by PaymentsJournal 0

Machine Learning Risk Management Tool GoesLive in 2017

RANCHO CUCAMONGA, California, March 22, 2017 – CO-OP Financial Services( is working to implement artificial intelligence to fight fraud,with a machine learning-based risk management tool to be utilized by CO-OP forits client credit unions in 2017.

“A key pain point for credit unions in 2017 is that fraud mitigationtools have not kept pace with the relentless advance of fraud,” said ToddClark, President/CEO of CO-OP. “CO-OP Financial Services has an equallyrelentless commitment to credit union and cardholder security. We are investing$20 million this year on new innovations to ensure credit unions have access tothe very best technology in the payments industry. Implementing machinelearning capabilities is a key initiative in delivery on that promise.”

CO-OP and Feedzai( of San Mateo, California, which specializes in artificial intelligencefor payments applications, are partnering to develop solutions to address fraudat any transaction volume. Machine learning is a key component of AI allowingmachines to automatically learn from data and adapt, with or without humansupervision.

To be used exclusively on behalf of CO-OP-client credit unions, theagile machine learning platform will work in real-time, incorporate advancedanalytics and provide alert and case management capabilities for fraud and riskservices.

For card payments, machine learning will augment the existing neuralnetwork-based Falcon Fraud Manager fraud detection system used by the CO-OPCard Member Security Team. Feeding on historical and current data, the platformwill utilize a strengthened transaction scoring model to better predict debitand credit card fraud, reducing credit unions’ losses while keeping falsealarms to a minimum. In addition, machine learning will be deployed as theprimary fraud management tool for CO-OP Shared Branching.

The platform will be able to take in any amount of relevant,multi-source data to define transaction risk scoring, incorporating events suchas cardholder PIN changes and the purchasing patterns of individual members tobetter predict expected behavior. Based on constant learning and scoringupdated in real-time, suspect transactions detected by machine learning can bedeclined on the spot or kicked out immediately to fraud team members foranalysis.

The CO-OP-Feedzai partnership is structured for the co-development of aseries of fraud-fighting, machine learning advances beyond the risk managementtool to be utilized by CO-OP later this year. It is also part of athree-pronged security strategy that includes fraud consulting and tools suchas CardNav by CO-OP, a card controls and alerts application that helps empowermembers in their own defense against fraud.

“Artificial intelligence has previously been thought of as technologyonly available to governmental organizations or the largest of corporations,”said Nuno Sebastiao, CEO of Feedzai. “Feedzai is pioneering ‘attainable AI’ –AI that will really work, right now for any sized company. There is perfectsynergy between ourselves and CO-OP, and we are very excited to be working withthem to bring machine learning to the aid of credit unions.”

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About CO-OP Financial Services

CO-OP Financial Services is a payments and financial technology companythat supports 3,500 credit unions and 60 million members. CO-OP products,services and strategic counsel help credit unions optimize member experiencesto consistently provide seamless, multi-channel offerings every time, whileensuring that secure, top-performing fraud safeguards are in place.