Knowledge Brief

Quadrant Knowledge Solutions

Feedzai is Leader in
SPARK Matrix: Enterprise Fraud
Management (EFM), 2021

An Excerpt from Quadrant Knowledge Solutions

Enterprise Fraud
Management (EFM) “SPARK Matrix: Enterprise Fraud Management (EFM), 2021”

MMMMarket
 | Knowledge Brief

Feedzai is Leader in SPARK Matrix: Enterprise

Fraud Management (EFM), 2021

Global payment dynamics are rapidly changing with the growing popularity of
digital banking, and emerging payment methods (mobile apps, blockchain,
others) spurred on by the ongoing COVID-19 pandemic. In this age of the
digital economy, financial institutions and merchants are continuously striving
to improve customer experience by adding innovative services, improving
omnichannel support, and facilitating frictionless purchases. However,
digitization has also exposed organizations to an ever-increasing number of
vulnerabilities that can be exploited for various fraudulent activities. Criminals
are continuously looking at finding innovative ways to uncover these
vulnerabilities and outsmart the existing fraud detection systems to launch
high-volume and complex fraud attacks. In addition, regulatory environments
are becoming more stringent with increasing scrutiny on cybersecurity
measures as well as fraud management models. Therefore, organizations
across the globe are evaluating their existing fraud detection and prevention
strategies and looking at deploying advanced fraud detection technologies to
actively detect and prevent frauds, minimize losses, improve fraud
investigation, comply with global norms, and enhance the overall customer
experience. Hence, organizations are continuously embracing sophisticated
fraud solutions such as Enterprise Fraud Management (EFM) for enhanced
security and to operate smoothly in these challenging environments.

An EFM solution helps organizations by providing comprehensive real-time

risk monitoring and analysis of all transactions and identifying internal and
external fraud covering all users, accounts, and channels. It provides a
comprehensive analysis of the user behavior between related accounts and
users across channels to help organizations identify malicious behavior,
including misuse, criminal activities, compliance violations, and corruption.
EFM solution vendors are focusing on improving their technology value
proposition by enhancing the performance of their machine learning models
and leveraging automation and advanced analytics to improve the accuracy
and speed of fraud detection, fraud investigation, and triage. The EFM
solutions’ primary focus is on enhancing customer experience and providing
confidence to organizations to focus on revenue optimization strategy rather
than on fighting frauds. An advanced EFM platform helps implement an
effective fraud management strategy and offers fundamental value
propositions, including effectively detecting and preventing frauds, minimizing
fraud losses, enhancing the efficiency of fraud investigations, and improving

2 Copyright 2021 © Quadrant Knowledge Solutions Private Limited

For Citation, info@quadrant-solutions.com
 | Knowledge Brief

the digital experience for customers. In addition to protecting organizations

from reputational and financial damage, an advanced EFM solution also aids
organizations in complying with the ever-increasing global regulations.
Therefore, the need for such advanced fraud prevention solutions will increase
in the future.

The key value proposition of the EFM solution includes providing robust data
integration, behavioral analytics, risk scoring, real-time fraud detection, alert
and case management, self-service environment, omnichannel functionality,
and visualization and reporting. The continuous transformation of EFM
solutions driven by advanced technologies is propelling the market adoption
amongst small to medium organizations and in large enterprises. EFM vendors
are providing certain differentiators which includes sophistication of
technology capabilities, comprehensive data integration capability,
effectiveness of case management, open framework and bring your own
model (BYOM) support, model performance, and vendor’s expertise and
domain knowledge.

Quadrant Knowledge Solutions’ SPARK Matrix: Enterprise Fraud Management

(EFM), 2021’ research includes detailed analysis of the global EFM market
dynamics, major trends, vendor landscape, and competitive positioning
analysis. This research provides strategic information - for technology vendors
to better understand the existing market, supporting their growth strategies,
and for users to evaluate different vendors’ capabilities, competitive
differentiation, and market position.

