An Interview with CEO of collectAI – for working capital management

Fintech for too long has been focusing on UX, and with the advent of AI, there have been many firms focusing on customer journeys, that would lead to closure of a transaction. However, in recent times, the focus has shifted to back office operations, and adding efficiencies to these processes.


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Germany based collectAI ​​automates ​and digitizes ​invoices, ​dunning ​and ​debt ​collection ​processes ​and ​is ​the ​first ​digital ​end-to-end provider ​in ​receivables ​management. They have achieved significant traction in Europe by processing €25 Million since launch in 2016.

We had a chance to talk to Mirko Krauel, CEO of the firm on their progress and plans, and here are the key points he mentioned about his journey with collectAI.

What led you to collectAI?

After a Diploma in Business Administration, I was working as a management consultant within digital innovation of Banking and Payments industry. During my corporate experience, I noticed inefficiencies in various back office processes. I also noticed that the Fintech startups at that time were mostly focusing on customer experience. I chose the problem to solve and I felt AI would have to be my go-to technology for the problem.

What was the best part of the journey and what were the challenges?

The best part of the journey was getting the team together, the initial days of getting the product design and getting to the MVP. We had quite a few challenges with the Go-To-Market strategy and our sales cycle was also too long. So we had to sit down and work out a way of going after mid-sized clients to have a few closures and build credibility. We also employed a few project managers who were able to bring deployments to closure on a plan.

The other challenge we had was getting access to quality data to build the software, but with time, we are getting better at that too. 

Tell us about the AI software you have developed

The AI software has got better over time as we have learnt and the software has done so too. It now evaluates

  • The best timing to send a message for the payment collection
  • Payment methods to include
  • The tone to be included (friendly, neutral, strict tone)
  • If SMS, Post, Email is better for a customer
  • If a payment plan should be offered

And as a result we end up with a customized communication strategy for every customer.

How do you measure performance of your AI program?

I think it would have to be based on the efficiencies achieved. We have introduced an intelligent​ email ​functionality that led ​to ​an ​increase ​of ​the ​collection ​rate ​of ​33%, ​while ​processing ​costs have ​been ​reduced ​by ​up ​to ​41%. 

It is a big market in Europe alone where about 23% of debts are not paid on time. We have managed £25 Million processed through collectAI in the last 12 months.

Those are big milestones that we have achieved within 12-18 months, and they wouldn’t have happened without the hard work of the team in building a capable software.

Where do you go from here, what is in pipeline?

We need to scale the team across various functions. We need a bigger IT team, enrich our operations team and also get a few PMs. I have also plans for developing some self service features within the product, which will help customer experience and conversion. 

There are a number of AI startups coming up across Europe focusing on back office operations. However collectAI are well funded by their parent company Otto Group, Germany’s largest online retailer, and they have also demonstrated execution in the last 12 months. There is serious competition across the Atlantic, however, they seem to have the advantage in the European markets.

Arunkumar Krishnakumar is a Fintech thought leader and an investor. 

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MoneyOnMobile is a mobile operator agnostic alternative to M-Pesa for the Unbanked and Underbanked

single shampoo

MoneyOnMobile is very low profile given how much traction they have. With a retail outlet distribution channel in India of 335,000 shops, 200 million unique phone numbers and more than 1 million domestic money transfer transactions processed in August 2017 alone, MoneyOnMobil should be top of mind for anybody tracking mobile money innovation.

Yet, although I keep a close eye on this space, I only heard about them a couple of weeks ago. Maybe we all instinctively gravitate towards something that resonates with our Western lifestyle. We can personally relate to the emerging middle class of India and so we can relate to ventures such as Paytm or the recently launched Tez from Google that serve that market.

It is harder to relate to the needs of the Unbanked and Underbanked and that is the market served by MoneyOnMobile and M-Pesa

As soon as I came across MoneyOnMobile,  I wrote about them here.

MoneyOnMobile has got the tag “Square of India”, partly because Jim McKelvey, a cofounder at Square is on the board of MoneyOnMobile. That positioning works well because of the connection through Jim and because Jim tells the story so well in this short video:

However this is a Western centric view and the analogy makes one think of credit card processing for small retailers. The analogy for MoneyOnMobile is closer to M-Pesa than Square and that is the analogy described in this post.

