Report: Datos 2024 Impact Awards in Fraud

Datos Insights’ 2024 Impact Awards in Fraud aim to identify and recognize those financial organizations and vendors leading the industry with new and disruptive financial crime products and capabilities.

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August 2024

The 2024 Impact Awards in Fraud

Fraud & AML Practice

This report provided compliments of:

August 2024

The 2024 Impact Awards in Fraud

Fraud & AML Practice

Table of Contents Introduction .............................................................................................................................. 2

Qualification and Evaluation Methodology ...................................................................... 2

The Fraud Market: Challenges and Needs ........................................................................... 4

Socure: Best Digital Identity Innovation ................................................................................ 6

Innovation: Sigma Identity v4.0 .......................................................................................... 7

Datos Insights’ Take ........................................................................................................... 11

Conclusion .............................................................................................................................. 12

List of Figures Figure 1: Impact Award Evaluation Criteria .......................................................................... 3

Figure 2: Sigma Identity v4.0 Framework............................................................................ 10

List of Tables Table A: Fraud Market Challenges ......................................................................................... 4

Table B: Socure and Sigma Identity v4.0 ............................................................................... 6

Table C: Sigma Identity v4.0―Key Features ......................................................................... 9

Table D: Sigma Identity V4.0―Quantitative and Qualitative Benefits ............................. 10

The 2024 Impact Awards in Fraud

Introduction Datos Insights’ 2024 Impact Awards in Fraud aim to identify and recognize those financial

organizations and vendors leading the industry with new and disruptive financial crime

products and capabilities. Award recipients and their innovations address critical

challenges in the fraud and financial crime prevention landscape, leveraging advanced

technologies such as AI, machine learning, and data analytics to thwart sophisticated

scams and fraud while ensuring both superior customer experience and compliance with

regulatory obligations.

Datos Insights designated the following five individual categories for its 2024 Impact

Awards in Fraud:

• Best Authentication Innovation: This category features new solutions or innovations

that deliver best-in-class identity-proofing or user authentication.

• Best Transaction Fraud Monitoring and Decisioning Innovation: These are new

solutions or innovations that deliver superior transaction fraud analytics, monitoring,

detection, and case management that protect the financial transaction.

• Best Digital Identity Verification Innovation: This category spotlights new solutions or

innovations that deliver exceptional individual identity verification.

• Best Scam and APP Fraud Prevention Innovation: These are new solutions or

innovations that deliver superior protection against scams and APP fraud threats.

• Best Innovation by an FI: This category features new solutions or innovations

developed and implemented by an FI that deliver robust fraud mitigation while

supporting elevated customer experience and operational efficiency.

Qualification and Evaluation Methodology In April 2024, Datos Insights solicited over 100 nominations for its 2024 Impact Awards in

Fraud. All nominated initiatives were required to be in production and must have been

implemented within the last two years. Strategic Advisors from Datos Insights’ Fraud &

AML practice, along with an external panel of subject matter experts and industry thought

leaders, evaluated the submissions and determined the individual category winners.

The 2024 Impact Awards in Fraud

Each fraud nomination was evaluated across several criteria (Figure 1).

Figure 1: Impact Award Evaluation Criteria

Level of innovation Competitive advantage assessment

Impact on customer experience

Impact on operational efficiency

Market needs assessment

Financial crime risk mitigation

Integration and scalability

Future roadmap

Source: Datos Insights

Fraud Impact Award Evaluation Criteria

The 2024 Impact Awards in Fraud

The Fraud Market: Challenges and Needs Sustaining effective financial crime risk management remains extremely challenging and

complex. The breadth of fraud technology solutions must go beyond traditional

capabilities to take on new market forces and combat expanding fraud while elevating the

customer experience and uplifting operational efficiency.

Table A identifies several key fraud challenges that financial organizations and technology

solution providers seek to address with innovative tools and approaches.

