IBM RegTech Innovations

Seven reasons why challenger banks choose IBM Safer Payments

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Challenger banks, also referred to as digital banks or “neobanks,”are recently created retail banks competing directly with the longer-established banks. Challenger banks distinguish themselves with modern financial technology practices such as online-only operations that avoid the costs and complexities of traditional banking. This trend first emerged in Europe and has progressively gained traction in all parts of the world. Today, challenger banks are growing significantly and attracting big money.

Challenger banks’ payment fraud challenges

As challenger banks strive to create brand recognition, they need to take concrete measures to tackle fraudulent activities in order to develop and nurture the required trust among consumers. Many challenger banks are challenged with untested and/or limited IT resources coupled with insufficient historical customer behavior data to build customer profiles and glean anti-fraud insights.

Unfortunately, many existing fraud prevention solutions aren’t a fit for challenger banks, as they negatively impact customer experience by increasing friction and costs, which these banks must eventually pass on to customers. This can directly impact the challenger banks’ key competitive advantages of lower cost services and exceptional customer experience.

Addressing these challenges with IBM Safer Payments

IBM Safer Payments addresses these technological, operational and data gaps in a cost-effective manner. It provides a superior enterprise-strength payment fraud prevention solution with seven essential benefits.

  1. Learn as you go – Many existing fraud solutions require large amounts of historical customer transactional data to develop and train their machine-learning detection models. In absence of this historical data, they offer ‘one-size-fits-all’ models based on consortium data. These generic models fail to notice the nuances in the customers’ profiles and behaviors leading to poor results. IBM Safer Payments’ artificial intelligence algorithms devise new fraud countermeasures and rules automatically from production data and presents them to the fraud analysts for review as well as continuously monitors the efficacy of all defined fraud countermeasures and decision rules, highlighting the ones that demonstrate declining performance over time.
  2. Enhance in flight – Once IBM Safer Payments is operational, challenger banks can add new data feeds and even full payment instruments and channels in flight in order to execute on business plans without endangering their fledgling operations.
  3. Pay as you grow – With a consumption-based pricing scheme, IBM Safer Payments aligns to challenger banks’ growth plans by scaling with the business and limiting large upfront costs.
  4. Go software stack-less – IBM Safer Payments embeds all components necessary for operation (including database, high availability replication, application server, monitoring, and middleware), and requires no other software component than the bare operating system. This avoids taxing challenger banks’ limited IT resources and budgets with procuring and servicing of large and expensive enterprise-grade software stacks.
  5. Work small and open – IBM Safer Payments has an ultra-small IT footprint and open standards, providing the optimal economics and skill-set requirements for any type of organization to set-up and maintain the solution.
  6. Deploy anywhere – IBM Safer Payments can run on a combination of Intel Xeon-based commodity server hardware and Linux, a platform that provides one of the most favorable price/performance ratios as well as flexible deployment options –- on-premises, public/private clouds and/or hybrid options.
  7. Rest assure – IBM Safer Payments is PCI PA-DSS certified. This implies that the highest standard of data security and data consistence of the payment industry are maintained. It also helps ensure that all development and quality assurance processes are in line with the highest standards of the industry.

IBM Safer Payments has already been successfully implemented at several challenger banks across Europe and Asia Pacific, with plans to be rolled out in the Americas. These implementations (including one record-breaking 7-week end-to-end deployment) have proven to quickly identify emerging fraudulent activities while maintaining low false-positive alert ratios. This helps minimize operational costs and fraud losses, enabling challenger banks to focus on their core business of advancing customers’ banking experience with innovative products and services. For more specifics on innovations in safer payments, see

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