Disclosure: MoneyOnMobile is a client of Daily Fintech Advisers. I am not a financial adviser, please do your own diligence before investing.

The journey of discovery about MoneyOnMobile

When I tell people who know about mobile money in India about MoneyOnMobile, the journey of discovery goes like this:

“That sounds like Paytm.”

“Not really, Paytm and Mobikwik and Tez and many other ventures go after the emerging middle class of India. It is a great market of about 300 million people and Western models and bank/credit card rails translate reasonably well to that market. MoneyOnMobile in contrast is serving the Unbanked and Underbanked of India, a market closer to 850 million people. What is remarkable is that MoneyOnMobile have found a way to profitably serve that population which you could never do with Western bank/credit card payment rails”.

“OK, so it is more like M-Pesa”.

“Exactly. With one crucial difference. MoneyOnMobile is an open platform that is mobile operator agnostic”.

In this post I will elaborate on that thesis for those who need some more background explanation.

Although I did not know about MoneyOnMobile, I did write a post nearly 3 years ago in November 2014 basically saying that the world needs something like an open alternative to M-Pesa. When I wrote that I did not know about MoneyOnMobile, I just thought that something like that should exist. So when I came across MoneyOnMobile a few weeks ago I immediately saw how game-changing it was.

Why M-Pesa is so game-changing 

M-Pesa started in Kenya because people were trading their mobile phone minutes; in a world without bank accounts or landlines, these mobile minutes were vital to life and were a form of currency. The roadside stands (a kind of decentralized Walmart) became the bank where you could convert mobile minutes into Kenyan fiat currency and/or pay bills. Bankers lobbied the Kenyan government to kill it, but a study found it to be secure. Anecdotally, the Kenyan President wanted to pay his gardener and when he saw how easy it was to do this with M-Pesa he was sold.

The traction data from M-Pesa in Kenya is stunning. Read this article from SC College of Business at Cornell with this data:

“Today, Kenya is a leading actor in the mobile money sector: approximately more than 26 million subscribe to the network with over 127.000 agents. Between 31% and 50% of Kenya’s GDP is estimated to flow through this network, as over 50% of the population continue to be without a bank account and to rely on platforms such as M-Pesa.”

But there is one big problem with M-Pesa

M-Pesa is controlled by Vodafone. There is nothing wrong with Vodafone. They are a good mobile phone operator. However an open, mobile phone operator agnostic version of M-Pesa would be better. This is particularly true in India where there is tough competition from many mobile phone operators driving down prices (which is critical to the Digital India agenda of the Indian Government).

The other analogy that people reach for when they first come across MoneyOnMobile is Bitcoin. This is where it is useful to compare M-Pesa and Bitcoin. They are like mirror images of each other:

M-pesa bitcoin

If you replace M-Pesa with MoneyOnMobile in that comparison, the power of their model emerges because it is like M-Pesa, except that it is mobile phone operator agnostic.

Why fight over the Overbanked when the Underbanked are so hungry for service?

Disruption happens through outsiders who are not being served by the current financial system. Bankers, fighting over the overbanked in the West, are eying the 70% of the world that is unbanked. One of the simplest trends to ride in the 21st century is the rise of billions from subsistence farming into the consumer society. Each of those billions spends very little but in aggregate the market is big and when a country reaches the tipping point when a real middle class emerges, it becomes a very big market – witness China and more recently India and many countries in Africa today.

The reason why – price

Going after the blue ocean Underbanked market is so obvious. Why is not everybody laser focussed on this? The reason is simple. It is hard to serve the Underbanked profitably.

It is hard, but not impossible.

CK Prahalad popularised the idea of this demographic as a profitable consumer base in his 2004 book The Fortune at the Bottom of the Pyramid.

The iconic Bottom Of Pyramid success story was the single serving of shampoo sold by Hindustan Unilever Limited (HUL) in India, described well in this HBR article:

“Years ago, HUL pioneered the use of low-cost, single-use packets to make its products affordable for lower-income consumers who often shop daily for necessities (think of a ketchup packet, but filled with soap). Now these packets are ubiquitous in developing countries around the world. HUL itself sells 27 billion sachets a year.”

It should be easy to do this digitally where the marginal cost is zero; but it is impossible using bank/credit card payment rails. MoneyOnMobile has figured out how to make payments profitable even if the transaction is 1 Rupee (about US$0.015) – just like M-Pesa. Unlike M-Pesa, they are mobile phone operator agnostic.

