campaign, where the company illustrates their capabilities in identifying and halting fraudulent purchases, thus saving their customers headaches and hard-earned money. According to AMEX's website, the company claims to have implemented a "sophisticated monitoring systems and controls in place to detect fraudulent activity and protect our Card members' accounts from misuse."
The AMEX Commercial can be seen here.
While this is great news for credit holders, it is better news for financial institutions themselves. Global bank fraud carries an estimated cost to banks, credit card companies, and financial lenders of more than $200 billion annually. By incorporating these security solutions, companies are able to significantly reduce expenses, thus improving their overall financial results.
American Express showed its commitment to serving as a market leader when the company bolstered its already renowned anti-fraud department through a relationship with The Bank of New Zealand (BNZ), an operating subsidiary of the National Australia Bank Limited (NAB). BNZ invented and developed this world beating fraud prevention technology, called Liquid Encryption Numbers or LEN, in New Zealand and holds the global patent. Liquid Encryption technology was launched on BNZ debit cards and Visa and MasterCard credit cards in 2008 and BNZ customers have since benefited from a significant decrease in fraud experiences with losses from the most common form of card fraud dropping by more than half.
However, BNZ isn't the only company in the space. Similar companies have also been busy in capturing market share in this rapidly growing industry.
Elephant Talk Communications Corp.'s (ETAK) wholly owned subsidiary, ValidSoft Limited and their partner, Adeptra have entered into an arrangement with Fair Isaac Corporation (FICO) to serve as a Fraud Resolution Manager providing fraud managers with high-volume automated processing of cases leveraging intelligent data assessment, advanced decision management and customer intervention. It gives organizations the scalability to process high volumes of cases simultaneously, performing investigations, shaping customer action and contact strategies, and reaching resolution in seconds. It uniquely provides a seamless connection between risk analysis and contact strategy development, deciding the necessity, timing, channel and nature of action required to find more fraud, reduce losses and foster customer loyalty. ValidSoft has also signed an agreement with Banco Santander (SAN) along with financial institutions in the USA, UK, Australia and governmental agencies in Europe. ValidSoft has successfully processed over 9 million transactions for Santander in the UK.
ImageWare Systems, Inc. (OTC:IWSY) is a provider of biometrically enabled software-based identity management solutions for biometrics, secure credential, and law enforcement and public safety markets. Its flagship product is the patented IWS Biometric Engine, a multi-biometric software platform enabling the enrollment and management of unlimited population sizes. The company recently signed a $2.2 million contract by the U.S. Department of Veteran Affairs (VA) to expand its personal identity verification (PIV) credentialing capabilities.
The point of the matter is that fraudsters have become smarter and are using intricate methods of cyber attacks in order to get between you and your money. Therefore, financial institutions are now forced to remain on the cutting edge of technology in order to secure not only YOUR investment but THEIRS as well. Beta testing new technology isn't how their global institutions became… well… GLOBAL INSTITUTIONS, they are now licensing the software from outside sources.
As the mobile payments world continues to advance, new methods will be used to authenticate users. Big Data analytics, voice biometrics, location validation are just some of the weapons that Global Intuitions will use to protect themselves and their customers. This naturally means that investments in technology and licensing will continue to drive the market as emerging growth companies jockey for position to prove their value add.
While criminals have evolved from sending phony emails that request bank transfers to collecting your bank information through phishing, so have anti-fraud pioneers such as ValidSoft, ImageWare, and BNZ. And while nobody knows where the market is headed, these three companies certainly seem to be outpacing both fraudsters and competitors on their way to the top.
Additional disclosure: Clearly this is a segment piece and covers the following tickers (FICO, AMX, ETAK, IWSY, SAN, NAB)