Dave Excell, Founder & CTO, Featurespace
Artificial intelligence (AI) is fast becoming the defining technology of our age. As with any new technology however, bad actors are equally adept at harnessing its power for their own nefarious ends.
The power of AI has seen fraudsters increasingly able to penetrate banking and payment systems. As in any conflict, there is an arms race between the defenders and attackers developing. In the case of card fraud, fortunately the defenders are winning.
Financial Fraud Action UK figures for 2017 published last month have shown the defenders are valiantly winning the fight, with the total value of unauthorised fraudulent payments on cards, remote banking and cheques falling by 5% to £731.8m – despite the gross number of attempts rising 3%.
So the arms race is on. The only way for us to beat the crooks is to continue to develop our own smart AI weapons to continue to stay one step ahead and begin to turn the tide on fraud.
AI is the new weapon of choice
Algorithms have long been used by fraudsters and hackers to even the odds against defender’s systems. By using AI, the time required to test large quantities of data and probe defences has reduced significantly.
AI is used by fraudsters in a variety of ways but two of the most common are Credit Master and Authorisation Manipulation attacks.
Credit Master attacks
One way in which fraudsters use AI is in so-called ‘Credit Master’ attacks. Algorithms are deployed which automatically generate credit card account numbers from an existing correct number as well as pairs of expiration dates. The criminal software then automatically tests these combinations, working sequentially through number combinations to see which match genuine cards by attempting a transaction. It’s simple trial and error.
Sequential number Credit Master attacks have existed for a long time but increasingly fraudsters can use AI to automate the process of testing mind-boggling amounts of numbers at the speed of computer processors. This fully automated process allows fraudsters to test thousands upon thousands of prospective number combinations at a far greater rate than would be possible with methods that require human input.
Fraudster’s attacks are becoming more nuanced, using AI to test many account numbers in random, rather than sequential configurations (sequential is more easily detected by existing fraud solutions). AI technology can also vary the rate at which numbers are attempted, either hard and fast, overwhelming detection or slow and steady, so the attempts do not seem like the same attack.
When one of the tested combinations proves to match an existing card, the fraudster can then use the details in further attacks to steal money from customers.
As fraudster’s technology improves its efficiency and speed, there is increasing load placed on bank systems to detect these fraudulent transactions.
In an Authorisation Manipulation attack, a fraudster presents themselves as a valid merchant through access to a payment terminal, either with a physical chip and pin/swipe machine or online terminal. Payment terminals can be obtained in a variety of ways, for example through taking over an existing account that has access to a terminal, via collusive merchants or by applying for one fraudulently.
When a transaction is put through a payment terminal, various different pieces of information are sent to the bank which, when validated, authorises money to move from a bank account to the merchant (or in this case fraudster).
The fraudster aims to force payments through this authorisation process by providing information to the bank which fits enough criteria for the bank to authorise the payment.
AI is now being used to test many different iterations and combinations of card numbers, customer information and purchase details through a bank’s authorisation process, learning which details have to be valid for a fraudulent transaction to be authorised.
AI allows fraudsters to test many more different combinations at a much higher rate than would otherwise be possible and to learn and adjust methods automatically based on which attempts are successful.
Much like an invader testing a wall’s defences, Authorisation Manipulation attacks find out exactly where weak points are and through a process of elimination will find the gaps in a bank or payment provider’s defences. The fewer valid details an attacker needs to successfully authorise a payment the more efficient fraudsters can be in their attempts.
A new weapon in the war against fraudsters
Using cutting edge technology, banking and payment providers are now able to foresee fraudulent transactions and stop them in their tracks. Rather than relying on static rules or models to detect fraud (that fraudsters can test and learn to defeat), advanced AI solutions are now analysing customer behaviour to provide a real time dynamic defence.
Existing rules or static model based systems are getting out-classed by fraudsters because they aren’t able to learn. When a static fraud system is being exploited, it isn’t able to detect whether or how fraudsters are getting through and isn’t able to seal the gap in its defences.
The subtle art of spotting a fraudster in the act
Fortunately, while AI is becoming more commonplace amongst fraudsters, banks and payment providers are employing ever more advanced AI to protect customers.
