Original text here from Patrice Bernard (LinkedIn)
As banks around the world, clearly overwhelmed by the rise of fraud, introduce increasingly intrusive and indiscriminate frictions, even blocking their clients' payments, Revolut is incorporating intelligence into its protective measures to minimize unwanted effects.
Despite financial institutions boasting about being at the forefront of data analysis and artificial intelligence, when it comes to preventing consumers from falling prey to scams, they tend to take the easy way out. Noting that most scams originate from social media and involve investment, they impose drastic restrictions based solely on these criteria... which unfortunately also impact numerous legitimate transactions.
However, it's not like there's a lack of contextual information within banking to develop a more refined and targeted approach. This is what Revolut demonstrates with the expansion of its defense program, previously applied to interbank transfers and now extended to card payments for its 35 million users across all countries of operation. A powerful machine learning model inspects transactions in real time and intervenes only if it likely originates from fraudulent activity.
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Initially, suspicious payments are immediately declined. Then, an interaction is initiated in the startup's app to further process the case: through a series of questions, the validity of the alert is either denied or confirmed. In the latter case, similar future attempts will also be stopped, no questions asked. Finally, with an educational intent, the client is offered preventative instructional content, illustrated with enlightening examples. There's even a plan to easily contact an advisor for details, if necessary.
Revolut claims that, during a trial period, its new system managed to reduce fraud-related losses by 30%. Unfortunately, it does not specify the rate of false alarms, which is essential to its value. Indeed, it can truly claim success, especially compared to the more generic approaches of its competitors, if it manages to reduce the number of incidents while minimally disrupting consumer activities... who are starting to get seriously frustrated with the banks' habit of throwing up unnecessary obstacles for every transaction.
