Early Warning's Zelle adds behavioral biometrics to boost its security

When Early Warning acquired clearXchange—soon to be renamed Zelle—late last year, the acquisition was applauded by banks that make up the P-to-P payments network because it brought Early Warning's various fraud detection technologies into play.

It was a match made in heaven from the standpoint that the banks were pushing the P-to-P real-time money transfer rails as an option that the Federal Reserve would want to consider as the nation's faster payments standard moving forward. But there is no such thing as too much security when funds are moving quickly over financial institution networks.

In a move that indicates financial institutions can't rest on their security laurels in today's intense cyberattack atmosphere, Early Warning and behavioral biometrics provider NuData Security have formed a strategic alliance to further protect the banks' real-time money transfers.

"Early Warning has a number of products that we are going to be powering behind the scenes," said Robert Capps, vice president of business development at NuData Security.

Early Warning will have NuData's NuDetect platform in play, providing human identification behavioral biometrics and risk-positioning to screen transactions in real-time.

"What is really critical of real-time payments is knowing that the consumer initiating the payment is the consumer who owns the bank account," Capps said. "With all of data breaches and credential fraud occurring, it is even more imperative to get that right."

When screening a transaction, NuDetect profiles certain interaction points such as log-ins, account creations, password resets, checkouts and bill payments.

Adding behavioral biometrics to a faster payments process is an increasingly important layer of defense for banks, said Julie Conroy, research director and fraud expert with Boston-based Aite Group.

Many banks are in various stages of evaluating the use of behavioral biometrics for fraud prevention in their online and mobile channels, and some have moved to production already, Conroy said.

"I’m a fan of the technology because it has the benefit of both being effective against fraud as well as transparent to the end user," Conroy added. "For that reason I think it also has good potential in the merchant space, since friction is such a big deal to that market."

Vancouver, B.C.-based NuData would like to see its security technology combined with that of Early Warning to become a "gold standard" for all banks to follow, and there is potential to eventually make it available to other industries and retail settings, Capps said.

But it can't be described as the technology that finally brings fraudsters to their knees.

"We are not knocking out bad guys, but we are slowing their progression," Capps said. "There needs to be a concerted effort to thwart fraudsters and how they develop their schemes and how they work."

In that regard, it would take "larger quantities of merchants and financial institutions getting on board with advanced technologies that can't be duplicated or broken," Capps said.

Until that happens, fraudsters will continue to target the weakest links in the chain, he added.

After Early Warning completed its acquisition of clearXchange, it did not take long for banks to begin falling in line by launching P-to-P products on those rails in early March.

It also reinforced Early Warning's belief that most of the payment apps in the marketplace had limited use cases or targeted specific customer segments, whereas clearXchange was poised to have scale immediately. In that regard, Early Warning viewed its acquisition as a statement that banks were not going to stand by idly in the P-to-P market and let PayPal's Venmo or other alternative options become dominant.