Digital identities are the most underutilized tool in fighting financial crime and stopping it in real-time. So says Garrett Gafke, Global President & CEO of IdentityMind. Gafke recently told PYMNTS that digital identities are rich veins of information whose eDNA can restore integrity to the financial system by utilizing predictive actions to prevent abuse.
PYMNTS: How would you define your company’s approach to innovation?
GG: We’re focused on bringing integrity back into the financial system. The rapid adoption of new technologies and business models has created a need for far more innovative risk management solutions — solutions that are prepared to proactively combat abuse, rather than chase it from behind. We are passionate about helping our clients mitigate the risks of their services, by making sure they can identify and stop financial crime in real time. Every fraudster, every money launderer, every dollar we help stop from funding terrorism — that’s why we innovate.
Our approach to innovation is centered on delivering more accurate risk evaluation in real time through eDNA (Electronic DNA). We believe in our fundamental approach to solving the problem, but we learn from our clients, we learn from our mistakes, we investigate market trends to anticipate the new waves of risk, we partner with other data and technology providers, and we research and develop the technology that helps us enhance our solution to deliver the value our clients need.
PYMNTS: What is the most innovative thing that you have introduced into the market and what value did it deliver to the stakeholder group that was its target?
GG: We pioneered the use of digital identities in risk management for financial transactions with our eDNA (Electronic DNA) technology. We view identities as a rich description of transactional attributes, the strength of the attributes’ relationship, and their behavior. With this approach we’ve been able to develop a digital identity trust model that provides our clients with an accurate risk evaluation for dealing with a digital identity.
eDNA allows Banks, Payment Service Providers, Merchants, and the overall FinTech ecosystem to benefit from sharing risk information while maintaining users’ information privacy. This is a fundamental change to the way institutions have historically managed risk. Instead of a static definition of an identity, our technology builds dynamic identities at the speed of digital commerce, with information contributed and constantly updated with each transaction that enters the system. This makes it easy to recognize stolen identities, cards, and repeated bad actors. But also — and perhaps more importantly — to recognize trusted customers and correct information. It’s an all-around more reliable and accurate approach, because it’s built for the way commerce works today.
PYMNTS: Where do you look for innovative ideas and why?
GG: I’ll refer to what I said earlier about learning from our clients, our own mistakes, investigating market trends, working with partners, and doing the research — all of that enhances our fundamental approach.
PYMNTS: What do you think that most people underestimate about innovating in payments?
GG: The complexities of delivering a truly scalable solution, while also managing the risk associated with general payments.
Most innovators are thinking about delivering financial services suited to the diverse lifestyles and problems in handling money worldwide. They’re not thinking about how those systems can be abused, and they underestimate the worldwide impact of having their models and technology applied in a negative manner. When compliance and risk management are an afterthought, the expenses associated with it are sometimes a surprise, so they get done at the minimum level. The good news is they progressively realize the importance of handling it correctly. The ones who succeed have a clear understanding, and their risk strategies improve.
PYMNTS: What person or company do you think “gets” innovation and why – and, conversely, who or what has missed it and why?
GG: As you know, if you can’t say anything nice, then say nothing at all. It is certainly not my place to call out who or what company missed certain innovations. We all miss certain opportunities and it can be frustrating. I am more focused on the positive strides our industry has made in the last several years. We are seeing a tremendous amount of innovation in the eCommerce space, and really have over the past 5 years. After the dot.com crash, a lot of attention exited the payments arena while great innovation continued to take place; it just wasn’t sexy at the time. Now we see examples of crowdfunding, virtual currencies, biometrics, Internet lending, Remitters, P2P, more liberal PSPs, and sponsoring banks fueling greater innovation.
Our marketplace is very fortunate with some of the greatest innovators ever, everything we do today revolves around how we can generate and spend money in more efficient ways. Things we do today are generally attributed to everyone who worked in the payments space over the last 20 years when the overall market was greatly fragmented. Think about it — everything we have focused on since the mid ’90s has been around reducing friction and speeding up the payment cycle. It is certainly a much longer discussion than we can accommodate in this short interview.
PYMNTS: What advice would you give a young innovator in this space and why would you tell him/her to heed it?
My advice would be quite simple. Speed is important, but know and expect mistakes — understanding the difference between urgent and important is key. It takes more drive, passion and investment than you think. So be humble. You need to start there.
Much of the innovation we have seen, and will see in the future, is still dependent on the back-end plumbing built decades prior. It’s important to understand and embrace that infrastructure in order to create efficiencies and innovation all around it. There are so many areas to innovate within the market.
President & Chief Executive Officer, IdentityMind
Garrett Gafke is an entrepreneur and Fortune 500 Executive. Prior to joining IdentityMind Global, Gafke served as President & CEO of Paymate, an innovative provider of payment and risk management services which was acquired by Flexigroup (FLX). Prior to Paymate, Gafke worked as advisor/Interim-CEO for several top tier venture firms and private equity firms.
Gafke has served as President and CEO for SteelEye which was acquired by SIOS a public Japanese company, and was a member of the senior executive team that built and took CyberSource (CYBS) public, which Visa acquired in 2010 for $2 billion, and Trintech (TTPA) public. He helped build VeriFone’s Internet Commerce Division (PAY) which was later acquired by Hewlett Packard(HQP) , and was served as the Group Vice President and General Manager for Cardinal Health’s(CAH) technology division. Gafke is also an active angel investor and Board Member of early stage companies in and around Silicon Valley.