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Bernard Lunn is a Fintech deal-maker, author, investor and thought-leader.

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The Battle for the Billion – Payments in India heats up with Google Tez

A week ago Google launched “Tez” (meaning “fast” in Hindi), as yet another player in the payments segment in India. Indian payments industry has seen major growth over the last few years, thanks to the e-commerce boom. And e-payments is projected to be $500 Billion by 2025 – a market that can definitely accommodate multiple winners.


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A few questions I have been trying to find answers to since the launch are,

  • How does Google Tez stack up against the first movers, and the major players in this segment?
  • Is it too little too late for Google?
  • Will it help/hurt Google?
  • Will Google be satisfied with just the conquering the payments on smart phone market?

Before getting into these questions lets discuss the two key payment services in play here.

Unified Payments Interface (UPI) and UPI based apps: UPI is a feature that allows consumers to perform funds transfer, where the sender doesn’t need the bank details of the receiver. The funds transfer happens between two virtual payment address. Key differences between UPI and the other key methods of payments (NEFT/RTGS) are described here. UPI is currently used by 50 Indian Banks.

Apps that are predominantly UPI based, just act as a pass through layer for payments to happen. Examples are Google Tez, BHIM, PhonePe

e-Wallets: These are apps that store money and act as digital wallets, and will need to be topped-up from time to time with cash from either bank accounts or credit cards. When a money transfer is made, it moves from the sender’s e-Wallet to the receiver’s e-Wallet. PayTM is an Example.


BHIM was launched by the Government of India, and had quite a lot of success due to its simplistic design and interface. It is an app that supports only UPI transactions.

PhonePe, since its launch has been giving BHIM tough competition. It has richer functionalities for consumers from sending money to paying bills.

PayTM, ofcourse, is the one to beat in the Payments sector in India. PayTM is an e-Wallet, and has a different use case, as explained above. It has the first movers advantage and big money via investors such as Alibaba, and the might to take on Google at this stage.

Google Tez Features:

Tez takes a different approach to the Payments customer journey, perhaps to steer clear of the competition with PayTM. Tez is built on top of UPI, so users transfer money from one bank account (connected to their Tez app) to another, without storing money within Tez.

Tez supports a “Cash” mode that allows money to be transferred from one Tez user to another using Audio QR technology (AQR), which is supposedly more user friendly and secure. This is what one would need to pay the shop keepers in the local market.

Apart from this Tez supports several Indian Regional languages, has a fraud prevention feature called Tez Shield, and also provides a chat like interface.

Are they late?

Why would Sundar Pichai, someone who understands the Indian market come to the party so late? And is there hope?PaymentsTrend

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I believe, Google has the following advantages,

  • They have positioned themselves cleverly in the UPI space which is not the strategy that PayTM are currently taking.
  • As a feature within Google Tez, they support “Cash Mode“- which allows users to transfer money to nearby Tez users through a QR Code. India loves cash and this approach differentiates Google from the rest of the UPI lot.
  • As a further advantage, google has better data about every smart phone user than the Government of India or PayTM. If they put that to good use, they would be able to provide more contextual customer journeys.
  • Sundar Pichai’s understanding of the market, and Google’s might is a definite advantage on top of these.

It remains to be seen if they can accelerate from here, to conquer the UPI segment first, and eventually the smart phone payments segment in India.

The Next Billion

There are ONLY 300 million smart phone users in India. There are close to 650 Million mobile users (including smart phone users) and about a Billion who don’t have a smart-phone in India.

That is one mammoth market that Google would not want to miss out on.  But the advantages Google have with smart phone users (consumer data), is not something they can extend into the next Billion. So, one way to do it is through acquiring a key player in that market.

There are a few trying to conquer this space that shouts out for M-Pesa like innovation, and MoneyOnMobile is one key player. When I met the CEO of MoneyonMobile earlier this week, I was surprised to learn (inspite of knowing the Indian market) about the amount of efforts and capital it took to get the Next Billion on board. However, as Bernard describes in his article on MoneyOnMobile, the winner will make it big. And to me, Google might have to conquer that market through acquisition.

Google are not the first movers, so they are always going to play catch up. But they could do it right first time. Watch this space.