The research includes detailed competition analysis and vendor evaluation

with the proprietary SPARK Matrix analysis. SPARK Matrix includes ranking
and positioning of leading EFM vendors with a global impact. The SPARK
Matrix includes analysis of vendors, including ACI Worldwide, BAE Systems,
BPC, Clari5, DataVisor, EastNets, Featurespace, Feedzai, FICO, Fiserv, IBM,
LexisNexis Risk Solutions, NICE Actimize, Quantexa, and SAS.

3 Copyright 2021 © Quadrant Knowledge Solutions Private Limited

For Citation, info@quadrant-solutions.com
 | Knowledge Brief

Market Dynamics and Trends

The following are the key research findings of Quadrant Knowledge Solutions
Enterprise Fraud Management (EFM) research:

 The market drivers for the growth of EFM solutions include the growing
frequency, sophistication, and complexity of fraud & cybersecurity
attacks that are significantly expanding the organizations’ risk exposure
and the continued disruption in the technology landscape, which is
driving emerging business models and leading to the wave of emerging
fraud trends.

 The market drivers also include continued investments in digital

transformation projects leading to increased online availability across
verticals, increase in remote working, increased use of mobile and
personal devices, and pandemic-related increase in online fraud. All
these factors are driving the need for efficient fraud prevention
solutions that offer a seamless customer experience.

 Furthermore, the global regulations and compliance requirements are

increasingly becoming stringent, and there is growing scrutiny by
regulators on model governance and transparency.

 Driven by the growing demand for EFM solutions to overcome frauds,

including account takeover, customer abuse, loyalty abuse, card-not-
present fraud, return abuse, payment fraud, cybersecurity breaches,
internal fraud, and bot attacks, vendors are increasingly replacing rule-
based and traditional ML-based fraud detection systems with advanced
fraud management solutions. Organizations are increasingly evaluating
vendors offering advanced fraud detection solutions with greater
emphasis on model performance as the increasing number of fraud
attacks require a flexible, scalable, and advanced EFM solution.

 Leading vendors are increasingly leveraging consortium-based shared

intelligence to amplify the effectiveness of fraud models in combating
the most advanced and emerging frauds. An industry consortium
network enables trusted cross-industry peers to share data about
shared risks for various use cases.

 With disrupted business scenarios, increase in remote working, and

rise in online activity and frauds, a robust fraud management

4 Copyright 2021 © Quadrant Knowledge Solutions Private Limited

For Citation, info@quadrant-solutions.com
 | Knowledge Brief

mechanism is the need of the hour in this time of the COVID-19

pandemic. Critical investments in EFM solutions are postulated to grow,
with organizations focusing more on security and hassle-free user
experience being the new long-term strategy to retain customers for
the long term.

 The key value proposition of the EFM solution includes providing

robust data integration, behavioral analytics, risk scoring, real-time
fraud detection, alert and case management, self-service environment,
omnichannel functionality, and visualization and reporting. The
continuous transformation of EFM solutions driven by advanced
technologies is propelling the market adoption amongst small to
medium organizations and in large enterprises.

5 Copyright 2021 © Quadrant Knowledge Solutions Private Limited

For Citation, info@quadrant-solutions.com
 | Knowledge Brief

Figure: Key Components of Enterprise Fraud Management (EFM) Solution.

6 Copyright 2021 © Quadrant Knowledge Solutions Private Limited

For Citation, info@quadrant-solutions.com
 | Knowledge Brief

SPARK Matrix Analysis of the Enterprise Fraud

Management Market

Quadrant Knowledge Solutions conducted an in-depth analysis of the major

Enterprise Fraud Management (EFM) vendors by evaluating their product
portfolio, market presence, and customer value proposition. EFM market
outlook provides competitive analysis and a ranking of the leading vendors in
the form of a proprietary SPARK MatrixTM. SPARK Matrix analysis provides a
snapshot of key market participants and a visual representation of market
participants. It provides strategic insights on how each vendor ranks related to
their competitors based on their respective technology excellence and
customer impact parameters. The evaluation is based on primary research
including expert interviews, analysis of use cases, and Quadrant's internal
analysis of the overall EFM market.

