In a year in which digital transactions have ballooned, Ekata is the kind of digital identity verification company that is seeing burgeoning opportunities. Ekata is focused on data analytics, applying its methods and technologies to things like payment authentication and the detection of fake account creation and other kinds of fraud. With its sophisticated API and SaaS tool, the company can map out digital identity elements and see how they’re linked and how they’re used, with machine learning playing an important role.
Given this expertise, Ekata Global Marketing VP Beth Shulkin had a lot of insights to share in a recent interview with Mobile ID World President Peter O’Neill. In addition to delving into Ekata’s solutions, Shulkin also touched on important topics including the balance between friction and security, the difference between credit risk and fraud risk, and Ekata’s efforts to “verticalize the vertical” in its business operations. But before all that, she started off by explaining how Ekata spun off from its parent company, Whitepages.com, last year.
Read the full Mobile ID world interview with Beth Shulkin, VP of Global Marketing, Ekata:
Peter O’Neill, President & CEO, Mobile ID World: To start off, can you please tell our readers about the genesis of the company? When did you start?
Beth Shulkin, VP of Global Marketing, Ekata: Ekata became a brand in June of 2019. However, as a business running digital identity verification data, we belonged to Whitepages.com prior to that. We were the B2B arm of whitepages.com selling APIs, which officially started in 2012, albeit Whitepages was born in 1997. So, our B2B business started in 2012 and Ekata became a standalone company in 2019.
Peter O’Neill: How has this past year been for your company? How has COVID changed the global identity landscape for you?
Beth Shulkin: That’s an excellent question. Our bread and butter had been in the e-commerce industry. That’s where we started, with folks using data to verify transactions or do manual review of fraud investigations, so we saw a couple of different things happen. One, for a lot of our digital retailers and e-commerce companies, we saw obviously an uptick in usage and business due to COVID lockdown.
But for some of our other customers in industries like travel and hospitality, we saw a decrease in usage, and saw those companies get hit harder. We also saw a decline in the amount of managed manual review teams. People had to go from potentially being in centers, to having to work from home, so we did see a bit of decrease in our number of managed manual review agents that were actively using our Pro Insight tool.
All in all, we braced for the worst, as many companies did. We had several meetings in February and March about what we wanted to do with the company budget, and where to make sure we weren’t over investing or being too conservative that it would negatively impact our customers. We weren’t sure how COVID was going to impact us, but we were actually very fortunate, we didn’t have to cut any programs or any people. In fact, we hired 40 new employees in 2020. So, the impact to us has been minor because of what we do; providing digital identity verification data to assess risk which became increasingly important as online activities spiked due to the pandemic.
Peter O’Neill: Well, it’s frightening actually, the increase in online fraud. These trends that we’ve been seeing in financial services and other markets broadly really took off. I think of the healthcare market in particular, one that we follow quite actively, and remote everything, from prescriptions straight through. It’s all happening quickly. What we thought was going to take four or five years is now down to months. Quite interesting to see how that’s changed.
You mentioned one of your products. Could you briefly give a quick product outline for us?
Beth Shulkin: Absolutely. As I mentioned, we provide digital identity verification data solutions, so we are a data company and we consider ourselves a Data as a Service (DaaS) company, not really a SaaS company. We focus on digital interactions, specifically the transaction processing component, serviced by our Transaction Risk API and the online account opening component, serviced by our Account Opening API. Our data is there to basically combat fraud and also help reduce customer friction, two sides of the same coin. We have a suite of data APIs that folks either integrate into a platform or integrate into their risk models.
Even though we are a DaaS company, we do supply a SaaS product called Pro Insight, which is a global manual review tool. It can be used by a business that may require manual review of a transaction or an account. For example, a company transacting online may have a small subset of orders that get flagged as risky by a fraud model that’s implemented in their environment. Those flagged orders trigger the company to take a deeper dive, with a human eye, into the data that exists on the name, address, phone number, email, or IP of the purchaser or customer, and they can quickly do that with our Pro Insight manual review tool. The data is easily accessible and informative, it can decrease the research time that a review agent would have previously spent, researching a flagged transaction.
