Chances are good that if you use a Visa or MasterCard credit or debit card, Fair Isaac Corp.'s industry-leading Falcon Fraud Manager software is at work guarding it from fraud.
About 9,000 banks use some version of Falcon, either directly or through a processing partner. Now the Minneapolis-based company is selling a significant new update, Falcon 6.3, that extends the fraud protection beyond card payments to other forms of payment, covering the exploding world of mobile banking as well as wire transfers and Automated Clearing House transactions.
The beefed-up Falcon adds significant new capabilities, according to Stuart Wells, the company's new chief technology officer. Fair Isaac is probably still best known to the general public for its ubiquitous FICO credit score, but with its teams of software developers in California, Fair Isaac has long been applying predictive analytics mathematics to scores of other areas.
"Mobile banking is a serious challenge for financial institutions," said Wells. "What's really exciting about the Falcon 6.3 product is it will recognize new types of fraud and capture it, and identify it."
Falcon does this using neural network analytics that seek to replicate the way the brain learns things by recognizing patterns, explained Doug Clare, Fair Isaac's vice president for product management who heads up fraud product management from the company's San Diego offices.
The software enables the bank to collect and examine in milliseconds a range of different variables about each transaction. For typical consumers, that could be how many times a week they go to the grocery store or buy gasoline, and whether their typical purchase is above or below $50, for instance. Then the software scours for outliers, such as the $500 withdrawal at a casino at 2 a.m. It's all part of trying to predict the likelihood of fraud for any given transaction.
"It builds up an understanding of what's typical behavior for you as a cardholder," Clare said.
Now, when a customer makes a deposit with their mobile phone, for instance, Falcon can help the bank make decisions about when to release the funds.
Eric Grover, a payments consultant with Intrepid Ventures, called Falcon 6.3 a logical extension of a product regarded as the "safe, industrial-strength choice" from the country's No. 1 card fraud prevention tool.
"When I think about fraud protection tools, they would be the top of anyone's list," Grover said.
Fair Isaac's Insurance Fraud Manager products use similar techniques to help insurance payers detect fraud in health care claims, an important growth area for Fair Isaac. The company has also been extending the techniques to retail, primarily in marketing. Its "Analytic Offer Manager," for instance, extends real-time data crunching to help merchants tailor the best deal to give a consumer.
The possibilities are wide open, said Clare, noting that a grocery chain in California recently offered a store app that works on Wi-Fi. When customers walk into the grocery store, their smartphones will buzz and inform them that, for instance, Hellmann's mayo is 50 cents off.
Falcon, a bread-and-butter product for Fair Isaac, is all about streaming analytics, or capturing trends in real time from the digital trails people leave behind them. Consumer facing organizations such as banks and retailers are capturing extreme amounts of information from consumers, on the web and off. The "Big Data" buzzword is about figuring out how to take these massive piles of information and glean useful insights from it.
"The amount of data captured has just exploded," Clare said. "Nobody knows what to do with it."
Jennifer Bjorhus • 612-673-4683