Arunkumar Krishnakumar is a Fintech thought leader and an investor. 

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Thematic investment returns of 30%-40% in Digital Payments

VeroPay App

Fintech investment opportunities for our portfolios are growing. In this post, I won’t dive into investment opportunities in private markets, like those through crowdfunding platforms, or through lending marketplaces, and won’t touch upon the emerging asset class of cryptos. Even though the number of articles around these investment opportunities on Seeking Alpha has skyrocketed over the past year, today I want to look only into the public markets and specifically in the Digital payments subsector which is the largest area not only in terms of number of Fintechs but most importantly in terms of adaptation rate from incumbents and end-user penetration. This is the reason that there are a few thematic investment vehicles already offered from the universal and private banks and Fintechs, focused on capturing the huge investment opportunity through trackers, certificates, and motifs. The second batch would be around themes of lending, crowdfunding, and lastly robo-advisory.

Digital payments subspace growth and potential, comes from growing e-commerce, high cash usage implying lots of room for electronic payment adaptation, omnichannel adaptation, growth in value-add services like loyalty programs, and increased security needs.

Three kinds of investment instruments

 7yr certificate with dynamic rebalancing of basket

UBS and Credit Suisse offer a performance linked equity certificate. It is a 7yr certificate that was issued in late 2014 and expires in 2021. It is linked to the AtonRâ Digital payments basket that is rebalanced on a monthly basis. AtonRâ is a Geneva independent research firm with an innovative thematic focus (e.g. biotech, AI and robotics, digital payments, global defense and security etc).

These certificates have had a decent cumulative performance for the first 3 calendar years (part of 2014, 2105, 2016) of around 10%. The explosive growth has been reflected in the returns year-to-date. 2017 has spiked up over 40%!

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UBS certifcate in USD

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Credit Suisse certificate in EUR

The holdings of the underlying portfolio aren’t transparent. They are published in the conventional monthly performance report. From one of the recent ones, the top holdings and best performers, offer us some insights in understanding the returns and the exposure.

Alibaba ADR (BABA) and Qiwi ADR are both top holdings and top performers for the month of June. No need for an intro to Alibaba and the only public way to invest in Alipay. Qiwi is a Russian payment service provider focused on serving primarily Russia, Ukraine, Kazakhstan, Moldova, Belarus, Romania, the United States, and the United Arab Emirates. It is publicly listed on the Nasdaq and of course, the Moscow Exchange (ticker: QIWI).

Celio, the largest Brazilian credit and debit card operator player in Latin America by revenue and market value, is the another top performer this past month. Listed only on the Bovespa BVMF: CIEL3.

Square and Global payments, a Fintech and an incumbent, are the other two top holdings of the AtonRâ Digital payments basket. Square is already 8 yrs and is one the significant Fintech players both in hardware and software for merchants and small businesses
SQ). The other US is nearly 50yrs old with a truly global footprint (GPN (NYSE)).

1yr certificate with a fixed basket

Julius Baer’s 1yr tracker certificate on a digital payment basket is soon expiring (Sep 6, 2017). It was a transparent structure with 12 equally weighted holdings that were mostly incumbents rather than pure Fintechs; and procuded over 30% returns.

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The above holdings (in the left column) have been revised for an upcoming new tracker with the same number of equally weighted holdings and 4 revisions (in blue):

Maturing Sep 2017 To be issued in Sep 2017
Apple Inc Total System Services
Worldline SA Worldline SA
Mastercard Inc Mastercard Inc
Alphabet Inc Tencent
Global Payments Inc Global Payments Inc
Alibaba Group Holding Ltd Alibaba Group Holding Ltd
NXP Semiconductors NV Square
PayPal Holdings Inc PayPal Holdings Inc
Worldpay Group PLC Wirecard
Vantiv Inc Vantiv Inc
Ingenico Group SA Ingenico Group SA
Visa Inc Visa Inc

This basket is only composed of ADRs (no other currency exposure) and more incumbents. The rebalancing is effectively annually reinvestment decision is left to the investor.


For US retail investors only, Motif offers for $9.95 the “Digital Dollars” motif-basket that is fully transparent and dynamic. It is rebalanced quarterly and its holdings are market-cap weighted with only US listed companies. Currently it has 20 holdings with a heavy focus on the card network segment. The current segment breakdown is:

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The one year return is over 30%. The holdings, weights, and returns are:

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What is more important is that Motif offers an optimization algo that allows users to take stocks that can be considered players in the mobile payments space (which are 26 US listed stocks) and optimize (holdings and weights). This is a great tool for DIY thematic investing.