Peter O’Neill: You mentioned the balance between customer friction and security. It’s always been an issue and something that’s hard to balance. Can you talk to us a little bit about the difference between fraud risk and credit risk and what’s more effective in today’s landscape?
Beth Shulkin: Sure. Let me give you a little background on why we started having to talk about the differences between credit risk and fraud risk. As we went into the digital identity verification space, we found that a lot of folks are grounded in identity verification in a couple of different ways. They’re either grounded in it from an access management perspective, meaning your passwords and your logins at work, or they’re grounded in it from a consumer’s perspective with credit scores when applying for credit.
What happened is we started seeing, as you mentioned, fraud evolve from what we always joke as some hacker in a basement somewhere, to actual full-scale automated, systemic fraud. We saw the need to build digital identity verification scores and risk assessments for digital fraud, which is different than when you assess someone on paying back the credit you extend them.
The way that we distinguish between those two is credit risk exists in mature credit markets only. It’s what we would call siloed, rooted only in the country that you’re in. There are about 15 to 20 different mature credit markets that issue credit. It’s often wrapped around one primary identifier, what we would call a static element, so my Social Security number. My Social Security number does not change, I guess unless I go into a witness protection program, but that’s highly unlikely. Dates of birth, those don’t change; again, you don’t change the day you were born on.
When you look at lending credit, the approach is looking for an absolute. They’re like, “I need to absolutely know that this is Beth Shulkin who lives at 123 Main Street. I need to understand if she is creditworthy, because I’m not going to give her a $500,000 loan for this house if I am not absolutely sure she is who she says she is, and that she meets my thresholds for repaying this debt.” We really need to look at credit risk in that lens; you’re looking for a 100 percent definitive answer on the identity.
Digitally, though, you start talking about millions and billions of online interactions, transactions, and payments, you can’t wrap yourself around a 100 percent definitive answer approach, for a couple of different reasons. One, you’re talking about a whole lot of friction. Can you imagine if you went to buy a pair of shoes on Amazon and you had to go through the same process you go through while getting a loan for your house? You just would never buy shoes on Amazon.
Digital risk assessment doesn’t have the same FCRA (Fair Credit Reporting Act) rules that are required by law for credit. We really look at fraud risk as something more dynamic, and it needs a probabilistic assessment. Here’s why, because you have to balance both sides of the coin of keeping fraud low while not rejecting good customers, and you have to manage it cross-border, at high volumes, and in fractions of a second. You could make your system so tight that it never ever, ever, lets in any fraud, but you also will highly increase the number of good customers you are declining by doing so, and you’ll end up out of business. It’s not siloed, fraud risk. Obviously with digital, you can shop anywhere in the world. Consumers demand instant gratification today in their digital experiences so a threshold of acceptable probability of risk becomes the barometer, not a 100 percent guarantee. If that makes sense.
Peter O’Neill: It does, and it’s been an industry discussion for quite some time. I really do think if it weren’t for COVID, we’d probably be bumping into each other at the Money20/20 show in Vegas right about now.
Beth Shulkin: Absolutely we would have
Peter O’Neill: Actually, Money20/20 is one of our partners and we’ve been speaking at and attending those conferences since the beginning. We consider it the best fintech show in the world. There are so many industries that have not caught up to where financial services is right now in dealing with this whole identity scenario. The pandemic and remote everything has forced everybody to start to move much more quickly around this.
Beth Shulkin: Absolutely.
Peter O’Neill: You mentioned a fair bit about the payment marketplace, financial services. Do you see yourself moving into other markets as well? I mentioned healthcare. You had also talked a little bit about travel and airports. Where else do you see growth?