Table A: Fraud Market Challenges

Fraud challenge Impact

Greater sophistication and volume of fraud and scams

As more people and organizations conduct business online, new fraud vectors have emerged for financial criminals to exploit. Fraud and scams such as APP and account takeover (ATO) are on the rise, and emerging technologies like generative AI are helping criminals refine their techniques and make social engineering more sophisticated. Mean- while, liability for fraud losses is shifting from the consumer to the FI.

These factors are motivating FIs to replace legacy solutions with newer, more advanced ones that can address fraud risks across the customer life cycle. Solutions that harness automation, machine learning, and other cutting-edge technologies are invaluable in navigating the ever- evolving threat landscape. Further, FIs are turning toward solutions that allow for data sharing and collaborative approaches to fraud prevention.

Emergence of new payment types and channels

Real-time payments and the proliferation of digital wallets and peer-to- peer (P2P) payment platforms are gaining popularity. FIs are thus responsible for devising new fraud risk management approaches for these methods while still elevating their approaches to legacy payments, such as checks and cash. The emergence of digital-asset payments has led FIs to rethink their fraud mitigation protocols, as the digital assets industry has fueled new methods of carrying out fraud and scams.

The 2024 Impact Awards in Fraud

Fraud challenge Impact

Regulatory pressures and compliance requirements

FIs face increasing regulatory scrutiny and compliance requirements related to fraud prevention and consumer protection. This includes evolving standards for customer authentication, data privacy, and fraud reporting. FIs must balance robust fraud prevention measures with regulatory compliance, often requiring sophisticated technological solutions and comprehensive data management strategies.

Cross-channel fraud detection and prevention

As customers interact with financial services through multiple channels (mobile, online, in-person), fraudsters exploit the gaps between these channels. FIs need integrated solutions that can provide a holistic view of customer behavior and transactions across all channels to detect and prevent cross-channel fraud attempts.

Data privacy and security concerns

While data sharing and analysis are crucial for effective fraud prevention, FIs must also navigate stringent data privacy regulations and growing consumer concerns about data security. Solutions that can leverage data for fraud prevention while ensuring robust data protection and compliance with privacy laws are in high demand.

Customer experience and friction

As FIs implement more robust fraud prevention measures, they face the challenge of balancing security with a seamless customer experience. Overly stringent controls can lead to false positives, causing unnecessary friction and frustration for legitimate customers. This can result in decreased customer satisfaction, abandoned transactions, and potential loss of business. FIs must find innovative ways to enhance fraud detection and prevention while maintaining a smooth, friction-free experience for genuine users across all channels and touch points.

This challenge aligns with the report’s emphasis on customer-centric approaches and the need for solutions that can improve fraud detection without negatively impacting the user experience.

Source: Datos Insights

These challenges underscore the need for innovative, comprehensive, and adaptive fraud

prevention solutions in the financial services industry. The award-winning innovations

highlighted in this report demonstrate how leading organizations are addressing these

complex issues through advanced technologies, data analytics, and collaborative

approaches to fraud mitigation.

The 2024 Impact Awards in Fraud

Socure: Best Digital Identity Innovation By Jim Mortensen

The winner of the 2024 Fraud Impact Award for the Best Digital Identity Innovation

category goes to Socure for its Sigma Identity v4.0 solution. This comprehensive offering

provides a completely integrated identity fraud solution that can address all forms of

identity fraud.

Socure is a leading provider of digital identity verification and fraud solutions. Its

predictive analytics platform applies AI and machine learning techniques with trusted

online and offline data intelligence to verify identities in real time. Socure provides a

vertically integrated identity verification and fraud prevention platform that boasts an

Identity Assurance Level 2 (IAL-2) certification and a FedRAMP certification that is currently

in process. This enables the company to deliver advanced levels of assurance and the

highest standards for security and compliance.

Table B lists key information about Socure and its award-winning innovation.

Table B: Socure and Sigma Identity v4.0

Category Description

Organization Socure

Date founded 2012

Headquarters New York

Innovation Sigma Identity v4.0

Brief description Sigma Identity v4.0 is a comprehensive, end-to-end verification solution providing a 360-degree view of identities, from PII to device intelligence and behavioral analytics. The solution is based on a consortium of over a decade of transactions from more than 2,500 customers.

