Categories: Fraud / RiskInsights

The Importance of Building Online Trust to Face Fraud Risk

A fraud has the power of causing enormous financial losses and put your business upside down. To not fall for something like this – what is most of the time is out of your control – it’s necessary to invest lots of money in a security department, pay a massive fine to the government for not having an adequate compliance (fulfillment of norms and rules) or simply count on luck for yo ur company to not be part of the statistics. Unfortunately, it looks like the randomness is going against the corporations due to the fast growth of this kind of crime.

According to a Thomson Reuters research, one of the most trustworthy information companies of the world, a bank spends an average of 53.58 million dollars a year with KYC (Know Your Customer), the name given to the process of identifying, and verifying clients for compliance. Some institutions spend almost 401 million dollars a year. Jamie Dimon, JP Morga’s CEO, said in a letter that he spent $2.14 billion and employs 13.000 people in his compliance department after the company received a 21.43-billion-dollar fine in 2015.

All that cost exists because of how much this work is done manually and because traditional companies that provide information credentials are inflexible and technologically limited. In 2017, Equifax, one of the three biggest credit bureaus of the US, had its database invaded by digital criminals and the confidential information of 143 million people – including credit card and social security numbers – were exposed and hence subjects to fraud.

Thus the financial category witnesses the surge of FinTech (finance and technology), the RegTech (regulatory technology) startups take long strides to fill this gap on the market. According to the paper “A Report on Global RegTech” from April 2016, financial institutions had to pay more than US $160 billion in fines and penalties for not fulfilling the compliances that they’re supposed to. Also, the document informs that the global demand for technologies related to regulations and compliances brought around US $118.7 billion in the same year.

In the Brazilian scenario, KYC and frauds are a huge issue for the economy too. According to data from Serasa Experian, a local company for credit analysis, in 2017, one fraud attempt occurs every 16.8 seconds, with telecommunications, banks and services sectors being the targeted the most by criminals. The losses caused by these activities varies between R $1.76 billion and R $33.33 billion, says a report made by the Department of Justice and Universidade de Brasília (UnB) based on data from 2012.

IDwall is a digital security company offering something that you can’t put a price into it: online trust. It doesn’t matter if your product is awesome if your income is affected by frauds and slow authentication. IDwall provides document validation in an automated way, doing a complete background scan of the user faster and more competent than a bank, for example. The firm also provides the Face Match service, that uses facial recognition for the automatic detection of frauds, and IDnetwork, a system for sharing information between businesses to prevent credential frauds.

The company’s impact is not restricted to Brazil. On the recently published “Global RegTech Review,” a US research that makes a deep analysis of the Regulatory Technology market, IDwall is mentioned among 100 innovative companies that every financial institution must get to know in 2018.

In 2017, the firm incorporated on its portfolio technology giants and big companies from the financial market. Naturally, the success displays on IDwall’s profit that increased 20 times in nine months, reaching the astonishing number of US $90k in September 2017, a fact that puts the company as an avant-garde and profitable business.

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Paulo Vitor Ando: Paulo Vitor Ando graduated in analysis & system development and is specialized in information security by UNICAMP, one of the best Brazilian universities. A former TI manager in IBM, Paulo currently holds the position of CPO at IDwall.