1088. News: Visa bets $2.4bn for BioCatch, InvestiFi raises $20m, and HSBC pulls back in Australia

0:04This is FinTech Insider News. This week, Visa agrees a$2.4 billion deal to acquire BioCatch, Investify raises$20 million for an embedded investing platform, and HSBC is to pull out of the Australian retail banking market. We're going to tackle all of these in today's news show.

0:38Hello and welcome to episode 1088 of FinTech Insider News, brought to you by 11FS, six-time consultancy of the year that works with financial providers big and small to build the next generation of financial services. I'm Benjamin Ensor, Director of Research and Strategy at 11FS. Now, to help me unpack the biggest and most interesting stories from fintech and financial services from the past week, I'm joined by three outstanding guests. First of all, we have a very warm welcome to the podcast for James Holmes, Chief Product Officer at Seckle. James, it's great to have you on the show. Can you introduce yourself and tell our listeners a little bit about Seckle?

1:19Thanks, Benjamin. Yeah, it's great to be back. As you said, I'm James. I'm the Chief Product Officer at Seckle. Settle is the embedded custody and investment infrastructure platform sitting behind a number of the UK's leading investment platforms and wealth managers. We're part of the Octopus group and we build infrastructure that enables other businesses to launch investment platforms either within their own kind of customer journeys or using our UIs. Probably our most famous customer is Monzo who we onboarded last year, but we also support GoHenry, Chip and Quilto Invest. Fabulous. Fantastic and welcome to the show.

1:53So I'm also delighted to welcome to the show Benjamin David, Head of Intelligence at the Payments Association. Welcome to the show. Could you also introduce yourself and the Payments Association to our listeners, to the extent it isn't obvious from the title, but Payments Association. Absolutely, yes. So I'm Head of Intelligence at the Payments Association. and my role is really about understanding the forces shaping payments and financial services, whether that is fraud, regulation, emerging technology or changing customer behaviour. Yeah, I work for the Payments Association, which is the UK's major payments trade association.

2:40has over 250 members and works with a broad community of banks, payment firms, fintechs, and technology providers. Amazing. Thank you. And I'm also delighted to welcome back to the podcast Dave Morris, who regular listeners will know, Chief Executive of Foundry OS. Dave, would you mind just reminding our audience who've not come across you before, who you are and what Foundry OS is, please. Yeah, great to be back, Benjen. Yeah, Foundry OS is an embedded banking and wealth platform that basically grew out of the 11FS world over several years. We're now part of the 11FS Holdings Group and actively sort of growing out that platform now across banking, wealth management, with our first customers in different parts of the group and outwardly into the wider world beyond that.

3:44So exciting times, a lot of AI stuff going on with us at the moment. Fantastic. Welcome back. Okay, well, let's dive straight into the news. So our first story is that Visa has agreed a$2.4 billion deal to acquire BioCatch. So Visa is going to acquire the Israeli behavioral biometrics firm BioCatch for$2.5 billion in cash. BioCatch's AI-powered platform analyzes behavioral device and network signals in real time to help banks distinguish legitimate customers from fraudsters, protecting about 760 million users worldwide and serving more than 350 financial institutions. The acquisition follows Visa's broader investment in fraud prevention, with a company saying it has spent more than$13 billion on technology and infrastructure over the past five years.

4:41Separately, Bank of America has announced that it's acquiring a UK cybersecurity specialist, MDSEC Consulting. Benjamin, it's logical to come first to you on this. Obviously, we've seen a lot of shifts in fraud over the past year or two, particularly perhaps driven by AI and the way that AI has undermined some of the sort of conventional ways that firms have developed. Visa's making a big bet here,$2.5 billion. That's a lot of money. Why do you think they're doing that? What's exciting about BioCatch? what's exciting about sort of behavioral signals what's behind this basically yeah good question so i'll start with fraud because fraud has moved from being seen primarily as an operational or compliance problem to being a genuine strategic issue right and this scale is obviously one reason fraud is becoming faster, cheaper and easier to industrialize.

