Credit bureaus seek partners to keep up with fintech wave

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As fintechs flooded the market with alternative payments and lending, legacy credit bureaus have scrambled to find partners, investments and acquisitions to keep up.

Much as the fintech wave has sparked investments and deal-making among legacy bank technology vendors and payment processors, Experian, TransUnion and Equifax are entering partnerships and making investments.

TransUnion recently acquired TruSignal, which uses artificial intelligence-driven scoring to improve data management as part of marketing programs. And in just the past few weeks, Equifax has partnered with Giact Systems to boost authentication; and announced support for the Fintech Sandbox to improve its outreach to the developer community.

Experian faced its own challenges in find a common route to reach both traditional companies and startups tackling different customer fraud problems.
Experian in 2016 began building a hub through acquisitions and partnerships to deliver a range of fraud-fighting tools to customers through an open platform accessible via APIs.

Device-identification specialist 41st Parameter, which Experian purchased in 2013, provided a foundation that Experian built upon.

The result is Experian’s CrossCore hub-style platform, one of the company’s fastest-growing areas with more partners in the wings, according to Kathleen Peters, senior vice president, head of fraud and identity at Experian N.A.

“Banks and retail credit providers in particular struggle with integrating multiple fraud solutions to attack different problems, and what they really want is access to solutions they can mix and match on demand, as their fraud conditions change,” Peters said.

CrossCore last year gained greater insight into mobile device fraud when Experian invested in mobile-identity firm Danal. A few months later carrier-billing specialist Boku purchased Danal for $68 million, bringing Boku into CrossCore’s fold.

“Danal and Boku are powerful resources for detecting fraud and recognizing repeat customers, as we all come to realize the mobile phone number itself has a lot of inherent information that can determine whether a transaction is valid or not,” Peters said.

CrossCore has come far since its launch with a few core partners including Emailage, Whitepages Pro, IQor and myNetWatchman. Israel’s BioCatch became a key partner in April 2017, adding behavioral biometrics to CrossCore's mix with tools Experian couldn’t provide directly.

“We look at more than 2,000 parameters to solve for many problems, but our big strength is in behavioral analysis, looking for unusual interactions that give people away as fraudsters, like how a suspicious person acts at the airport,” said Frances Zelazny, chief strategy and marketing officer at Israel-based BioCatch.

Mitek also joined CrossCore as a partner last year, bringing its identity document verification and biometric facial matching to mitigate fraud to the menu.

Daon, which provides global biometric authentication technology including voice, face and fingerprint recognition through its IdentityX solution, became a CrossCore partner in 2017.

Fintechs are taking a creative approach to applying CrossCore’s solutions, Peters suggested. “Through our API and a one-sheet client procurement process, we can move very quickly to let customers orchestrate their own fraud solutions using different tools.”

CrossCore users may apply Experian’s solutions or those from its partners simultaneously or in a sequence, based on their own risk rules. Synchrony, which supports many private-label retail credit card programs, also is a client, along with several fintechs, according to Peters.

Installment and point-of-sale loans are a growing area of demand for CrossCore’s services. “A lot of alternative lenders operate almost exclusively online and the tools we’re making available are all about monitoring fraud while maintaining a very fast and seamless customer experience,” she said.

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