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CustomerXPs’ federated network to help banks combat financial frauds globally

Rivi Varghese, CEO, CustomerXPs (Clari5)

Increasing cases of frauds and compliance are forcing banks, globally, to perpetually stay alert and glean intelligence from their peers on how to prevent such attacks. Besides, the cyber-attacks are now getting coordinated for short durations, and the need is more pressing. According to an industry report, the size of global fraud has reached a whopping $4 trillion.

To address this challenge, an Indian FinTech is planning to launch a federated network of banks that would enable member banks to receive fraud-related information and intelligence on a real-time basis.

Bengaluru-based CustomerXPs is in the process of rolling out the network, called Federated Anti-Fraud Network, that would comprise all sizes of banks. While the company did not divulge the names of the member banks, it is given to understand that about the top five Indian lenders are already on the network. The network would help them tackle the burgeoning financial frauds across the world.

The network enables member banks to consolidate, cross-pollinate and exchange fraud intelligence among themselves in real-time. It would help them stay ahead of the curve by being in sync with frauds as and when they occur globally. It also helps them better protect themselves from fraud.

Rivi Varghese, Founder and CEO of CustomerXPs, told IBS Intelligence, “ Just like humans acquire intelligence, banks also need to become intelligent, but not just learning from what they experience from within, but also by learning from their ‘tribe of banks’ – in real-time. It is the best antidote to the 24X7 problem of fraud and compliance due to digital. Think of us as providing the pillow so that CROs (chief risk officers) can sleep peacefully at night.”

The network would be scaled up across banks in 15 countries by mid of next year, said Varghese, who co-founded CustomerXPs along with Aditya Lal and Balaji Suryanarayana in 2006. The company, which focuses on real-time, cross-channel banking enterprise and transaction fraud management, Anti-Money Laundering (AML) and customer experience under the brand Clari5.
Before starting CustomerXPs, the founders used to work with IT giant Infosys’ product (Finacle) team and were responsible for creating, delivering and implementing a series of delivery channel products. It had helped the founders garner enough experience to create a product that would be critical for banks to combat all kind of financial frauds and risks.

“A category leader in the banking EFCRM (Enterprise Financial Crime Risk Management) space, Clari5 works like a bank’s central nervous system and helps fight financial crime by summoning the collective contextual intelligence from across all the bank’s systems. It brings the essence to bear within the short transaction window itself for necessary intervention – whether to block hold or allow the transaction. All this happens in extreme real-time,” Varghese added.

Besides helping prevent frauds, Clari5 also helps improve the customer experience and sales of the banks that can use the same contextual intelligence for cross-selling and upselling. “Banks hence benefit from a system whereby investing in an anti-fraud- system; they can also make money out of it. So besides protecting the bottom line (losses to fraud), Clari5 enables opportunities to grow their top-line,” Varghese added.

On diversification, Varghese said that the company has a “sharp focus’ on providing the Financial Crime Risk Management solutions for banks, and the idea is to extend the existing product lines. For example, the company has extended ‘Clari5 AML’ product to a solution that helps bank detect early signs of loan frauds or accounts that are most likely to become NPA. The product is called Loan Early Warning Signal (LEWS),

Present in across 15 countries, CustomerXPs processes over 10 billion transactions and manages over 500 million banking accounts transactions. With 200 million accounts at a single site, it claims to have one of the largest real-time implementations of a fraud management solution in the world. The company is growing over 75% year-on-year for the last couple of years and expects to close the financial year 2020 at $12 million in revenue (from product license alone), on the back of expansion into newer markets.

With a focus on new markets and emerging economies, the company expects over 60% of its revenues to come from North America, Africa, the Middle East and South Asia.

The company, which competes with technology solution providers such as FICO, FIS, SAS and Oracle, aims to be among the top five global players in AI for banking in the next 3-4 years. Varghese said that regulatory changes and the evolving fraud management landscape globally would help achieve the feat.

“We have evolved our expertise in the AI and Machine learning space along with RPA to deliver our end-to-end capability around predicting, detecting, preventing, managing, reporting of financial crime, ” Varghese said.

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