5:51AI allows criminals to create more convincing messages, automate attacks and target far more people than they could have done previously. But there is also a commercial dimension here. So a bank or payment firms, as we know, can spend years building trust and lose it in a single badly handled fraud case. So fraud prevention now affects things like customer confidence, retention, reputation, and ultimately growth. And this is why a business such as Visa is prepared to invest at this level. And it's not simply buying another fraud tool, right? It's strengthening the trust infrastructure around the payment ecosystem.

6:37And what is particularly interesting for me is about obviously BioCatch. is that it's looking beyond whether a password or payment credential is technically correct. And it's looking at how someone actually behaves, how they type, how they hold a device, how they move through an application and whether that behavior is consistent with the genuine customer. I think that matters because criminals can steal credentials as we know, right? They can sometimes get through authentication and behavioral signals are quite unique in that they can provide an additional layer of context that is much harder to reproduce consistently.

7:18Yeah, that's a really nice point because, of course, AI is remarkably impressive. Generative AI is remarkably impressive at faking all sorts of things. But of course, it's probably a little bit harder to fake the behavior of a customer and certain signals, particularly if those are not known to the AI. I presume we all have various quirks that we're maybe not even aware of. that. Okay. James, I was quite interested by the Bank of America announcement, although it's completely unrelated, you know, Bank of America acquiring a consulting firm, because we don't often see, you know, big financial firms actually sort of buying specialists and pulling them in house.

7:59What did you think that was interesting? That struck me as a little bit unusual. Yeah, I think it was hard to kind of get to the bottom of exactly what was behind it from the from the press release. I guess what we're seeing is kind of, as Benjamin said, firms are actively looking at any way in which they can strengthen their brand trust around these cases. Maybe Bank of America's kind of deeper thinking was around the fact that consultancies with deep expertise in this area can help build that. But I kind of tend to agree with you. It was quite hard to dig into the underlying motives from what was available online.

8:32Yeah. Benjamin, back to you. I mean, do these deals maybe signal that actually there's some big firms that are starting to worry that they're potentially losing the arms race against cyber criminals? And that actually just, you know, this is worth spending a lot of money on this because there's a really serious threat out there or set of serious threats. Yeah. Yeah. So are financial institutions bringing more of these capabilities in-house? Yes. Although I do not think this means the end, really, of specialist providers, what we are seeing in financial institutions, or is already financial institutions, becoming more deliberate about which capabilities they consider important fraud intelligence, right, cybersecurity, identity, and data orchestration increasingly fall into that category.

9:30Now owning a capability can give an institution greater control over things like new data, product development, and how quickly it responds to new threats. But at the same time, what we know is that no single institution can develop every specialist tool internally. Of course they cannot. And the likely model is probably a mixture. So firms will want to own the strategy, the data architecture, and at the same time, no single institution can develop every specialist tool internally. So the likely model is a mixture. So firms will want to own the strategy, the data architecture, and the customer response, while continuing to work with specialist technology providers, where those providers often offer deep expertise.

10:27So definitely bringing more of those capabilities in-house, but I don't think it means the end of specialist providers. Thank you. Yeah. Dave, there was another sort of AI-related fraud story this week. I'm not sure if you saw it. It was involving Metrobank. And normally we're talking about AI being used to perpetrate fraud. In this case, the fraud seemed to be in order to spend money on AI. There was a Metrobank customer who apparently lost£14 ,000 after fraudsters repeatedly bought credits for Anthropics' called chatbot, even after the customer, told the bank the first transaction wasn't authorized.

11:06I don't have all the details of this, Dave, but I thought it was a pretty interesting story. Yeah, it was really interesting. As far as it's the, you know, you're buying your own lunch by using fraud to buy more tokens to then do more fraud. You know, but yeah, it was, for me, the interesting part of this was what it shows is the sort of traditional approach that a lot of retail banks take around some of the sort of particular on the sort of card payment world of fraud is about trying to just spot transactions as opposed to looking at you know more personalized behavior of customers and understanding actually what is what is normal for a customer versus a particular customer rather than as normal as a pattern for all of their customers in blocks and types of customers.

