Anti-fraud collaboration platform startup FiVerity Inc. said today it has raised $4 million in new funding to expand its network of information providers and data while introducing advanced machine learning algorithms.

Founded in 2017, FiVerity offers artificial intelligence and machine learning solutions that detect new and emerging forms of cyber fraud for financial institutions. The company’s platform combines secure and compliant information sharing and the expertise of each institution’s fraud analysts, strengthening fraud identification by responding to activity detected throughout the industry via the company’s partnerships with banks, credit unions, regulators and law enforcement agencies.

FiVerity argues that increased fraud rates are only part of the challenge facing organizations, as fraudsters steadily increase their use of sophisticated automation and AI-based tools, making it far more difficult for financial institutions to identify incidents of fraud. The failure to identify and stop fraud quickly can result in legal repercussions and the loss of important customer relationships.

In boosting its machine learning algorithms and its network of data providers with the new investment, FiVerity aims to identify new methods fraudsters are using and compare patterns against those within a financial institution’s systems. The approach is said to accelerate not only the detection of fraudulent accounts but the sharing of these threats within the larger financial community to protect personally identifiable information and stop these activities before significant damage is inflicted.

FiVerity currently works with financial institutions, regulators and organizations such as the U.S. Federal Reserve and the Financial Crimes Enforcement Network on its Anti-Fraud Collaboration platform to better understand the needs of the industry and ensure they can be addressed through its solution.

“Fraudsters have become increasingly innovative, turning to new AI and automation techniques to successfully deceive financial institutions into granting loans, opening accounts and approving transactions,” FiVerity Chief Executive Greg Woolf said in a statement. “This latest investment provides the additional resources needed to expand our offerings with new real-time collaboration and information capabilities that allow financial institutions to take a proactive approach to fraud detection — identifying fraudulent activity before it impacts their business, like an ‘antivirus for fraud.’”

Mendon Venture Partners LLC led the seed round, with FinCapital LLC, Mendoza Ventures LLC, Service Provider Capital LLC and Grasshopper Bank N.A. also participating. As part of the deal, John Clausen, a partner at Mendon Venture Partners, veteran financial services investor and former N.Y. Federal Reserve Bank regulator, will join FiVerity’s board of directors.

Image: FiVerity