The 2024 Impact Awards in Fraud

Category Description

Value proposition Socure’s solution delivers near-instant identity fraud decisions, reducing false positives and manual reviews while enhancing fraud detection capabilities across multiple industries.

Key benefits Socure reports that Sigma Identity v4.0 captures up to 99% of all identity fraud in the top 5% of riskiest users while providing reductions in false positives exceeding 40% for some users. The solution delivers decisions in under 150 milliseconds and can reduce manual reviews to less than 5% of volume.

Website socure.com

Source: Socure, Datos Insights

Innovation: Sigma Identity v4.0 Socure’s Sigma Identity v4.0 aims to provide end-to-end identity verification. It brings

every element of the identity into a single score for optimum false-positive reduction while

leading to high fraud capture rates. The vertically integrated solution provides a 360-

degree view of identities, from PII to device intelligence to behavioral analytics, based on a

consortium of over a decade of transactions from nearly 2,500 customers. Socure’s identity

graph combines explicit and behavioral data, allowing the company to perform real-time

anomaly detection at the individual, company, industry, and network levels.

Sigma Identity v4.0 introduces two novel features:

• Entity Profiler: This capability merges digital footprints, such as geolocation and

browser languages, with authoritative identity data to construct a comprehensive

profile for an identity based on historic verifications. By comparing the identity’s

current context and behavior against those collected in their profile, unusual deviations

indicative of identity theft can be detected, and organizations gain a more dynamic

and accurate assessment of digital identities.

• Integrated Anomaly Detection: This feature assesses behavioral pattern differences at

the company, industry, and financial network level to adapt to generative AI attacks,

enabling the identification of thousands of risk-indicating variables. With this

technology, customers are equipped to swiftly identify and respond to threats, such as

a sudden increase in applications from device farms, tumbled emails, money-muling

activity, or unknown Voice over Internet Protocol providers. This feature enhances the

platform’s ability to detect and prevent sophisticated fraud attempts.

The 2024 Impact Awards in Fraud

By delivering actionable risk intelligence via an integrated in-house developed single API,

Socure can replace complex rules systems and inconsistent performance across poorly

integrated point solutions. The interconnectivity and corroboration between data points

enable a “flywheel” effect wherein each verification makes the system smarter and more

trusted, leading to faster, more precise future verifications.

Market Challenges and Needs

Socure’s Sigma Identity v4.0 addresses several critical challenges and unmet needs in the

identity verification and fraud prevention market:

• Elimination of limited, single-point solutions: Many vendors in the fraud prevention

industry solve for select fraud types, such as identity document fraud, payment fraud,

or synthetic fraud, missing the holistic view of a consumer and the risks that extend

beyond the narrow single-point solution perspective.

• Reduction of false positives, friction, and manual reviews: Operations teams are being

asked to do more with fewer resources and to lower friction for prospects and

customers.

• Enhancement of device fingerprinting: Fraudsters have figured out how to game most

device fingerprinting solutions requiring the correlation of associated device, behavior,

network, and location patterns across the ecosystem.

• Enhanced fraud prevention through shared knowledge: The ability to share data

through a consortium of companies across industries provides a multiplier effect of

fraud prevention efficacy.

Socure’s integrated solution takes advantage of predictive signals across PII, digital, and

behavioral risk dimensions fused into a singular identity view. By delivering a high degree

of analytical accuracy, manual reviews can be reduced, leading to a more friction-free

experience for prospects and customers. Sigma Identity v4.0 also addresses the need for

shared knowledge of known bad identities and fraudulent devices to expedite and more

effectively fight fraud.

How It Works

Socure’s Sigma Identity v4.0 leverages a combination of advanced technologies and

unique data sources to provide comprehensive identity verification and fraud prevention,

as presented in Table C.