11:57And I've actually trying to get more sophisticated around going to a very personalized fraud models, I think is the route that everyone's going to have to take. Particularly as these models are only going to get more sophisticated, the fraudsters are going to use them in more sophisticated ways. I think there was some research that Anthropic pushed out a couple of weeks ago that they're now using their next every version of their model is built with 90 % of the previous version of the model. So there's very little of their own code going into these things that isn't generated. So increasingly they're going to actually understand less and less about their capabilities of these models as they go forward.

12:39So, you know, it is going to be a, you know, a race from one side to try and keep up with people on using these tools to prevent things. And the fraudsters using the tools to try and do things that we're trying to prevent. So it has to become more sophisticated. It has to become more personal. And I think in this Metro Bank story, it's clear that they were just spotting general patterns of things because they managed to spot the first transaction and several of the others, but then others got through, which means that they're really not keeping a memory for that particular customer in that view of the world as to the context of the payments from that customer of was that they wouldn't have let it go through.

13:28Benjamin, what are you finding? What are you hearing from your members in terms of the sort of use of AI to combat AI-related fraud? Are we in an era now where it's AI fighting AI? What are you hearing and what are you talking about to your members? So what I'm seeing is a really important change around the economics of fraud. So what we've seen in our research is AI. AI is allowing criminals to produce content at scale, to personalize it and make it far more convincing. We know that in a food stir in 2026, where I can create perfectly believable emails, voice messages, fake documents, or even synthetic identities much faster than before.

14:14And the industry is investing in AI as well. But criminals often have an agility advantage, right? They do not have procurement processes, legacy systems, governance committees, or regulatory obligations. They can test an attack, they can learn from it, and they can change direction extremely quickly. Now, our research has found 76 % of financial crime leaders believe that AI-enabled fraud is already moving faster than their current response capabilities. And that is a really significant warning. So firms need to adapt faster in three major areas. Better data, faster decision making, and clear AI governance.

15:08And technology, of course, really, really matters, but firms also who need the operating model to deploy it safely and quickly. And it's also worth remembering that AI does not necessarily create completely new forms of fraud. And in many cases, what we're seeing is it makes existing fraud just a lot more effective. APP fraud, authorized push payment fraud, remains the most disruptive threat for many of our members. In our research, 51 % identified it as a major operational challenge. AI can make the impersonation more credible. It can also improve the language, right? It can simulate a trusted voice.

15:52It can help the criminal maintain a really convincing conversation over a longer period. And that makes the human side of fraud prevention increasingly important alongside the technology. Well, I think you're convincing me that anything Visa can do to find and scale new, smarter technologies that help to stop some of that and scale less across Visa's billions of transactions is possibly billions of dollars well spent. Okay, well, we're out of time on that story, which is a shame because there's a lot more to unpack there, but thank you. Let's move on. Our next story is that Investify has raised$20 million for an embedded investing platform.

16:39So Investify has raised these funds through a funding round led by Vibe Credit Union, with participation from BankTech Ventures and several American credit unions and community banks. The company enables financial institutions to offer investing services directly within their existing digital banking apps, including fractional investing, exchange-traded funds, individual retirement accounts, IRAs, cryptocurrency, and stablecoins. A key feature is its investing from checking capability, enabling customers to invest directly from their bank account without transferring funds to a third-party platform.

17:14Investify says it has grown from four financial institutions in 2024 to more than 60 credit unions and community banks, as banks increasingly look to retain customer assets that might otherwise move to external third-party investment platforms. James, it kind of makes sense to bring you in here because this is very much your area. It's quite an exciting deal. It's quite impressive growth from sort of four to 60 clients in a few years. It's kind of good news to see credit unions and community banks, sort of smaller players in the states starting to offer better investing options to their customers, right?

17:55What did you think of this? Yeah, 100%. I mean, congratulations to all the Investify team. It's a great transaction. I think it really does. So the kind of momentum that embedded investing has right across the world. I think previously people saw you might have a relationship where you did your saving and your spending, and then a separate relationship where you did your investing. I think neobanks and traditional banks are kind of coming to the conclusion or making a bet that customers want all of these three things in a single place. And you can kind of see that in the UK, whether it's Revolut or Monzo, they have investing as a core part of their proposition so that when people ideally get paid, they can kind of interact with one provider that can help them save money in cash for a rainy day or put some money towards a holiday and at the same time invest for their future.

