IBM has acquired IRIS Analytics, a financial fraud detection company. The deal will see IBM considerably expand its client base, while for IRIS Analytics, the integration with IBM’s machine learning technologies with that of its own will improve the company’s ability to detect fraud while reducing false positives.
Detecting bank fraud remains a key issue for many banks – according to a study by IBM only 16% of banks could detect bank fraud as it happened, with false-positives seen as a considerable hindrance to international regulations. The vast majority of banks require four weeks to deploy countermeasures to countermand the new and rapidly growing form of fraud. Current fraud techniques have considerable limitations as new technologies such as alternative and mobile payments innovations are taking hold; today often well organised fraudsters are able to command technological innovations, allowing them to quickly innovate new fraud methods.
IRIS Analytics traces its roots back to 1992 with the founding of a GZS’s Fraud prevention task force aimed at preventing credit card fraud. The first version of IRIS Analytics was released in 2000, and, after the acquisition of GZS by First Data Corporation in 2006, IRIS Analytics was created in 2007 through a management buyout of various assets owned by First Data Corporation. Today the company produces a range of off-the-shelf products to detect fraud, as well as providing direct operational assistance to clients. The company works for a wide range of clients, including cross-border acquirers (PoS, ATM and CnP), payment service providers, e-wallets, and major card processors for many years. The firm has its headquarters in Koblenz, Germany.
IBM’s announced acquisition of IRIS Analytics provides the firm with expanded capabilities in the fraud detection arena. One of the products offered by IRIS uses machine learning technology, the software acts as a ‘virtual analyst’ at various inflection points where patterns may be detected as the result of fraudulent activity. The combination of IBM’s machine learning techniques with that of IRIS Analytics’ will, according to the partners, help organisations “more accurately detect fraud at scale and speed so that they are in a position to implement countermeasures quickly, with more control and transparency, while at the same time assists with dramatically lowering false positives.”
“Defenses against financial crime are in critical need of innovation and improvement. As the payments industry evolves with new payments methods such as chip and PIN, mobile payments and immediate payments, the ability for financial institutions to accurately make decisions about what is suspicious and what is legitimate before the payment is executed is required,” says Constantin von Altrock, Chief Executive Officer of IRIS Analytics. “The combination of IRIS technology with IBM’s Counter Fraud capabilities creates a comprehensive solution for real time payment fraud prevention.”