Roy Prayikulam, Senior Vice President, Risk & Fraud Division at Inform, is an internationally active optimization specialist headquartered in Aachen, Germany. He argues that as data is changing - in type and amount - risk and fraud monitoring will become even more important than it used to be.
In this interview, he explores the risk and fraud landscape today, and in the year ahead.
Q. The Risk & Fraud area is becoming an increasingly important part, both for companies and government institutions. What are the biggest differences between these two target groups in terms of performance and support requirements?
A. Government needs data in order to adapt its regulations, while companies need real-time prevention and security to detect and respond to risk at the moment it is occurring. Businesses need to be proactive, whereas government can be reactive in analyzing the current state of risk and fraud. Government must then deploy the appropriate initiatives to provide guidance to companies, and also manage their own risk exposures. Risk management companies and solution providers serve both businesses and government, helping both sectors protect their proprietary data. All organizations in both the public and private sectors require effective software systems that are reliable globally, and backed by expert knowledge.
Q. The development of such software solutions require accumulated expertise and well-structured planning. How many employees are in your business unit and how has the team developed over the last 5 years?
A. INFORM currently has a team of just over 100 RiskShield experts that are supported by our central organization. We have achieved steady growth of approximately 25-30% over the past five years.
Q. How do you ensure that your software keeps up with the changing times and is constantly improving?
A. RiskShield is a strategic risk and fraud solution, developed exclusively by INFORM specialists. We constantly focus on keeping the software up-to-date and responsive to current market requirements, both from a technological and business standpoint.
On the technological front, our team of dedicated software engineers are completely focused on constantly developing new features and technologies and incorporating these into the software. We work in close cooperation with our customers to address their requests and project needs. Our strong customer partnerships enable us to grow with them, build a trusting relationship that facilitates their ease in making requests and asking questions, which benefits both our customers and INFORM.
Of course, we are also continually monitoring market conditions to determine what new fraud patterns are evolving, what new trends are emerging, what new regulations have been enacted, and which functionalities are appearing that we need to pay attention to. We also work closely with a local university and leverage competence hubs internally that focus on modern technologies and requirements.
Last, but not least, our solutions features what we call Hybrid-AI, an advanced technology developed by INFORM, integrates data-driven and knowledge-driven methods of Artificial Intelligence (AI). Data-driven methods include, for example, Machine Learning (ML) algorithms. We search through huge daily data volumes for recurring correlations and patterns that indicate criminal behavior. Knowledge-driven methods include, for example, fuzzy logic or scorecards, which can be used by human experts to define complex rules for handling certain behavioral patterns. In this way, concrete decisions and recommendations for action can be derived from data, even if this data is imprecise. Thanks to this holistic functional scope, our solution can consistently keep pace with evolving fraud methods.
On the business side, our colleagues are subject matter experts who have industry-specific knowledge and experience in the field. Similarly, we have long-term employees with tenures of 15 and 25 years, who have been working on the RiskShield solution for a long time. In either case, we remain current with continuous education and training, maintaining certifications and qualifications, and attending appropriate conferences.
Q. Artificial Intelligence (AI) is considered an elementary component in the fight against terrorist financing or other fraud attacks; it usually involves sensitive data. Is it possible to make a general statement about which data require protection?
A. In our opinion, all data is sensitive. And in our case especially, considering that we focus on personal and financial transaction data. They both need protection and reflect certain government regulations. We are proud to say that INFORM is ISO-Certified, demonstrating our strong focus on the protection of data. In light of the current trend toward cloud-based systems, it is extremely important to meet data protection requirements and to give our customers peace of mind in knowing their systems and data are secure. A high level of encryption for both data storage and communication is critical.
Q. You also support numerous international companies at INFORM. Given the uncertain economic situation, I would also be interested to know what trends and developments you expect in your industry in the coming year.
A. There will always be financial, payment, healthcare, and telecommunications service providers whose requirements will continue to evolve and grow. Concurrently, there will be new technological developments that pave the way for new frauds, for example, cryptocurrency and blockchain. Because so many of these developments are digital, data is changing by type and also the amount. As a result, risk and fraud management will become more important, requiring organizations to have strong monitoring systems in place.
In parallel to the need of data to be secured, an exchange among institutions is becoming more significant. Information from anti-money laundering measures in insurance and payment services, for example, shared through an open APIs with multiple players in the industry can benefit a group of companies that can in turn use similar functionalities in their local applications. Thus, it is important to find the right balance between protecting sensitive data and building synergies with other organizations.
Furthermore, fraud enters the area of social engineering. As a result, for instance, identity protection will become fundamental. Payments are increasingly becoming real-time and therefore, the need to detect and prevent a fraud from occurring immediately, in real-time, is becoming increasingly more critical.
