Behind the Idea Europe Trending

Behind the Idea: Fourthline

Fourthline works with some of the fastest-growing financial institutions in Europe including SolarisBank, Vivid Money and Trade Republic to authenticate and verify the identities of thousands of new customers every day

The pandemic has triggered a surge in financial crime. Fraudsters are becoming smarter, using deep fakes, social engineering techniques and creating synthetic online identities to evade detection. Financial institutions find themselves in an almost impossible situation. Regulators across Europe have tasked them with not only improving financial crime checks on new clients but also reviewing the Know Your Client (KYC) files of existing clients through large-scale remediation. This requires a very diligent, high-quality process under strict timelines. We are helping solve this problem by identifying emerging financial crime trends across borders and working with regulated enterprises to address fraud and meet compliance.

Krik Gunning, CEO and co-founder, Fourthline

Krik Gunning is the CEO and Co-Founder of digital identity specialist Fourthline. He is leading its mission to build a safer, more accessible global financial system. Krik has 20 years’ experience working in financial services previously as M&A advisor at ABN AMRO and co-founding Dutch M&A boutique IvyRoads. 

What has been the traditional company response to financial technology innovations?

Traditional banks and wealth managers through to emerging crypto platforms and digital marketplaces require the highest quality fraud detection. Getting compliance right is hard, and done incorrectly, can fundamentally damage a business or even destroy it. So, there is always a cautious approach to innovation.  

We’ve been focused on monitoring fraud and financial crime patterns across borders. It’s our march to provide a single source of truth on fraud hotspots and emerging fraudulent behaviours. This is an Achilles heel for many financial institutions. Fourthline, like our clients is a regulated financial institution. We bring a bank-grade technology stack, internationally recognised fraud experts and the flexibility and agility of a fintech. 

How has this changed over the past few years?

We have always been focused on fighting financial crime to build a safer financial ecosystem. What’s changed has been banks’ individual approaches and understanding of the scale of the challenge.  Five years ago, ‘Know Your Customer (KYC) wasn’t on the radar of most banks. Today, it is a top priority, and every bank realises it is a challenge it needs to solve and needs outside expertise to do so.

Regulatory scrutiny now requires banks to re-validate existing clients – we call this continuous KYC. Done right, it leads to better customer data and significantly less fraud—but done wrong, it can be the ultimate money pit. 

Another key change is the shift to real-time intel and analysis of fraud patterns. It’s the only way to stay one step ahead of criminals. In 2021, almost half (47%) of the detected financial fraud attempts in Europe involved ‘social engineering’ where fraudsters duped their victims into disclosing confidential information and making payments by using psychological manipulation. We also witnessed criminals use advanced silicone masks and deep fakes to assume the identity of someone else. It is simply not enough for banks to have core identity checks and balances in place to protect against fraud. 200 words

Is there anything that has created a culture of change inside the company?

We believe that if financial institutions could join forces in their battle to fight financial crime, the cost of compliance across the industry could be reduced by 90 per cent and there would collectively be 60 per cent less fraud.  As criminals become more inventive to gain access to the ever-evolving financial ecosystem, it’s crucial for society that we don’t allow crime to pay. Our culture is centred on not just helping our clients prevent fraud and protect their businesses. Rather we’re all driven to help protect the end-users – society as a whole – from criminal activity. This permeates everything we do. 

What Fintech ideas have been implemented?

To stay one step ahead of financial fraudsters, we approach problem-solving with a unique combination of advanced AI techniques and highly trained financial crime analysts.  We only automate checks if it leads to a higher quality conversion rate. Some examples of new initiatives we recently implemented include:

  • Our proof of address (PoA) solution: Traditional documents such as utility bills and council tax bills are not designed to deter fraud. They have no security features and are easy to falsify. We’ve built a more reliable and customer-centric alternative to PoA checks.
  • We launched six new AI Models: In addition to algorithms indicating whether an ID document is fraudulent, we now also have algorithms indicating whether an ID document is authentic and why. The latter is something no one else in the industry has been able to achieve through AI/ML.
  • Public- private partnerships: We have been actively engaging with local and international law enforcement agencies in multiple cross-border public-private initiatives such as the French National Police and Europol. 

What benefits have these brought?

Implementing these approaches has driven many benefits including:

  • Creating a safer financial ecosystem: Our work with the French National Police and Europol demonstrates that identity fraud does not stop at national borders. 
  • Stronger Conversion Rates: Proof of Address checks are a typical drop-off point for end customers. With our Proof of Address solution, we achieve a 99.7 per cent conversion rate overall with only 0.3% failing at the address verification stage.
  • 60 per cent Greater Fraud Detection: We continuously recalibrate our in-house built and trained AI models to eliminate bias, incorporate new learnings, and perform more data checks than the market, detecting 60% more fraud than competitors
  • Higher optical character recognition (OCR) than Google – We enable our partners to identify and authenticate over 3500 official documents from around the world and can collect data and process cases in seconds—with 99.98 per cent accuracy. 

Do you see any other industry challenges on the horizon?

Governments around the world have announced plans to create digital identities as trusted as passports and the pandemic has fuelled this with vaccine passports becoming part of everyday life. If you look at the EU specifically, the success of providing all European citizens with access to a digital wallet will be predicated on the delivery of a common toolbox. The EU Commission has provided the impetus for change. The opportunity now lies with European technology companies to deliver.   

Can these challenges be aided by Fintech?

Absolutely. Who do you trust with your most personal information? Banks. Fintechs have a critical role to play in the building out of digital identity passports. After all, their success will hinge on societal trust in the technology: the security, compliance, and overall user experience. Who better to provide that expertise than fintechs? 

Final thoughts

Brexit shouldn’t mean that the UK chooses to fight financial crime in isolation. Financial crime operates beyond borders. Whilst hotspots in crime are emerging, the link between detecting cases and prosecution is not yet strong enough. A key issue contributing to this is the lack of communication, data sharing and therefore transparency between law enforcement agencies in different jurisdictions. Regulators, governments, financial institutions, and technology companies must work together across Europe to help prevent financial fraud, achieve compliance and protect the individuals that use our financial institutions from criminal activity. 


  • Polly is a journalist, content creator and general opinion holder from North Wales. She has written for a number of publications, usually hovering around the topics of fintech, tech, lifestyle and body positivity.

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