Start-up takes aim at online prevention

Business Signatures last week unveiled software aimed at helping financial institutions curb online fraud.

Fraud Prevention Solution works to spot fraudulent intent and prevent the perpetrators from executing bad financial transactions. It's designed for banking, brokerage and investment management firms that do business online.

Fraud is a huge problem for financial institutions, says Karen Massey, a senior research analyst at Financial Insights, an IDC company. "Our estimates are that in 2005, fraud losses for banks in the United States alone will hit $12 billion to $15 billion. As fraud solutions get smart, fraudsters get smarter."

Business Signatures' technology looks at how visitors are using a Web site and attempts to spot fraudulent intent based on their access, navigational and behavioral patterns. For example, a Web visitor who logs into an account, immediately changes the password and then attempts to transfer all funds might fit the profile of an account hijacking, says Peter Relan, chairman and CEO of Business Signatures.

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Business Signatures last week unveiled software aimed at helping financial institutions curb online fraud.

Fraud Prevention Solution works to spot fraudulent intent and prevent the perpetrators from executing bad financial transactions. It's designed for banking, brokerage and investment management firms that do business online.

Fraud is a huge problem for financial institutions, says Karen Massey, a senior research analyst at Financial Insights, an IDC company. "Our estimates are that in 2005, fraud losses for banks in the United States alone will hit $12 billion to $15 billion. As fraud solutions get smart, fraudsters get smarter."

Business Signatures' technology looks at how visitors are using a Web site and attempts to spot fraudulent intent based on their access, navigational and behavioral patterns. For example, a Web visitor who logs into an account, immediately changes the password and then attempts to transfer all funds might fit the profile of an account hijacking, says Peter Relan, chairman and CEO of Business Signatures.

The software can halt suspicious transactions in real time or require additional authentication to validate the customer's identity, he says.

Relan launched Business Signatures in July with Sunil Bhargava and Joyo Wijaya; the three partners had spent time at Oracle and online grocer Webvan Group before joining forces in 2001 to build the company's core event-processing technology, called Intent Processor.

Intent Processor attempts to discern what customers are trying to do in the moment, rather than analyze aggregate customer behavior after the fact. The software aggregates data from a variety of internal and external sources, including Web sessions, application logs and SNMP feeds from databases and security devices. It converts the data streams into discrete steps of an online business process, such as "login" or "set up funds transfer."

The technology combines Web analytics features that are typical of products from vendors such as WebTrends and WebSideStory with business activity monitoring features of software from such vendors as Celequest, Metastorm, Oracle and Tibco Software.

What differs is that Business Signatures' software characterizes and draws conclusions about user behavior right away instead of storing transaction information and then doing an analysis later.

The offering includes e-Fraud Signature, a library of customizable templates that recognize patterns of online behavior that deviate from normal user activity.

Conceptually, the approach makes sense, Massey says. The financial industry is attempting to be more proactive in fighting fraud, but to date most traditional products don't catch fraud until it's too late. "Depending on how the system is programmed, it will send up a red flag. But it's usually after the transaction has been done, so it's a matter of managing the customer after the fact," she says.

Fraud Prevention Solution and the e-Fraud Signature library are scheduled to be available in mid-November. Pricing is "in the six figures" for an annual software license, and companies also pay an annual fee for each account protected, Relan says.