Beth Shulkin: I would say we play in three main verticals, eCommerce, Payments, and Financial Services. But we also verticalize the vertical, for lack of a better way to say that. In payments, there’s acquirers and processors, and there’s obviously issuers. There’s now all the peer-to-peer payment apps, and remittance technology, and that has always been something that we’ve played in. That’s why we focus on the payments vertical.
In financial services, we are focused in a couple of different areas – and this is a newer area of focus for us, by the way, Peter – focus is moving into traditional banks, because they are, like you said, having to move what traditionally might have not been online, to online. They’re also getting forced into some of that with the explosion of fintech, competition, and open banking regulations.
You think of all the new tech popping up like Robinhood and financial fintech companies doing buy now pay later (like Afterpay) and challenger banks (Marcus by Goldman Sachs), that are looking to basically onboard customers digitally and onboard people onto their digital platform, and then allow them to transact, bank, and interact there. We focus really on traditional banks for that reason, to help enable their evolution to digital. Then point of sale and online lending is a key focus area for us in financial services as well.
As I mentioned, e-commerce was our history and where we started. We have good market-share here in the U.S. and working with the three major e-commerce fraud platforms, CyberSource, Accertify and Kount helped grow that. We’ve always played very well in this space and continue to do so expanding into EMEA and APAC markets. Travel and hospitality and digital goods, where you’re issuing a digital ticket item, or gift cards, something that’s not physically shipped, is a space we play well in, even though we originally started in shipped goods. There was a lot we could do around an address. It was a pretty big indicator of risk looking at how an address was actually linked to the other components on a shipped order.
And then in marketplaces, I can tell you –and this probably won’t shock you, it’s probably not new news – where we have had quick adoption and continue to, is where there’s disruptive innovation in digital interactions and transactions, where people are spitting out ideas like, “Hey, I want to be able to loan somebody $5,000 or $10,000, even $50,000, online. I don’t want them to have to walk into a bank of even have to see them.” Or “I want to allow sellers and buyers, on both the demand/supply side of a marketplace, to find each other on a digital platform without ever having to meet one another, yet safely make an exchange.”
Wherever there’s been that disruptive digital innovation, we’ve always played really well there, because a couple of things have to happen. Businesses have to get people onto their platform, and they have to get people creating accounts and/or getting people to transact on their platform/site. Obviously, you just can’t open the floodgates, because your fraud would be through the roof and you’d be shut down faster than you got opened. So, we’ve played there so businesses could quickly assess the risk of the identity behind the interaction to enable faster onboarding without unacceptable fraud rates.
We haven’t gone into healthcare. We’ve talked about it at times. We haven’t gone into government, albeit I will tell you that with some of the unemployment fraud that has taken place we have found ourselves now in conversations with players in that space, but it’s not been a concerted focus area for us.
I think a natural next progression, Peter, potentially could be in insurance, because I think we’re going to find insurance, under the broader umbrella of Financial Services, is going to have to, to your earlier point, find ways or be forced to get more and more innovative. I know in healthcare too, we are seeing this innovation, but I think we’d probably lean more towards insurance over healthcare, we already have some traction in insurtech.
We’re also just very careful about not spreading ourselves too thinly, because we know where we’re strong and what we’re good at. As a year-and-a-half-old Ekata brand, there’s still a lot of market share in the verticals that we’re currently focused on.
Peter O’Neill: Well, I was just going to say, and that is even more so true now with COVID, because anybody who was sitting on the sidelines seeing what was going to happen, has to move now. I agree about insurance and financial, they go hand in hand, and legal slips in there as well. Yes, healthcare is a totally different kettle of fish and very complex, a lot of rules and regs, but it has some significant identity challenges that are being pushed forward and need resolve now.
Beth Shulkin: Challenges and potential, I absolutely agree. I think it will be interesting how that plays out.
Peter O’Neill: Beth, thank you so much for filling us in on your company. Congrats on your successful growth. We appreciate you taking the time to speak with us today.
Beth Shulkin: Great, thanks. My pleasure Peter.
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