What began as a solution to protect a company’s internal systems in the late 1990s has grown into one of the most successful fraud prevention companies in the space.
CEO Brad Wiskirchen said Kount’s origins trace back to designing a system to protect their own merchant accounts from fraud.
“In order to protect our own merchant account in 1998, we invented a patented technology called device fingerprinting,” Mr. Wiskirchen recalled. “We were good at fighting fraud in the digital space and over time we fielded many purchase overtures from large companies.
“We quickly learned we should probably be starting our own fraud control company.”
Starting off with demonstrated demand for your product lays a great foundation, but Kount took nothing for granted, Mr. Wiskirchen said. Before launching, they hired consultants to interview lists of potential clients to identify what their specific pain points were and what they wanted in a fraud control solution.
Kount was also able to support themselves financially so they had full control over product development. They built all elements in-house without having to reach out to third parties.
“We just built it in the right way, leveraging the right amount of AI and the right amount of human intelligence, device fingerprinting, and machine learning,” Mr. Wiskirchen said.
The marketplace agreed. Within their first year, Kount signed Staples and Chase Paymentech as customers.
The former chair of the Salt Lake City branch of the United States Federal Reserve, Mr. Wiskirchen serves on the International Monetary Fund’s (IMF) Interdepartmental Working Group on Finance and Technology, a committee that advises the IMF on advances in fintech. Working with executives from companies including Ripple and Ant Financial, they provide input on white papers attempting to predict fin-tech’s future path.
“We’re sharing our perspectives what the meaningful advances in fintech are, what the gaps are, and where the opportunities are for technological advancements,” Mr. Wiskirchen said.
While the level of card-not-present fraud that arose after America’s switch to the EMV chip should surprise no one, what did catch many off guard were the effect of other trends occurring at the same time, Mr. Wiskirchen said.
“The level of fraud that was expected happened, but what was unexpected was what happened when historically bricks and mortar businesses that were beginning to digitize customer relationships were just about to get into mobile apps and their internet launch.”
Fraudsters migrating to CNP fraud found additional opportunities in exploiting vulnerabilities in e-commerce and mobile payments. For example, fast food restaurants used to accepting register payments now had to contend with the technology behind online and mobile transactions.
“They hadn’t had to deal with fraud before,” Mr. Wiskirchen explained. “That exacerbated the already expected tsunami of fraud.”
Mr. Wiskirchen said the industry has to constantly contend with balancing the needs of increasingly impatient consumers with the needs of clients who are increasingly sensitive of their fraud vulnerability
“If they impose any degree of friction, that will impact their likelihood they’ll have that consumer. And that’s not just in the first transaction they’re looking at CLTV (customer long-term value) and ongoing transactions. If they have one bad experience the consumer will not go back to that site or that merchant.”
That leaves Kount on a constant watch to improve their services in the face of fervent competition and constant change.
“You have to improve every day. To fight fraud I believe you need real intelligence, which is AI plus human intelligence.
“Neither can do it on its own.”