In this article we are joined by Enfuce, a Featurespace customer and one of the leading FinTechs in Europe, to look at the impact of the European Banking Authority’s (EBA) Revised Payment Services Directive, also known as PSD2, on the financial services industry.

Enfuce offers payment, open banking and sustainability services to banks, fintechs, financial operators, and merchants. The company was established in 2016 and by 2020 they have close to 10 million end-users using their platform.

As an ambitious fintech company, Enfuce has recently been successfully accredited as an authorized payment institution by the Finnish Financial Supervisory Authority (FIN-FSA). This will allow customers to perform account information (AIS) and payment initiation services (PIS) together with Enfuce. And it means Enfuce can now serve an even wider group of customers and bring its vision of “Open Banking for everyone” to reality.

In February 2020, Featurespace and Enfuce announced a partnership which introduces the integration of the ARIC™ Risk Hub into Enfuce’s platform. By combining industry expertise and the best technology for fraud management and compliance, the partnership is delivering improved security and scalability for payment transactions. Aside from established fraud monitoring for card transactions, Enfuce has identified Open Banking as a perfect use case where the solution can be applied to deliver the same significant benefits.

Open Banking Innovation

PSD2 will unlock digital innovation in payments by enabling new types of banking services and the market entry of new providers. It places the customer in control of their data and creates an easier way to move, manage, and generate more value out of their money. Provided the customer has given their permission, third parties can access their account and transaction data via an application programming interface (API). For example, FinTechs can offer novel user-friendly digital payments services, accounting agencies can automate verification of account information and telecommunication providers can enable real-time payments to better serve their customers.

As new entrants to the market are revolutionizing financial services, new types of risks are inadvertently opening, too. The good news is that new techniques to detect and prevent fraud are also constantly developing. The global cost of fraud is an estimated £3.89 ($5.13) trillion. As this threat continues to grow, it is vitally important to protect consumers and businesses against fraud and scams. PSD2 will open the industry to new types of fraud risks, and to a large extent, Open Banking-related fraud patterns are still unknown to the industry. With new players entering the ecosystem, we can also expect to face issues in Third Party Provider (TPP) certification and validation as well as fraud patterns already occurring in card transactions.

Current Fraud Trends

A trend that has risen over the course of the COVID-19 pandemic shows fraudsters leveraging social engineering and phishing tactics to obtain personal information to undertake transactions using customers’ details. Fraudsters are also impersonating police or banking staff to trick customers into divulging their personal information including passwords.

Paying by credit or debit card includes added protection for customers through the chargeback process, however, this same protection is not in place when customers decide to make payments by direct transfer from their bank account.

With Open Banking, we expect to see evolving scam and fraud patterns. Consequently, the old methods for fraud detection and prevention will not be sufficient to protect customers, merchants, and banks. The importance of analyzing a range of customer data such as spending patterns and other customer behaviors will be a key factor to detect and stop fraud, without impacting genuine customers.

Delivering the best solution to uncover suspicious patterns

In preparation for the rise in Open Banking activity, Enfuce continues to work closely with Featurespace to develop new methods for the most effective fraud prevention within Enfuce’s ARIC Risk Hub deployment.

Featurespace’s approach of monitoring ‘good behavior’ ensures that even when fraud patterns change, they are quickly identified. This machine learning technique has proved highly effective in reducing false positives which creates a better customer experience whilst detecting fraud quicker.

The ability to analyze all available transaction data in real-time will play a big role in the monitoring effort, and it will help to uncover transactions that are part of a pattern that is not yet known.

Combined with human expert evaluation, ARIC Risk Hub’s accurate fraud transaction monitoring brings these additional safeguards to Enfuce’s customers and the entire ecosystem. The opportunity of Open Banking can also be a catalyst that supports the fight against fraud. And the financial services industry will benefit from new revenue streams and improved end-user experiences for customers, while remaining secure and compliant.


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