Using the very latest in machine learning technologies, the defenders are trying to spot the fraudsters in the act. Instead of trying to notice things that might be ‘wrong’, smart tech can now intuitively ‘know’ a real customer from a crook.
Featurespace’s real time machine learning platform is able to understand the behavioural traits of real customers, learning each individual’s characteristic traits. This is done by spotting the variance from the individual’s normal behaviour. This can be as subtle as the rhythm in which a customer typically enters their password, their preference for key strokes, or how they use a mouse.
It can also be learning where a person is likely to go and what they might spend. This kind of intuitive learning means fraudsters with stolen card information can be picked off in real time.
In the perpetual arms race between financial criminals and the defenders of customers, AI provides tools for both sides, but by using the latest machine learning technologies the defenders are winning the race.
How sustainable AI improves the triple bottom line
An investment in green AI enables financial services firms to align people, profit, and planet
By Nick Dale, EVP business development, Verne Global
Green investing is widely regarded as a mega trend, with chief executive Larry Fink of BlackRock, the world’s largest money manager, stating, “Climate change has become a defining factor in companies’ long-term prospects … awareness is rapidly changing, and I believe we are on the edge of a fundamental reshaping of finance.”
The recent seismic shift in public opinion about climate change has not only increased attention on the sustainability and societal impact of investing in a company, it’s also influencing the decisions being made in finance industry boardrooms overall, whether that’s implementing innovative business models or adopting new partnerships and technologies. However, as business leaders strive to make green choices, many are unaware of the hidden environmental costs of the technologies they are employing.
AI in the finance industry
The use of AI has become ubiquitous across industry sectors, and is now an integral part of the technologies being used in financial services, from optimising asset portfolios and underwriting loans to assessing risks.
AI is especially beneficial for things like quantitative trading, which uses large data sets to identify patterns that can then inform strategic trades. AI’s machine learning models can analyse vast and complex data and make predictions accordingly. But AI models are not only data-hungry, they are power hungry.
Supercomputers train and test mountains of data for AI models, and can run 24-hours a day, for hours, days, or even weeks. These applications consume huge amounts of energy, and as AI technology continues to grow and develop, the computations behind it are also increasing in size and complexity. The carbon emissions from training a single AI model for language translation is roughly equivalent to 125 round-trip flights from New York to Beijing (AI Now 2019 Report).
The carbon cost of AI becomes even higher when you factor in the energy required to keep the computing equipment housed in data centres cool – overheating can impact performance and damage equipment. As a result, in a conventional data centre, at least 40% of all energy consumed goes towards cooling.
But sustainable AI is possible if financial services organisations take positive steps to minimise its environmental impact.
Minimising AI’s carbon footprint
Location, location, location
Many tech giants are committing to reducing their carbon footprint, with Amazon pledging to reach 80% renewable energy by 2024, and Google investing in data centres in Nordic countries specifically for better energy efficiency.
This is because in the Nordics, data centres are largely powered by renewable energy sources. Iceland, in particular, uses 100% renewable hydroelectric and geothermal power – with no nuclear power sources – and is connected to a reliable power grid. These renewable energy sources are much less harmful to the environment because, unlike fossil fuels, they don’t cause pollution and don’t generate greenhouse gases. Not to mention, renewable energy is based on natural resources that can be replenished within an average human lifetime, as compared to fossil fuels, which can take thousands—or even millions—of years to replace.
Over 80% of compute doesn’t need to be near the end-user, and in those situations, choosing data centre locations in cool climates has a significant impact on carbon emissions. AI compute can be located in places like Iceland, which can utilise all-year-round, free cooling due to its temperate climate.
Data centres that are located in hot climates, like Arizona in the US, require high-powered cooling systems in operation around the clock. With average high temperatures of 40° Celsius in the summer, these data centres can use up to 4 million gallons of water a day to absorb heat through evaporation into cooling towers. Consequently, when location doesn’t hamper performance or accessibility, housing AI compute in data centres with natural cooling is a no-brainer.
