SAN FRANCISCO–(BUSINESS WIRE)–Unit21 and other members of the US consumer fintech community have come together to launch the Fintech Fraud Decentralized Autonomous Organization (DAO), a decentralized network that uses a collaborative data-sharing approach to identify and combat fraud.
Participating fintechs include Brex, Chime, PrimeTrust, Yotta and Airbase.
The DAO enables participating organizations to access aggregated user data through an open source platform, enabling greater transparency and faster identification of suspicious and potentially fraudulent activity. Traditional AML and KYC systems have not allowed the sharing of data between organizations at the scale required, making it difficult to share critical information to prevent fraud. Fraud losses have always been a significant cost contributor for financial institutions, more so in the fintech sector where fraud attack vectors are constantly evolving.
For each participant, the Fintech Fraud DAO connects risk and compliance infrastructure to end users’ data by allowing participants to privately and securely contribute anonymized transaction behavior. In return, they get access to aggregated cross-platform data about these customers. Each participating fintech has governance authority over the DAO, through the distribution of governance tokens in the DAO network. The entire system operates solely as a give-and-take model, providing access to any US fintech willing to contribute end-user data in a secure, encrypted format.
By partnering with leading fintechs, the Fintech Fraud DAO is expected to process data from approximately 20% of all US fintech users by the end of the year. Specifically, DAO currently processes large amounts of data related to:
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Over 20 million neobanking customers;
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Retail end users of cost management platforms with over $3B in annual transaction volume;
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Customers of some of the world’s leading crypto service providers and exchanges; and
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More than a million customers in the consumer lending area.
“As the fintech industry continues to grow, so do the myriad of risks industry organizations face,” said Clarence Chio, President, Fintech Fraud DAO. “Fintech Fraud DAO can help create a more secure fintech ecosystem by providing a decentralized, networked data repository that ingests not only fraudulent activity, but also legitimate user behavior across member platforms in real-time, resulting in a more secure ecosystem. This is an important step in helping the industry move from fraud detection to fraud prevention.”
“Brex is delighted to be working with the Fintech Fraud DAO. The reason we got involved is so we can continue to support our partner organizations and grow our footprint in Fintech, while fighting fraud is tackled jointly by the wider community,” says Daniel Sankey , Head of Financial Crimes Compliance at Brex.
“Fraud teams have been stuck comparing their customer information with official resources. The teams rely solely on discrepancies between these sources to serve as a tip against potential fraud. The DAO provides a platform for risk teams to compare customer information with confirmed fraud, reducing their need for high-frequency decisions that are prone to human error Over time, there is an ROI through saved operational time, as well as fraud losses, says Thomas Frantz, Senior Risk Manager at Airbase.
Banking veteran Lou Anne Alexander will serve in an advisory role to The DAO. Alexander has more than 30 years of experience in the banking industry, and has led projects in e-commerce, payments, identity and authentication. She most recently served as Chief Product Officer at Early Warning, building industry-defining solutions to enable payments and reduce fraud in the banking and financial services industry.
“In an ever-evolving industry, standard fraud detection products are not always sufficient to detect fraudulent activity. The Fintech Fraud DAO is helping to shape the next generation of fintech innovation by providing an open yet secure network of collective data to help fintechs further to identify and mitigate fraud,” said Lou Anne Alexander. “I look forward to providing further advice and expanding this initiative.”
The DAO is an independent entity governed by its members, so that the participants can collectively decide how the network should be run. All data contributed to the Fintech Fraud DAO is owned by the contributing participant, and is never shared or requested by any member in unencrypted form.
For more information, please email [email protected].
About Fintech Fraud DAO
Fintech Fraud DAO is owned and operated by Unit21, a data infrastructure company at the forefront of the codeless enterprise revolution. Today, the company serves over a hundred fintech organizations for broad anti-money laundering (AML) and fraud use cases in an integrated Risk and Compliance infrastructure platform.
Fintech Fraud DAO aims to leverage its extensive network of partner fintechs, as well as deep expertise from building AML and fraud solutions for a range of fintechs to bring to market a network-driven approach to moving the needle on fraud.
