Fintech
Fighting Fraud: Insights from Sumsub’s Martin ten Houten
In today’s world of financial services, fraud is one of the major challenges that traditional banks, fintechs and other organizations must overcome.
In our exclusive Money20/20 Europe interview from June, we speak to Martin ten Houten, Vice President of Business Development for Europe at Sumsub, who gives his views on the current state of fraud, its impact and the innovative solutions being implemented to combat it.
The alarming increase in fraud
While fraud comes in many forms, Authorized Push Payment (APP) fraud stands out as the leading form of malicious activity today. “We’ve seen a 155% increase in APP fraud over the past two years,” notes ten Houten.
“There have been high-profile cases, including a financial employee at a major Hong Kong institution who fell victim to deepfake technology, making a $25 million payment to a fake individual,” he continues.
“Fraud comes at a high cost and it is crucial to leverage artificial intelligence to combat these sophisticated threats,” ten Houten stresses.
The Cat and Mouse Game with Scammers
Just as technology evolves, scammers also evolve to stay one step ahead of security measures.
Deepfake technology, for example, has seen a tenfold increase in usage globally in just a few years. There has been a 200% increase in the cryptocurrency sector alone, while fintech has seen a staggering 500% increase.
“It’s a pervasive challenge, not just in financial services but also in other areas like elections,” ten Houten says. Sumsub’s internal reports show a 245% increase in the use of non-financial deepfakes from Q1 2023 to Q1 2024.
To combat this, a blended approach using multiple tools is essential. “We need to monitor consumer behavior and provide risk assessment scores in real time,” explains ten Houten. This involves the effective use of tools such as Know Your Customer (KYC) elements, Identity Verification (IDV), email and phone assessments, and financial transaction monitoring.
The importance of continuous monitoring
According to Statista research, only 30% of fraud is detected during the onboarding phase, while 70% occurs after onboarding. This highlights the need for continuous monitoring.
“It’s crucial to focus on ongoing monitoring, not just the initial onboarding,” says ten Houten. Sumsub’s open architecture platform facilitates this process by integrating multiple technologies to continuously monitor candidates after they’ve been onboarded.
Sumsub Growth and Innovation
Sumsub’s commitment to fighting fraud has led to significant growth. With over 2,000 customers and nine years in the industry, the company has made a name for itself in sectors such as cryptocurrency, gaming, and fintech.
“We are now focusing on expanding into financial services, especially banking, globally,” says ten Houten. Sumsub is focusing its efforts on key markets in Europe, APAC and the Middle East.
Innovation remains at the core of Sumsub’s strategy. “We are constantly improving our deepfake technology, fraud detection networks, and other tools to capture as many of the 70% of fraud that occurs after onboarding as possible,” says ten Houten.
This relentless focus on innovation and comprehensive fraud prevention is driving Sumsub’s current rapid growth and success.