The 2024 Impact Awards in Fraud

Table C: Sigma Identity v4.0―Key Features

Key feature Description

Data amalgamation Socure harnesses the collective intelligence from a consortium of over 2,500 customers as well as all authoritative and alternative data sources. It overlays this feedback data from all these customers, understanding the historical patterns of good customers and fraudsters holistically.

Digital footprint integration

The solution integrates digital footprints with authoritative data, considering the recency, frequency, and context of transactions for a more dynamic and accurate identity assessment.

Creative anomaly detection with large language models (LLMs)

The platform trains LLMs to detect unusual and creative patterns in user-submitted data, such as gibberish emails, alias emails, email tumbling, invalid domains, or typos in Social Security numbers and addresses.

Multiresolution anomaly and risk detection

Sophisticated anomaly and risk detectors operate at multiple levels―company, entity, and industry―allowing for the identification of thousands of risk-indicating variables.

Lower manual review requirements

Due to the lower level of false positives, Sigma Identity v4.0 reportedly reduces the volume of manual reviews from the industry average of 10% to 15% to less than 5%.

Comprehensive view of identities

Because of a unique data amalgamation approach and advanced analytical techniques, the solution provides a multifaceted view of identity, including the integration of digital footprints and entity profiles that facilitate a more dynamic and accurate identity assessment.

Source: Socure, Datos Insights

Sigma Identity v4.0 leverages these features to provide a comprehensive, end-to-end

identity verification solution that uses advanced AI and machine learning techniques. As

shown in Figure 2, the system utilizes Socure’s proprietary identity graph, which enables its

real-time Behavioral Anomaly Detection capability to identify anomalies at multiple levels.

In addition, the solution’s Entity Profiler feature goes beyond snapshot verification,

creating a dynamic Identity view that tracks consumers from inception through their

financial journey. The third-party data sources and consortium data provide the fuel to

increase visibility and complete the view of the identity.

The 2024 Impact Awards in Fraud

Figure 2: Sigma Identity v4.0 Framework

This approach allows for a more nuanced and accurate assessment of identity by

considering the recency, frequency, and context of transactions. Additionally, the solution

identifies behavioral anomalies in real time across companies and industries, enhancing

the ability to combat evolving fraud tactics, including those leveraging generative AI. By

processing and analyzing this wealth of data, Sigma Identity v4.0 can deliver near-instant

and highly accurate identity fraud decisions.

Key Quantitative and Qualitative Results

Clients who have leveraged Socure’s Sigma Identity v4.0 enjoy substantial quantitative and

qualitative benefits, as illustrated in Table D.

Table D: Sigma Identity V4.0―Quantitative and Qualitative Benefits

Benefit Description

Improved predictive power

The solution’s advanced analytic capabilities reportedly enable the ability to capture up to 99% of all ID fraud in the top 5% of riskiest applications or users, with a 40% or better reduction in false positives.

Enhanced speed of execution

Leveraging an advanced technical architecture, Sigma Identity v4.0 returns decisions in under 150 milliseconds.

Source: Socure

Sigma Identity v4.0 Framework

The 2024 Impact Awards in Fraud

Benefit Description

Lower manual review requirements

Due to the lower level of false positives, Sigma Identity v4.0 reportedly reduces the volume of manual reviews from the industry average of 10% to 15% to less than 5%.

Comprehensive view of identities

Because of a unique data amalgamation approach and advanced analytical techniques, the solution provides a multifaceted view of identity, including the integration of digital footprints and entity profiles, facilitating a more dynamic and accurate identity assessment.

Source: Socure, Datos Insights

Sigma Identity v4.0 is positioned as an impactful solution in the identity verification and

fraud prevention landscape. Its ability to dramatically increase auto-approvals, especially

for hard-to-verify populations, while simultaneously reducing fraud and operational costs

demonstrates the platform’s potential to drive both top-line growth and bottom-line

savings for its clients.

Datos Insights’ Take By combining advanced AI and machine learning techniques with a substantial consortium

network of data, Socure has created a solution that addresses many of the key challenges

facing the industry today. The introduction of Entity Profiler and Integrated Behavioral

Anomaly Detection sets Sigma Identity v4.0 apart, offering a more dynamic and

comprehensive approach to identity verification. These features, combined with the

solution’s ability to deliver near-instant decisions with high accuracy, make Socure a leader

in the fight against dynamic fraud threats, including those posed by generative AI.

