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ARIC Risk Hub’s performance within the Shaype platform was so effective from the very first day that we almost couldn't believe it! We didn't experience a single instance of fraud for almost 12 months, while maintaining incredibly low false positives. The customer pipeline is very full, reflecting strong demand globally for “tomorrow’s financial experiences today.
Businesses and consumers in Australia are increasingly preferring payment ecosystems which allow the electronic exchange of money instantly and irrevocably, enabling settlement 24/7 instead of necessitating a few business days.
While innovative transaction services offer convenience and speed, sadly, bad actors can also use these to facilitate abuse and to perpetrate crime. Australia has also experienced rapid growth in both the volume and variety of fraud. The increase in the sophistication of fraud schemes combined with a vast volume of transactions, often means banks’ existing protective strategies are not up to the task. For new players, it represents a significant risk to their portfolio from day one of their operations, particularly as fraudsters often target new entrants, assuming their strategies will be weaker.
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Phishing, smishing and vishing techniques can all be used within social engineering attacks on customers that result in scams. According to the ‘Targeting Scams’ report published by the Australian Competition & Consumer Commission (ACCC), in 2021, scam losses in Australia grew to more than A$2 billion.
The largest combined losses in 2021 were:
A$701 million lost to investment scams
A$227 million lost to payment redirection scams
A$142 million lost to romance scams
As only about 13% of victims make a report, these official statistics clearly underreport the problem.
High-profile data breaches, such as the Optus example, currently under investigation by the Australian Privacy Commissioner, can result in a long tail risk of compromised payment and personal information.
According to the recent Australian Payments Network ‘Payment Fraud’ report, card fraud increased by 5.7% to A$495 million, with Card-Not-Present (CNP) fraud accounting for 57.3 cents per A$1,000 spent in 2021.
With Australia’s share market and dollar dipping, inflation above target, interest rates rising sharply at speed, and a recession potentially looming, consumers are having to tighten their belts, and many will be more vulnerable to financial stress and fraud schemes such as mule accounts. Fraudsters exploit the general public – not realizing they are participating in highly illegal money laundering – by paying them a fee to transfer proceeds of fraud and crime through their accounts, because they’re unlikely to be flagged as fraudsters.
Fraud and financial crime prevention are often deemed necessary to support compliance in this heavily regulated financial services industry, however Shaype identified that financial crime prevention equated to a clear competitive advantage.
In common with many other global markets Australia has a healthy fintech ecosystem where start-ups and scale-ups are harnessing best-in-class technology to deliver innovative transaction services. This is exactly what Shaype did to create a powerful and flexible embedded finance platform offering single-API access to a full suite of microservices with a core capability in payments – including bank transfers, VISA card, digital wallets, and tokenization.
Sydney-based global fintech, Shaype (a rebrand from Hay as a Service) launched in August 2020, redefining what is possible in financial innovation, fintech and embedded financial experiences.
Shaype sells its platform to financial and non-financial businesses who wish to access the core payments functionality and fulfill their customers’ demands for more choice and seamless user experiences. With the rise in fraud and scams, and increasing regulatory focus and compliance challenges, Shaype prioritized solving for financial crime compliance as a continuous differentiator for its service, to ensure the completeness of its platform and to protect these innovative new services on behalf of their customers.
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A processor partner offered Shaype the fraud and financial crime functionality included within its own system, but Shaype’s extensive market research concluded that a more sophisticated, flexible, cloud-based solution was needed to prevent both current and new fraud typologies, to integrate within its own platform, and match its performance. Shaype wanted a system that would support (not hinder) their ability to rapidly evolve and iterate – designed in a manner that allows them to change, update, and test, and deliver new features, processes, or capabilities in hours, not weeks.
Powered by Adaptive Behavioral Analytics, ARIC™ Risk Hub is an award-winning fraud detection and financial crime prevention platform with fully adaptive self-learning machine learning models that delivers real–time transaction monitoring.
Featurespace’s ARIC Risk Hub enables Shaype to offer Fraud-and-Financial-Crime-Prevention-as-a Service, alongside wallets, on-boarding services, plastic, and non-plastic rails to their customers, as part of the Shaype embedded finance platform:
ARIC Risk Hub is a key component of delivering our one-stop-shop for embedded financial services with next generation security included. It has been a non-negotiable priority from day one. That is why we chose Featurespace. It was a priority for us to cultivate a good partnership with a like-minded fintech. Honesty, transparency and authenticity had to be at the heart, to allow for a true partnership where both parties feel confident in the relationship and its value. We found that with Featurespace.