According to the SPARK Matrix analysis of the global EFM market, “Feedzai,
with a robust functional capability of its product - ‘Transaction Fraud for
Banking (TFB)’ has secured strong ratings across the performance parameters
of technology excellence and customer impact and has been positioned
amongst the technology leaders in the 2021 SPARK Matrix of the Enterprise
Fraud Management (EFM) market.”

7 Copyright 2021 © Quadrant Knowledge Solutions Private Limited

For Citation, info@quadrant-solutions.com
 | Knowledge Brief

Figure: 2021 SPARK Matrix

(Strategic Performance Assessment and Ranking)
Global Enterprise Fraud Management (EFM) Market

8 Copyright 2021 © Quadrant Knowledge Solutions Private Limited

For Citation, info@quadrant-solutions.com
 | Knowledge Brief

Feedzai Capabilities in the Global Enterprise Fraud

Management (EFM) Market

Founded in 2011 and double-headquartered in San Mateo, CA, and Lisbon,

Portugal, Feedzai  offers risk management solutions to merchants and
processors and acquirers globally. The company provides a transaction fraud
solution that enables organizations to monitor all business-related activities in
real-time. The solution prevents complex frauds with accuracy and scalability.
Feedzai offers a unified risk management platform that leverages ML and helps
banks and financial institutions manage financial crime. Feedzai’s transaction
fraud solution is backed by key capabilities and features like advanced
machine learning, rules engine & real-time decision engine, open data model,
and orchestration with third-party data enrichers. It also includes transaction
screening and monitoring, self-serviceable data science environment,
Feedzai's visual link analysis tool Genome, alert & case management system,
Insights, and Whitebox Explanation. Additionally, Feedzai now offers
standardized integrations for Device, Behavior and Malware data insights
through our Revelock acquisition.

The platform enables automated data ingestion and transformation from any
source to a standardized format used in its risk scoring. It leverages advanced
AI/ML and big data for automatic data ingestion, OpenML, AutoML, Segment-
of-One Profiles™, and Risk Ledger. Feedzai’s OpenML engine utilizes standard
APIs and allows data scientists to import machine learning models built using
open source and third-party tools to the Feedzai Risk Engine. Feedzai also
provides AutoML capability that aids data scientists to automate tasks like
feature engineering and the creation and selection of ML models on various
criteria much faster than traditional workflows. Feedzai’s Risk Engine builds
granular Segment-of-One Profiles™ for every individual entity in real-time
across the business to assess risks. Risk Ledger provides data enrichment
through integrations with third-party data providers and a cross-industry data
consortium that provides relevant insights into fraud and financial crime
patterns across verticals and use cases to identify and prevent criminal
activities. Feedzai’s Risk Engine helps create real-time risk scores based on
rules and machine learning models to improve the accuracy of fraud
prediction. Furthermore, it processes and scores transactions in milliseconds
for real-time decisions and rapid iteration.

Feedzai follows an open data model that allows it to integrate with customer’s
internal and external systems, incorporating standard/custom input/output

9 Copyright 2021 © Quadrant Knowledge Solutions Private Limited

For Citation, info@quadrant-solutions.com
 | Knowledge Brief

adapters such as HTTP/REST, APIs, ISO20022, ISO8583, and others. Feedzai

supports multiple integration types with third-party data vendors. Feedzai
supports digital trust and identity, behavior biometrics, device authentication,
and identity data capabilities through partnering, thereby providing a risk
engine with additional data.

The transaction screening capability of the platform offered by Feedzai helps

organizations identify and extract all crucial data from transaction messages
and feeds that data in the watchlist, such as sanctions, PEPs, or any internal
interdiction lists. The solution also offers a self-service data science
environment capability that allows users to perform the complete data science
loop, from loading data to deploying a model.

Feedzai’s Genome aids risk ops teams in identifying and evaluating emerging
financial crime patterns and fraudulent network rings. It further leverages
graph-based techniques to surface different AML and fraud typologies such as
mule accounts, layering tactics, triangle schemes, structuring, account
takeovers, and bot attacks. Feedzai’s Genome also deepens risk assessment,
thereby helping investigators and data analysts to cover wider criminal
operations. It also shows the hidden connections in the transaction to the
investigators and data analysts, thereby helping in effective decision-making
and policymaking while complying with the regulations.