As fraud tactics continue to evolve and become more sophisticated, solutions such as

Sigma Identity v4.0 will play an increasingly critical role in protecting businesses and

consumers alike. Socure’s commitment to innovation suggests that the company is well-

positioned to maintain its importance in this space and is highly deserving of being the

winner of the 2024 Fraud Impact Award for Best Digital Identity Innovation. Its Sigma

Identity v4.0 solution demonstrates a forward-thinking approach to identity verification

and fraud prevention, addressing key industry challenges while delivering tangible

benefits to its clients.

The 2024 Impact Awards in Fraud

Conclusion The fraud prevention landscape is experiencing a transformative shift driven by rapid

technological advancements and evolving criminal tactics. As highlighted by these 2024

Datos Insights Impact Awards in Fraud, innovative solutions are reshaping how FIs detect,

prevent, and respond to fraudulent activities. These innovations not only enhance security

but also strive to maintain seamless customer experiences―a delicate balance that’s

increasingly crucial in today’s digital-first financial ecosystem.

From advanced identity verification systems and behavioral biometrics to AI-powered

scam detection and customer empowerment tools, these solutions reflect the industry’s

move beyond traditional, siloed fraud prevention methods. They demonstrate how FIs and

technology providers are leveraging data analytics, machine learning, and cross-industry

collaboration to stay ahead of sophisticated fraud schemes. They showcase a trend toward

more holistic, real-time, and customer-centric approaches to fraud prevention.

However, the path forward is not without challenges. As FIs adopt these advanced

technologies, they must navigate complex regulatory landscapes, address data privacy

concerns, and ensure the ethical use of AI in decision-making processes. Moreover, the

human element remains critical; technology alone cannot solve the fraud problem.

Institutions must foster a culture of security awareness among both staff and customers,

complementing technological solutions with robust education and training programs.

As fraud tactics continue to evolve, so, too, must the strategies to combat them. The

innovations recognized in this report represent material steps forward, but they are just the

beginning. The financial industry must remain vigilant, continually investing in research,

development, and implementation of next-generation fraud prevention solutions. By

doing so, it can build a more resilient financial system that protects consumers, businesses,

and the broader economy from the ever-present threat of fraud. FIs that successfully

integrate these advanced fraud prevention technologies while maintaining customer trust

and operational efficiency will be best positioned to thrive in an increasingly complex

financial landscape.

The 2024 Impact Awards in Fraud

About Datos Insights Datos Insights is an advisory firm providing mission-critical insights on technology,

regulations, strategy, and operations to hundreds of banks, insurers, payments providers,

and investment firms―as well as the technology and service providers that support them.

Comprising former senior technology, strategy, and operations executives as well as

experienced researchers and consultants, our experts provide actionable advice to our

client base, leveraging deep insights developed via our extensive network of clients and

other industry contacts.

Contact Research, consulting, and events:

sales@datos-insights.com

Press inquiries:

pr@datos-insights.com

All other inquiries:

info@datos-insights.com

Global headquarters:

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Boston, MA 02109

www.datos-insights.com

Author Information Gabrielle Inhofe

ginhofe@datos-insights.com

Contributing authors:

David Mattei

dmattei@datos-insights.com

Jim Mortensen

jmortensen@datos-insights.com

David Barnhardt

dbarnhardt@datos-insights.com

Trace Fooshée

tfooshee@datos-insights.com

mailto:sales@datos-insights.com mailto:pr@datos-insights.com mailto:info@datos-insights.com http://www.datos-insights.com/ mailto:ginhofe@datos-insights.com mailto:dmattei@datos-insights.com mailto:jmortensen@datos-insights.com mailto:dbarnhardt@datos-insights.com mailto:tfooshee@datos-insights.com

Report: Datos 2024 Impact Awards in Fraud

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