Feedzai, the cloud-based financial risk management platform, today announced a $200 million Series D investment round led by leading global investment firm KKR, with participation from existing investors Sapphire Ventures, and Citi Ventures. The company states that the new investment will be used to accelerate its global expansion, further develop its product offerings, and boost its partner strategy to strengthen its position as one of the most comprehensive financial crime prevention and risk management solution in the market. Feedzai is now valued at well over $1 billion, making it Portugal’s first tech unicorn company.
“Financial institutions in the UK, in particular, may face an element of added risk later in the year – if the proposed increase to the maximum contactless payment amount becomes £100,” said Nuno Sebastiao, CEO and Chairman of Feedzai. “While this is meant to boost high street shopping, FIs will need to ensure that on the one hand they are providing a safe experience and limiting fraud, and on the other that they aren’t blocking too many transactions as shopping habits change. This is one of many scenarios that Feedzai’s cloud-based risk management platform with robust machine learning is well placed to quickly adapt to.”
Feedzai’s platform is used by the world’s leading financial institutions, payment providers, and merchants to manage the risk of financial crime while enabling an optimised experience for end-users. The core of Feedzai’s offering is its artificial intelligence and machine learning platform, which processes customer and third-party data to identify, assess, and accelerate the remediation of potential threats. The net result of this approach is significantly higher rates of financial crime detection with lower rates of false positives in contrast to legacy, often rules-based approaches, and meaningful cost savings for customers through fewer charge-backs, more efficient triage of alerts, and avoidance of regulatory fines. In addition, Feedzai’s technology allows a more seamless, real-time experience for consumers. Feedzai’s core offering originally focused on identifying transaction fraud, but in recent years has leveraged the underlying technology to expand into adjacencies such as anti-money laundering and account opening.
Manish Kohli, Global Head of Payments and Receivables, with Citi’s Treasury and Trade Solutions, said: “Citi is committed to advancing global payments anchored on transparency, efficiency, and control, and our partnership with Feedzai is allowing us to provide customers with technology that seamlessly balances agility and security.”
The investment comes as demand for Feedzai’s technology is accelerating alongside the rapid shift to digital banking and commerce, which has led to a significant increase in consumers becoming victims of financial crime. In the last quarter of 2020 alone, consumers faced a 650% increase in account takeover scams, a 600% in impersonation scams, and a 250% increase in online banking fraud attacks compared to the first quarter in the same year, according to Feedzai’s data.
Today, Feedzai monitors companies with more than 800 million customers in 190 countries, with products protecting half of the UK and Canada’s populations, as well as four of the five largest banks in North America. Many of the world’s largest financial institutions such as Citibank, Fiserv, and Santander, as well as the world’s most innovative Fintechs such as SoFi and Mox by Standard Chartered, already use Feedzai’s AI-powered risk management solutions. Every time someone opens a bank account, transfers money, or makes a payment with their mobile device, they are experiencing transparency, convenience, and protection in 3 milliseconds or less – all made possible by Feedzai’s AI platform.
Sebastiao explained: “According to the UK government’s Economic Crime Plan 2019-2022, serious and organised crime is estimated to cost the UK at least £37 billion each year, with further estimates from the National Economic Crime Centre finding that money laundering can cost upwards of £100 billion in the UK per year. As people are transacting online now more than ever before, fraudsters are forever coming up with new techniques. This means financial institutions’ risk management capabilities have never been so crucial. Feedzai’s cloud-based risk management platform is uniquely positioned to respond both to the need for accuracy and operational value, as customers expect protection as much as a seamless shopping experience.
“We’re thrilled to be working with KKR to bring more innovation into this space and to keep protecting our customers from an ever-evolving financial crime landscape,” he said
“Feedzai offers a powerful solution to one of the biggest challenges we are facing today: financial crime in the digital age. Global commerce depends on future-proof technologies capable of dealing with a rapidly evolving threat landscape. At the same time, consumers rightfully demand a great customer experience, in addition to strong security layers when using banking or payments services,” said Stephen Shanley, Managing Director at KKR.
Spencer Chavez, Principal at KKR, continued, “We believe Feedzai’s platform uniquely meets these expectations and more, and we are looking forward to working with Nuno and the rest of the team to expand their offering even further.”
The investment follows the close of another exceptional financial year where Feedzai saw significant growth in all its geographic markets and customer verticals. In addition to its core offering, the company recently launched “Feedzai Solutions,” an initiative aimed at democratizing the fight against financial crime by allowing financial institutions of all sizes to benefit from the most advanced technology available today in an “out-of-the-box” format. The company has also expanded its Responsible AI framework, which was recently recognized as “Fraud Prevention Innovation of the Year” by Fintech Breakthrough, to allow financial institutions to provide the best customer experience possible while ensuring that Fairness, Accountability, Transparency, and Ethics (FATE) become part of the decision-making process.
KKR will be making the investment through its Next Generation Technology Growth Fund II, a fund dedicated to growth equity investment opportunities in the technology space.