Energy efficient and cost-effective
Many in the financial sector have traditionally viewed sustainability as a trade-off between profit and planet, but when it comes to green AI, financial services firms can have it both ways. By housing the servers that train AI models in data centres powered by renewable energy sources, businesses can substantially reduce energy expenses and benefit from long-term, fixed pricing.
And when renewable energy sources are combined with year-round, cool climates, the energy demands and costs of AI can be dramatically reduced. AI is here to stay, but by making the right choices, companies in the finance sector can still drive profitability whilst making real and measurable progress on sustainability.
Survey of IT decision makers exposes the increased pressures IT organisations face amidst covid-19
Independent Survey Uncovers the Limitations Traditional IT Infrastructure Imposes, Exacerbated by a Remote Workforce
Nebulon, Inc.®, the pioneer of Cloud-Defined Storage, released today the results of an independent survey completed by IT decision makers at 500 companies in the IT, financial services, manufacturing, retail, distribution and transport industries across the UK, US, Germany and France. Conducted in June of this year, the survey exposes the biggest challenges enterprises face in transforming their on-premises application storage environments, which have only been exacerbated during this COVID-19 era. While IT organisations cite multiple restrictions, the survey reveals limited infrastructure automation and high CAPEX as the most significant challenges for those deploying enterprise storage array technology, forcing them to re-examine IT spending and operations even more so than usual amidst the pandemic.
While increasing automation and reducing costs may seem like mainstream initiatives for any large organisation, the pandemic and resulting workforce restrictions mandate significant progress in days or weeks, versus months or quarters. The results of the survey, undertaken by Vanson Bourne, further reinforce this as respondents also highlighted their on-premises application storage environments are difficult to maintain, and reveal that they lacked the in-house expertise necessary to manage them. Even more disconcerting, respondents indicate that their traditional external storage arrays are not suited to handle new workloads, including containers and NoSQL databases. This is unsurprising as modern workloads have been architected for local versus shared storage resources.
British IT decision makers specifically ranked “expensive” highest, with 57% making this one of their top three challenges, followed by “time consuming to maintain” (50%) and “difficult to automate at scale” (49%). Respondents from smaller organisations (1,000-2,999 employees) were more likely to mark “lack of in-house expertise” highly compared to larger organisations (3,000+employees) (59% compared to 31%) while these larger companies were more likely to consider cost a top challenge (61% compared to 35%).
“The impact of the pandemic is forcing CIOs worldwide to reconsider their operations,” said Siamak Nazari, Co-Founder and CEO of Nebulon, Inc. “Reducing costs through server-based storage alternatives without the restrictions of hyperconverged infrastructure, and reducing operating cost pressure through cloud-based management of the application storage infrastructure are crucial initiatives for IT organisations looking to survive this new normal.”
For companies with a growing class of mission-critical data that cannot or should not move to the public cloud, Cloud-Defined Storage is an alternative to expensive storage arrays, offering enterprises a cloud-managed, server-based approach for mission-critical storage. By combining a cloud-based control plane, called Nebulon ON, with server-based storage that is powered by the Nebulon Services Processing Unit (SPU), Nebulon enables organisations to reduce cost for enterprise storage by up to half without compromising on enterprise data services. This is made possible by Nebulon’s unique architecture that makes use of commodity SSDs in industry standard servers, Ethernet in favour of Fibre Channel, and by eliminating operational complexities by moving management to Nebulon ON with an as-a-service model.
Nebulon ON uses AI to analyse application workloads during operations, provides actionable recommendations for IT organisations and provides a single API endpoint that greatly streamlines automation at-scale. Customisable application templates, tailored for customer’s application clusters, eliminate the guesswork in configuring infrastructure and produce repeatable, reliable infrastructure services for modern, mission-critical workloads. With the architectural and operational simplicity of Cloud-Defined Storage, application owners gain a self-service infrastructure provisioning that is unmatched with existing on-premises storage solutions.
“IT organisations have been seeking a cost-effective alternative to external storage arrays for years,” said Nazari. “With our Cloud-Defined Storage offering, they finally have the opportunity to reduce costs while also deploying a self-service solution for application owners that also reduces the operational burden.”
Are you ‘prescribing’ the right security solution to your merchants?
