ABN AMRO’s Digital Impact Fund is taking a stake in ThetaRay. Hugo Bongers, director of ABN AMRO Digital Impact Fund tells Douglas Blakey that the tech vendor’s solutions help the bank stay ahead of threats, including detecting money laundering, human trafficking and terrorist financing

First it was a client and now ABN AMRO is an investor. ABN AMRO is taking a stake in ThetaRay, provider of big data analytics to combat financial cyber-crime and operational failure.

Prior to the ABN stake, Israel-headquartered ThetaRay has raised more than $60m. Early investors include Jerusalem Venture Partners, General Electric, Bank Hapoalim and Israel’s OurCrowd.

ThetaRay’s Financial Crime platform immediately detects suspicious behaviour anywhere in customers’ enterprise. Crucially, the detection occurs before it can disrupt operations causing inevitable expense and damage to brand reputation.

In particular, ThetaRay’s AI solutions discover new opportunities and expose blind sports within ever growing complex data sets.

ThetaRay’s patented algorithms detect anomalies in real time. This radically reduces false positives and uncovers ‘unknown unknowns’.

Other prominent banking clients of ThetaRay include ING and OCBC. ING agreed a deal to deploy ThetaRay’s advanced analytics solutions for fraud detection back in 2016. In 2017, OCBC partnered with ThetaRay to identify potential suspicious transactions. This slashed the volume of transactions going to manual review by 35% and increased accuracy four-fold.

ThetaRay in practice: AML, Fraud Detection, ATM security

As money laundering schemes become more sophisticated and global, legacy based systems tend to become ineffective. ThetaRay is assisting its banking clients increase detection rates and efficiency with unsupervised machine learning.

With the transition to digital, banks must manage risks exploiting all of their new and existing channels and products. ThetaRay is helping banks to mitigate risk with and detect fraud without predefined thresholds or assumptions.

And in the ATM sector, attacks have evolved from physical attacks into sophisticated hacking techniques penetrating bank’s IT systems. ThetaRay is helping backs to become resilient and effectively monitor ATM activity at scale.

ABN AMRO takes stake in ThetaRay: financials not disclosed

Neither ABN nor ThetaRay is disclosing the amount of the deal or the stake taken in the startup. The deal represents ABN’s first investment in an Israeli company.

Hugo Bongers, director of ABN AMRO Digital Impact Fund tells RBI: “We became a ThetaRay customer in June 2018. But things moved at speed after that. We got together and discussed other potential business partnerships.

“In particular we discussed how we could strengthen the business partnership. I strongly believe as an investor you should have more than just money involved. There are so many use cases that ABN can bring to the table to combine with the solution and AI platform that ThetaRay is delivering.

“I wanted more than just a supplier relationship. Where there is an equity relationship on top of a business partnership it is easier to share insights our challenges.”

And Bongers adds that the ABN collaboration can help ThetaRay to sharpen its solution.

There is, he says, a shared challenge across global financial services.

“Together, ABN and ThetaRay can create value together. Fighting financial crime is a global hot topic. The ThetaRay solutions also have use cases outside financial services. This will all help to drive revenue and growth.”

ABN AMRO Digital Impact: a €50m fund

Bongers says that ABN’s investment strategy has evolved since its early investments.

The corporate venture fund launched back in 2015 with €10m.

The aim was to invest in innovative start-ups and scale-ups specialising in the digitalisation of financial products and services.

In March 2018, the fund was raised to €50m. The increase was thanks to a successful investment pace. Each investment ranges between €1m and €5m.

We have moved a little way away from early stage start ups. If we really want to drive growth it is easier if the companies are a little bit more mature. That way the product is already crystallised.

“We are focusing on everything related to data, such as the investment in Tealium.”

ABN announced its investment in Tealium in May 2019. US-based Tealium is a customer data orchestration solution that provides enterprises with a single customer view. And it serves as a central point of management across the entire data supply chain.

As with ThetaRay, ABN is client of Tealium prior to making its investment.

“We will announce an investment in a data quality solution provider as our next investment,” reveals Bongers.

Mark Gazit, CEO of ThetaRay says that the firm is blessed by having investors that add value to the company.

Gazit adds: “Raising funds not as difficult as it was in the past. But finding investors that provide truly strategic value is not an obvious exercise. There is a great cultural fit with ABN. The bank understands the bigger picture. This investment is an important step in our company expanding as a global player.

Other ABN AMRO Digital Impact investments include:

Tink: enabling banks to create next-generation banking services including account aggregation and PFM.

Cloud Lending Solutions: developing cloud based lending solutions for financial institutions based on the Salesforce platform.

BehavioSec:  delivering enterprise-grade behavioural biometrics to combat online fraud.

sloarisBank: offers a platform that enables digital companies to create custom solutions

Ockto: helping consumers and businesses to safely collect and share data.

CrossLend: a debt exchange platform.