Rancho Cucamonga, Calif.-based CO-OP Financial Services intends to implement artificial intelligence to fight fraud, with a machine learning-based risk management tool for its client credit unions later in 2017.
“A key pain point for credit unions in 2017 is that fraud mitigation tools have not kept pace with the relentless advance of fraud,” Todd Clark, President/CEO of CO-OP said. “CO-OP Financial Services has an equally relentless commitment to credit union and cardholder security. We are investing $20 million this year on new innovations to ensure credit unions have access to the very best technology in the payments industry. Implementing machine learning capabilities is a key initiative in delivery on that promise.”
CO-OP and San Mateo, Calif.-based Feedzai, which specializes in artificial intelligence for payments applications, partnered to develop solutions to address fraud at any transaction volume.
To be used exclusively on behalf of CO-OP-client credit unions, the machine learning platform, a key component of AI allows machines to automatically learn from data and adapt, with or without human supervision. It operates in real-time, incorporates advanced analytics and provides alerts and case management capabilities for fraud and risk services.
For card payments, the CO-OP Card Member Security Team utilizes machine learning to augment the existing neural network-based Falcon Fraud Manager detection system. The platform employs historical and current data to strengthen the transaction-scoring model to predict debit and credit card fraud better, reducing credit unions’ losses while keeping false alarms to a minimum. In addition, machine learning takes a position as the primary fraud management tool for CO-OP Shared Branching.
The platform can receive any amount of relevant, multi-source data to define transaction risk scoring, incorporating events such as cardholder PIN changes and the purchasing patterns of individual members to better predict expected behavior. The system can decline suspect transactions detected by machine learning on the spot or kick them out immediately for fraud team analysis.
The CO-OP/Feedzai partnership structure centers on the co-development of a series of fraud-fighting, machine learning advances, scheduled for release by CO-OP later this year. It is also part of a three-pronged security strategy that includes fraud consulting and tools such as CardNav by CO-OP, a card controls and alerts application that helps empower members in their own defense against fraud.
“Artificial intelligence has previously been thought of as technology only available to governmental organizations or the largest of corporations,” Nuno Sebastiao, CEO of Feedzai, said. “Feedzai is pioneering attainable AI – AI that will really work, right now for any sized company. There is perfect synergy between ourselves and CO-OP, and we are very excited to be working with them to bring machine learning to the aid of credit unions.”