Our take

Global exposure in the digital payments space by including companies that are not listed in the US, has paid off. Rebalancing is necessary as the space is crowded and evolving with new value-add services. Frequency of rebalancing is not a no-brainer.

Lets watch whether Amazon sneaks into these baskets. In any case, the Amazon effect is lingering as AtonRâ research points out:

Looking further out, Amazon’s announced entry in the physical retail space through the acquisition of brick-and-mortar retailer Whole Foods Market is likely to have a major impact on the traditional checkout experience in most stores and to foster mobile payments. Indeed, it’s likely that Amazon will bring its Amazon Go concept (which uses notably computer vision and sensors to skip the checkout line and automatically debit the shopper’s Amazon account) to Whole Foods in the future, putting pressure on traditional retailers to follow suit with a seamless, mobile-based checkout experience.”

Efi Pylarinou is a Fintech thought-leader, consultant and investor. 

Get fresh daily insights from an amazing team of Fintech thought leaders around the world. Ride the Fintech wave by reading us daily in your email.

Africa Fintech boom focuses on Remittance and Community lending


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Recently, during a conversation with an African colleague, he mentioned that Fintech in Africa wasn’t disruptive. I was shocked and mentioned that Africa was going through a Leap-Frog era with the Telecom and Fintech boom and asked why he thought it wasn’t disruptive. He felt that a few years ago (in 2010) 80% of the population were unbanked, so there was nothing to disrupt.

That has changed massively though. As of last year, about 220 Million consumers were using Mobile Wallet across the continent, thanks to the mobile penetration. Many such payment providers do not inter-operate and that has been restrictive, especially for payments across countries within Africa. This space is being regulated to force payment providers to allow inter-operability.

However, with the Payments space over crowded, startups in Africa are now looking at Remittance and Lending. Remittance is the largest form of Foreign investment into Africa. In 2015, $62bn worth of remittance flowed into the continent, whereas the total Foreign Direct Investment (FDI) was $55bn, and total foreign aid was just over $50bn.

Remittance GDP

Western Union charges close to 10% for remittances and have about 12% of the market share. If the remittance commission came down to 5%, $16 Billion of savings can be made. And Africa currently pays the largest commissions for remittances into the continent. No wonder its a huge inefficiency that start ups target.

Remittance cost

A Rwandan startup Mergims allow relatives abroad to purchase airtime, electricity and other goods for their family at home instead of transferring cash. Mergims was one of the nominated startups in “Rising startups awards” from SWIFT and came fourth globally. Remittance along with Payments make up about 50% of African startups, but unlike Payments, Remittance still is some way from reaching its peak.

Many Lending Fintechs in Africa have taken an approach which is culturally aligned. Stokvel, which is the name for community banking in South Africa is used traditionally by a group of people who want to save money. People often choose to save and lend in community groups rather than formal banks.

Stokvels can be a savings scheme where members regularly contribute an agreed amount from which they receive a one-off lump sum. The sum can cover the costs of groceries, investments, holidays , or simply to save.

StokFella a startup based on the Stokvel principle have developed an app that can be used for creating and managing such communities. Stokvels can not only be used in lending, but also can be used for health insurance for example. There can be innovative applications once the communities have been created.

Its interesting to see Fintechs taking a very customized approach that would suit Africa and its culture. They are not just replicating business models used in the developed world, but are thinking ground up to come up with new ones.

Arunkumar Krishnakumar is a Fintech thought leader and an investor. 

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GDPR vs PSD2 – Banks may abandon PSD2 due to conflicting policies


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About a year ago, Bernard had written a post on PSD2, and discussed different levels of maturity in regulations. He highlighted that PSD2 was a regulation meant to open up the market for innovative consumer banking use cases and solutions. However, the same regulator (EBA) have set a timeline for General Data Protection Regulation (GDPR) in 2018 alongside PSD2.

We have discussed PSD2 and its implications for banks, fintech firms and consumers at length in the past. So, let me focus on GDPR and what it means to firms and consumers. The purpose of GDPR is to ensure consumers give informed consent before companies can share their personal data with third parties. Pre-ticked check boxes and inactivity from consumers can no longer be assumed as their consent to data sharing post GDPR.

