A group of former employees at London taxi app Hailo has split to form its own fraud protection venture. Ravelin, headquartered in the U.K. capital, will bring payments and machine learning technology to merchants, to help plug a fraud gap its co-founder and CEO claims is “very exposed.”
Ravelin closed a seed investment round last month, when it secured a cash injection from Passion Capital, which has made a name in London backing successful firms early like Mendeley, PickLive and Readmill. In an interview with Red Herring, CEO Martin Sweeney confirmed that Ravelin’s own seed is “above the average” £187,300 ($288,631) Passion usually invests.
Ravelin’s own platform, which will roll out in full late this year, is a three-pronged approach to fraud that combines machine learning, rule-making and peak-time fraud detection. Traditional approaches in the field, says Sweeney, are becoming less effective, as the quality of information is going up on the fraud side.
“The fraud that you’re seeing now on credit cards and debit cards, was getting harder and harder to spot, because the quality of data you can buy on the dark net is astronomical,” he adds. “Because of the leaks from all these websites – the ones you’ve heard of and the ones you haven’t – there’s a huge amount of information fraudsters are using to fraud merchants like Hailo.”
Ravelin’s own solution will allow merchants to build a rich picture of the user, integrating with apps on the front and back end. That data is then passed through a number of “strategies” on the back end which will help reduce an area of crime Sweeney claims is written off by many large companies. “(They) prioritize a smooth customer experience over fraud prevention,” he says.
The Ravelin team’s experience at transport giant Hailo, a hugely popular cab-hailing app with over 2.5 million British users whose 2013 revenues reached £62 million ($95.5 million), has helped progress immensely, says Sweeney. “I was running the payments teams on the technical and operations side, and came into contact with several other guys now here,” he adds. “I just enjoyed working with them so much, and enjoyed the problem as a concept enough to make it my full-time job.”
But Hailo, which recently announced that it would pull out of the U.S. market due to the “astronomical marketing spend”, focused, “rightly, (on) growth,” adds Sweeney. “It was later that margin protection became much more important. This is a trend we see in many other industries. We always applied the minimum effort for the maximum output at Hailo (regarding fraud), because there were so many other things.”
Now, with a platform, cash and location at the heart of the European FinTech world, Sweeney and his team are ready to win customers across the continent. “Even though London is traditionally seen as FinTech central, it’s also an e-commerce and retail center,” he says. “We want to have definite numbers that we can talk about; different case studies and some really happy people behind them.”
Machine learning may scare some potential clients, he adds, because “people don’t like trusting a black box.” But Ravelin hopes that its multifaceted approach to fraud detection and prevention will empower employees rather than disenfranchise them. “I think that’s a trap some people fall into when they’re talking about machine learning,” says Sweeney. “Not us.”