IBM Buys Bank Fraud Detection Firm

The October transition to EMV should be all the evidence any observer needs to understand that major brands take financial fraud very seriously. Now, one of the industry’s most powerful software firms is making sure that it has the chops to detect fraudulent activity before it clears.

Bob Griffin, general manager for IBM Safer Planet, told TechCrunch that his company had officially acquired Germany-based fraud detection firm IRIS Analytics to beef up its credit card fraud identification abilities. By using a “white box model” of fraud detection and intervention, IRIS allows clients to perform their own security fixes instead of waiting on a central vendor to roll out official patches for all of their clients — something IBM and Griffin have been interested in for a good while.

“We began looking at a variety of capabilities, and that’s how we discovered IRIS Analytics,” Griffin told TechCrunch. “It’s a small company in Germany doing phenomenal things. [We felt] it was the best-positioned and most effective technology offering around real-time payments and fraud prevention.”

While IBM may not be a major player in the financial fraud market, the two are far from perfect strangers. PCWorld explained that IBM has been quietly assembling a robust portfolio of fraud detection assets, including Israeli antifraud firm Trusteer in 2013 and Counter Fraud Management Software in 2014.

What does IRIS bring to the table that IBM couldn’t resist? The firm employs a machine learning approach to target fraudulent activities as they happen instead of after the fact. TechCrunch illustrated an example of a cardholder not disclosing travel to a foreign country and his or her card showing up there anyway.

Especially as more and more consumers move away from cash and toward physical cards or digital wallets, attempted fraud will undoubtedly increase in kind; catching hackers red-handed, though, saves a lot more time and money than tracking them down after their digital digressions.