Unlike PSD2, GDPR applies to businesses in the EU processing consumer data, not just Financial services firms. Also, for non-EU businesses GDPR applies, if an EU resident’s personal data is processed in connection with goods/services offered.

The Data Protection Act (DPA) provided consumers with right of subject access – which meant consumers can request a company for data that the firm had collected about them. Currently many businesses charge a fee to provide this data to consumers, but post GDPR, firms can’t charge this fee.

As consumers, we can instruct firms when to collect our data and stay on top of it using the right of subject access. Now what does this have to do with PSD2? PSD2’s purpose is to enable consumer data sharing, where as GDPR’s purpose seems to be to try and cut down on data sharing.


PSD2 is about financial services firms sharing customer data with third parties who they may not necessarily have a contractual agreement with. These third parties may then come up with innovative use cases by processing consumer data.

So, to be compliant with PSD2, banks should ask for customer’s consent to share their data with third parties. But to be compliant with GDPR, data processing by third parties will also need explicit customer consent. How is a bank supposed to be responsible for the processing of consumer data performed by a third party, it has no contractual agreement with?

While this hasn’t been explicitly mentioned as a process required to be GDPR compliant, my guess is, it would be upon the Banks to ensure third parties (that they share consumer data with) have consumers’ consent to process their data.

Unlike PSD2, that doesn’t have any punitive charges, violation of GDPR might result in a fine of upto €20 Million or 4% of Global turnover. And knowing the way banks deal with regulatory compliance, nothing motivates them more than a fine hanging over their heads.

This means, where there are conflicting regulations, and lack of clarity on a standard approach to data sharing, banks will focus completely on implementing the punitive GDPR. In someways, GDPR may also become an excuse for banks for not implementing PSD2 and avoid sharing what they feel is their asset – consumer data. Watch this space!!

Arunkumar Krishnakumar is a Fintech thought leader and an investor. 

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Fraud Detection using AI and Mastercard’s acquisition spree

“Progress is made by the improvement of people, not the improvement of machines.”


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As more consumers turn to digital banking for their everyday transactions they will generate huge amounts of data that banks can use to identify trends and highlight suspicious behavior.

As digital transaction volumes increase, and real-time payments become the norm, banking solutions to identify frauds are often inadequate. In most cases these systems will need to determine if a transaction is genuine or not in a fraction of a second. Thanks to the AI wave, as fraudsters get better, machines spotting them get better too.

Cybercrime is estimated to cost the global economy 400 billion dollars. Credit card fraud accounts for a large proportion of this cost. Artificial Intelligence (AI) can provide faster, cheaper and more accurate fraud detection.

Some of the key considerations of a payments infrastructure (using AI) while solving the fraud detection problem are,

  1. Initiate the payments safely
  2. Handle billions of transactions
  3. Identify relationships through graph maps
  4. Social media integration and Sentiment analysis
  5. Behavioural analysis
  6. Adapt quickly as fraudsters evolve their modus operandi

An AI system can use thousands of data points in every transaction and do a fuzzy lookup to billions of other transactions to identify patterns, coincidences and anomalies.

Most payment giants are increasingly turning to AI and Mastercard is no exception. They have been acquiring firms focusing on fraud detection as AI deal activity hit all time highs in Q1 2017. In March 2017 Mastercard announced the acquisition of NuData Security to deliver online and mobile anti-fraud solutions using session and biometric indicators.


“Our unprecedented use of artificial intelligence on our network is already proving successful. With the acquisition of Brighterion, we will further extend our capabilities to support the consumer experience.”

– Ajay Bhalla, President of Enterprise risk and security for Mastercard


Earlier this month, Mastercard announced the acquisition of Brighterion. Brighterion’s portfolio of AI and machine learning technologies provide real-time intelligence from all data sources regardless of type, complexity and volume. Its smart agent technology will be added to Mastercard’s suite of security products already using AI.

“Progress is made by the improvement of people through the improvement of machines.”

Arunkumar Krishnakumar is a Fintech thought leader and an investor. 

Get fresh daily insights from an amazing team of Fintech thought leaders around the world. Ride the Fintech wave by reading us daily in your email.