By Sandra Higgins, Chief Marketing Officer at Sysnet Global Solutions, draws parallels between taking multivitamins for the body to keeping small businesses ‘healthy’ using an all-in-one security solution
When it comes to leading a healthy lifestyle, eating the right food, taking regular exercise, and maintaining a positive mindset are key. However, despite these best intentions and practices, you still might not get all the nutrients your body needs to ensure it is working as effectively as possible. To combat this, a doctor might suggest taking a daily multivitamin as an insurance policy, to guarantee the body gets all the minerals and vitamins it needs, avoiding any shortfalls. Makes sense, right?
This same logic can be applied to businesses and the importance of cybersecurity and compliance solutions, especially in the current climate and the risks associated with remote working. Like a doctor prescribing a multivitamin to help their patients’ minds and bodies function effectively, in the same way, acquirers can offer security ‘prescriptions’ to help merchants keep on top of business health. The prescription is then deployed by a security software provider, much like a pharmacy would, dispensing the multivitamin of data security services and tools to help keep businesses in good health.
Just what the doctor ordered
With a wide variety of data security and compliance solutions available, like the streams of vitamins you see on pharmacy shelves, smaller businesses can often become overwhelmed by the sheer volume of available tools and may forego sourcing their business ‘medication’ altogether.
Taking the stress out of trying to understand what the business needs, it’s an acquirer’s responsibility to prescribe one solution that allows merchants to stay security fit and prevents them from becoming overwhelmed at the choice available. That way, merchants don’t end up buying the wrong solutions or supplementary add-ons at additional cost, that they don’t actually need.
The benefits of an all-in-one solution
Like with medicine, merchants need to know the long-term benefits of prescriptions before administering it, and with an all-in-one solution, the benefits are vast. In addition to easy compliance with payments standards such as PCI DSS and access to security tools that are appropriate to business set-up, other benefits of all-in-one security solutions include;
- Increased energy levels. With business security taken care of, business owners will have more time to focus on what matters, giving them more energy to run other areas of the business.
- Reduced fatigue. If a business has to work hard to manage its security levels, or its owner is losing sleep over not managing it at all, resulting in overdrive just to perform simple tasks, being compliant with regulations, like the PCI DSS standard, becomes much harder.
- Long-term healthy lifestyle. By taking an all-in-one security solution, businesses will become ‘compliance and security fit’. Everything will run more efficiently, without security issues slowing things down and preventing a business from moving forward.
- Improved mood. Certain studies have shown that a daily multivitamin has positive effects on a person’s mood and emotional well-being. Not having to think so much about security and compliance lifts a burden and has the same effect – business owner don’t feel guilty about not paying it enough attention and there’s no need to worry about breaches or facing fees from not being PCI compliant.
- Reduced stress and anxiety. Similar to having an improved mood, by simply attending to security matters, businesses will have one less thing to worry about.
Strength in numbers
Not only is there a multitude of long-term benefits attached to having a fully managed data security solution prescribed by acquirers, allowing businesses to be faster, simpler and more profitable, it also means that costs are kept low. Many people buy vitamins in bulk to help share the cost with family or close friends. By buying security tools at scale, costs are kept down for merchants. This means that when a business is weighing up their budgets, they can be sure their compliance and security cost is entirely affordable.
When buying a multivitamin, customers will likely buy from a reputable brand so that you can rely on the quality and effectiveness of the daily dose, as reputable multivitamin providers undergo meticulous analysis and rigorous quality controls during the manufacturing process. In the same vein, humans wouldn’t want a substandard multivitamin for their own body, so businesses wouldn’t expect this from an acquirer’s prescription.
Easy to consume
Multivitamins can provide patients with numerous health benefits but the biggest benefit of all is having these solutions in one place. It makes it easier to ensure the body gets all it needs to stay healthy. It is the same thing for businesses. Taking a security ‘multivitamin’ will greatly take the stress out of addressing compliance and security, and provide a business with more time to focus on other pressing tasks. If small businesses, in particular, can get into the habit of taking a regular multivitamin, a straightforward all-in-one solution, to address compliance and security at their business, they will be more open to trying other things too that may lead to an evolution of the business.
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