The company’s alerting and case management system allows analysts to view
all the contextual information allied with the specific event through a web-
based UI. Case Manager is backed with a broad range of enterprise-level
features such as queue management, aggregating related alerts into cases
and aggregating cases at the customer level, automation rules, workflow
creating SLAs, user assignment and access level segregation, adding notes,
files, and full audit trail. Hence, it ensures that all the business requirements
are duly met.

Feedzai’s Insights delivers rich and strong capabilities for dashboards, reports,
and alerts. It is an essential business tool for all customers across different
segments. Insights provides customers with a clear view of key actionable
metrics for decision-making. To make effective business decisions, customers
need to have access to valuable real-time data in the form of business
intelligence. Insights’ dashboards aid in understanding key actionable business
and product metrics and help communicate the strategy and action plan to the
team and management.

10 Copyright 2021 © Quadrant Knowledge Solutions Private Limited

For Citation, info@quadrant-solutions.com
 | Knowledge Brief

Feedzai's Risk Studio helps fraud analysts and business leaders to reduce
fraud. Risk Studio’s capabilities include a case manager with Whitebox
Explanations™ to manage fraud cases and alerts. It offers risk insights with
flexible dashboards, reports, notifications, fraud tools for editing rules and
managing lists, and fraud genome to perform a targeted investigation with
visual link analysis. The company’s Whitebox Explanations™ capability
provides an audit trail of the logic behind decisions made and
recommendation for list management for faster decision making.

Feedzai also offers a built-in notebook, known as JupyterLab, that aids the user
in understanding and performing advanced tasks. Feedzai solutions can be
deployed on-premises, cloud, and in a hybrid environment as per business
needs.

Analyst Perspective

Following is the analysis of the Feedzai’s capabilities in the Enterprise Fraud

Management (EFM) market:

 Feedzai’s Transaction Fraud for Banking (TFB) delivers real-time fraud

prevention to detect and terminate malicious transactions by utilizing
hyper-granular profiles, which encrypt the changing behavior of several
dimensions and entities involved in each transaction. The insights are
made available to rules and ML models to score and analyze each
transaction and for further deciding to accept or decline the transaction
or demand a step-up authentication.

 The other key differentiators include offering solutions in an

omnichannel environment, responsible AI, Segment-of-One Profiles™,
and Feedzai’s Genome. It also includes Whitebox Explanations for
targeted investigation across the depth and breadth of Cloud
Experience. Furthermore, Feedzai mainly supports on-cloud followed
by on-premises deployment models for EFM solutions.

 In terms of geographical presence, Feedzai has a strong presence in

Europe, followed by North America and APAC. Feedzai serves across
various verticals, including FIs-Banks and Fintechs, merchants and
eCommerce, followed by processors and acquirers. Feedzai also
supports multiple use cases comprising card payment fraud, card not
present fraud, ACH/wire fraud, account takeover, Digital Payment
Monitoring / PSD2 while complying with SCA Compliance, new

11 Copyright 2021 © Quadrant Knowledge Solutions Private Limited

For Citation, info@quadrant-solutions.com
 | Knowledge Brief

account fraud, mule activities, merchant acquiring, money laundering,

and sanction screening.

 The primary challenges for Feedzai include the growing competition

from emerging vendors with innovative technology offerings and
continued competition from well-established vendors. However, with its
differentiated technology value proposition, strong customer
references, and sophisticated platform, Feedzai is well-positioned to
maintain its growth momentum across the geographical regions in the
global EFM market.

In terms of roadmap, Feedzai focuses on enhancing its single financial

crime platform, amplifying digital platform trust, and increasing investments
in R&D for developing Responsible AI. Along with support and document
model risk management capability, Feedzai is focused on developing
advanced AI solutions. The company also plans to grow across new
verticals with its

12 Copyright 2021 © Quadrant Knowledge Solutions Private Limited

For Citation, info@quadrant-solutions.com