Mobile Fraud Detection Software Compares Users' Behavior Against Their Past Actions

"We think behavior can be the new password," says Nick Edwards.

Edwards is vice president of products at Silver Tail Systems, a young company that provides predictive analytics for fraud detection. On Tuesday it rolled out Forensics 3.0, software that captures customers' clicks as they use mobile banking apps and compares that behavior with their core website and mobile Web sessions. Previous generations of Forensics did not support mobile apps and mobile browsers.

"We'll look at transition times and the sequence people make as they go through a website," Edwards says.  "If you would normally login to mobile banking, go to your account summary, make a mortgage payment and then do something else, and suddenly you're wiring money to Nigeria or adding a bunch of additional payees, those are the types of things that we would flag as anomalies."

How does the software avoid false positives and accommodate variations in behavior that naturally occur due to changes in circumstances? "Our statistical modeling is sophisticated," Edwards says. "We have ways to measure and think through new behavioral steps or the assets of old behavioral steps and build those into the model." Also, customers can set different levels of sensitivity to fraud based on the type of transaction — for instance, looking more closely at a $5,000 wire transfer than a $50 bill payment.

A StreamView dashboard lets banks view user behavior at a glance. A bank might start to see patterns of behavior that are precursors to fraud, for instance. "When customers try to solve problems, in a lot of cases they may have a hunch that something doesn't look right," Edwards says. "This gives them the visibility to say yep, here's what's happening at this time from this user on this page."

The pricing for this software ranges from $50,000 a year to upward of $1 million a year, depending on the size of the financial institution and engagement.

Silver Tail Systems, of Menlo Park, Calif., has won some impressive backing, including from Netscape founder Marc Andreesen and Citi. "Silver Tail Systems is a true pioneer in the security industry, and we struck a relationship with them as a result. We believe this latest release is another proof point of their leadership and innovative approach to solving difficult security challenges that organizations face around the world," said Debby Hopkins, chief innovation officer of Citigroup, in a press release.