18:42And that's no longer just GIAs and ISAs, but also pensions as well, where people are bound to help them kind of get a much better handle on their financial life as a whole. It's interesting because it actually goes all the way back, as I'm sure you know, to the Wall Street crash of 1929, which is when the Americans brought in these rules to separate banks and investment firms. And that separation lasted in the States for whatever, 60, 70 years. But it also sort of affected some other countries. It's an interesting point, isn't it, James, about, you know, is there a risk that we see history repeat itself if everyone has all of their eggs in one basket?

19:18Or do you think that particular issue might not recur? Do you think there is any risk there of people having all their money in the same basket? Or is it actually really in lots of separate baskets? It's just managed through one interface? Yeah, it really is separate. I think there's been lots of other kind of regulation that's caught up with the Glass-Degal Act to help in both the UK and the US make sure assets are protected. In the UK, we help the CAS regime. That means that providers like Seckle have to ensure that every pound that we're reporting to customers is actually in our bank account on a daily basis.

19:52There isn't this kind of co-mingling and you certainly can't use investable assets to lend on, for an example. They are protected and ring-fenced. I think it's also why we're seeing the rise of providers like Seckle and Investify drive wealth in the States, Apex, where people are wanting to kind of outsource this capability to another provider who can help be A, on top of the regulation, but also make sure that the banks can specialize in what they do best, which is embedding and building a seamless customer journey, and they can leave, I guess, the infrastructure around investing to another party.

20:26Thank you. Dave, what do you make of this? We've always sort of talked about super apps and things and looked at some of the sort of Asian firms of they've embedded everything into a vast number of services into a single app. We're now starting to see more of that in Western markets, particularly in financial services, as we see sort of lending, insurance, investing, all getting embedded into banking apps. Does that just carry on until we have one app for everything, or is it just down to each individual to do what they wish? I think it, for me, I think it is going to carry on, But different people have different mindsets for that, where they're quite happy that everything's in their banks app and other people go, well, I want to go and use a specialist for different parts of my portfolio of investments and other things.

21:19And I think that's a mindset thing for different people. But I think for the banks, the more they can embed different things, they keep them in a journey that they're trying to control. They can manage the sort of cross-sell and upsell of all of those things across services they have or they partner with. I think the thing that's increasingly different for me is if you sort of look back a few years, the banks would be trying to have all of this in-house. So it would be our own insurance company that's part of the group and other things, whereas now it's much more of an embedded play with partnership.

21:54I think if you went and looked at the terms and conditions at the bottom of some of your banking providers now, you'd see a whole list of this bits with this company and this bits of this company. Whereas it probably wouldn't have been if you went back in that. But you know, so much is in there, how many people have got eSIMs in their banking apps and things like that now as well. And so you see going beyond pure financial services plays in there and across different things. Thank you. Benjamin, one of the things that I thought was interesting about this is that the community banks and the credit unions are investing directly in Investify, right?

22:34So they're investing in it as well as sort of working with it. And you were just talking about how in payments, firms need to work more closely together, particularly perhaps smaller firms that have got fewer defenses or less sophisticated defenses against cyber security, sorry, cyber attacks and fraud. Do you think this is, in a sense, part of the sort of same theme that the smaller firms, the smaller banks, the credit unions, building societies in the UK and so on, really, really need to sort of collaborate and pool resources if they're to match the sophistication of the bigger firms? Yeah, and I think that's one of the most interesting trends in financial services.

23:15And historically, scale was a huge advantage because larger banks could invest far more heavily in technology. And what we're increasingly seeing is smaller institutions achieving scale collectively rather than individually. So whether it's shared technology platforms, fintech partnerships, or joint investment miracles like this, collaboration allows them to access capabilities that would otherwise be difficult or uneconomic to develop alone. So it doesn't mean, of course, they lose their independence. Actually, in fact, it can help preserve it because they're able to offer customers their modern digital services without having to merge or dramatically increase costs.

