AI startup snags 300 business clients by promising to root out fraudsters

Online fraud is becoming prevalent in Southeast Asia, leaving financial institutions and consumer apps more vulnerable to scammers that are using increasingly sophisticated methods, according to a whitepaper from global consulting firm Accenture.

In Indonesia, for example, deceitful drivers have found ways to trick ride-hailing apps into thinking that they’ve picked up a passenger, chalking up bonus money in the process.

A big reason why fraud is thriving is how perpetrators can easily slip in and out of new identities and between different industries.

“When you think about fraud detection, oftentimes you are actually dealing with the same group of fraudsters,” explains Jefferson Chen, CEO and co-founder of Advance AI. “For Southeast Asia, the level of fraud is very high compared to more mature countries,” he adds.

Photo credit: Advance.ai

The Singapore-based company, which serves clients in China, Indonesia, the Philippines, Vietnam, and India, is working on a solution. Its flagship cloud-based product, Guardian, helps financial institutions and other organizations detect fraudsters among their customer base by using facial recognition and other machine-learning technologies and analyzing anonymized data supplied by clients, consumers, and data vendors. For example, the startup has teamed up with several Indonesian financial institutions, enabling it to pool data together to identify fraudsters that have tried to cheat multiple organizations.

Advance AI says it has over 300 customers spread out over the banking, fintech, telecommunications, and ecommerce industries. Among those on its roster are Indonesian bank BPTN, South Korea’s KEB Hana Bank, finance companies Home Credit and Credit Plus, and several unnamed licensed and registered fintech firms.

Advance AI’s technology kicks in whenever a client interacts with a customer. For banks, it occurs during the initial know-your-customer process and the opening of a bank account as well as when they need to determine a person’s ability to repay a loan. For mobile or internet platforms, it comes in whenever individuals perform a transaction, such as shopping online or booking a ride.

The startup also offers Advance Booster and Advance Connect as supporting services. Chen says Advance Booster is geared towards clients who need “services to help them understand how to use our solution [for their workflow]” or who aren’t using similar technologies in-house. Advance Connect, meanwhile, helps its clients sign up new customers through data-assisted marketing.

The money talk

Advance AI made headlines in mid-September 2019 when it raised US$80 million in series C funding. Pavilion Capital, a US and Asia-focused private equity fund of the Singapore government’s Temasek Holdings, and Gaorong Capital (formerly known as Banyan Capital) led the round.

The money will drive the startup’s efforts to recruit new talent for research and development as well as marketing. It’s also looking to expand into new verticals and markets like Thailand, but the company doesn’t have concrete plans yet.

While Chen declined to name Advance AI’s biggest competitors within and outside Southeast Asia, a growing number of Asia-based companies are tracking and preventing fraudulent activity through artificial intelligence.

Among the firms that operate in the same space or offer similar product ranges and target the same industries include Singapore’s CashShield, which raised US$20 million in series B funding in 2018; India’s Thirdwatch, which became part of Razorpay through an acquisition last August; China’s Tongdun Technology, which had its US$100 million series D funding round last June; and 4Paradigm, which recently became a unicorn.

Outside Asia, there’s New York-based Sigma Ratings, Magic FinServ, and Merlon Intelligence, and Los Angeles-based IceKredit.

Key differentiators