23:59Yeah, I like that. It's not about, it enables them to preserve their independence. I really like that. James, I'd love your thoughts on the product mix here, because things like IRAs, you know, retirement accounts, fractional investing, exchange traded funds, all make sense. They're all sort of, you know, low cost ways of enabling people to sort of access the markets. But then there's cryptocurrencies and stable coins in there as well, which I suppose feel a bit of a way from a community bank or a credit union, you know, serving, you know, serving a small community. What do you think of the product mix?

24:38Do you think those are relevant investments for community bank and credit union customers? Do you think it's just something they had, so they offered it? Or do you think that's something that customers are actually demanding? Yeah, it's really interesting. It's a debate we have internally all the time about how do you respond to demand for consumers from these types of products? I suspect, you know, if you're a bank, you've got the data on where people are spending their money. And if you can see that a large portion of your customer base is, you know, sending money to Coinbase or Binance or whoever it might be to buy crypto, then I think you feel like you need to be demand led and offer those customers those services within the product.

25:18I think it's a dangerous place to be for these banks to kind of be overruling and deciding whether a customer should or shouldn't be investing in that when you can clearly see the demand is there from the data that they have access to. without sharing all of Sekel's trade secrets. Can you see some of the investors on the Sekel platform putting a lot of funds into sort of more exotic, more maybe higher risk investments? Yeah, 100%. And I think, you know, you only need to look at the kind of accounts of some of the more leading like challenger brands in the UK and the US. Like lots of them have made lots of their profit or revenue from things like CFDs, things that typically are bad for retail customers, right?

25:55It's quite hard to get away from the economics of the industry and what's good for the customer are often being kind of commercially opposed, if that makes sense. Yeah, that's a really interesting point. Dave, what do you think on this? Because there is that sort of tension, isn't there, between offering customers what's best for them and offering customers what's best for the firm. How do firms get that right? Yeah, but if you look at the sort of small regional bank and credit union landscape in the US, It's a very diverse population in different areas. If you're a credit union in Florida, you may have a fairly high immigrant population that are sending a lot of money abroad and so having the ability to shift stable coins across there.

26:45Obviously, that landscape is very different as you go across different parts of the US. I think as well, as you embed some of these things, it becomes easier for people to do things. I know we've talked quite a few times on the podcast in the past about education of people about these things. If you give easier access to these things, you're giving people products they don't necessarily understand and how do you educate people and make them understand without sort of, you know, suddenly they've lost all of their savings because they've invested in some weird stock or CFD or something that they didn't understand how it worked.

27:23um benjamin there's a is there a fraud angle here because because one common fraud vector is is you know fake investment schemes and you know people creating ai profiles of you know sort of famous personalities and using those famous personalities to sort of tout all sorts of fake investments and so on but presumably if if if customers have got easier access to investments on their own platforms maybe does that make them slightly less likely to fall for things elsewhere? I mean, is it actually a better thing if banks are helping customers make sensible investments on their own platforms? Does that make anyone less likely to fall for investment scams?

28:06Perhaps not. Perhaps I'm being too optimistic there. I mean, we often talk about making investing easier, right? But we should talk about making it safer. One of the fastest growing fraud threats, of course, is investment scams. We've seen this in a myriad of our reports, and AI is making fake investment opportunities look increasingly credible. And if banks are embedding investment, investing into their apps, they also have an opportunity to embed protection, whether that's things like education, scam warnings or behavioural monitoring to spot when someone may be sending money to a fraudulent investment scheme.

28:49Yeah, I think that's really, really important. Any final thoughts on this, James, either on that fraud angle or just more widely on Investify? Yeah, I think it's just that we're going to see more and more of this, I think as both Dave and Ben have commented. It does feel like consolidation of your financial life into a single app is a real driving momentum in the industry. I think we're going to see more of it in the UK, in Europe, in America. That's super exciting for people like us. And I think it is exciting for the consumer as well. I think we're seeing more, like the evidence we get settled is there's more and more people who have never previously invested who are choosing to invest because it's now embedded within an app that they love and trust.