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“Truly build for scale from day one”: Interview with Krik Gunning, co-founder and CEO of Fourthline

Today, fraud detection software is used to detect illegitimate and high-risk transactions made online. These tools continuously monitor user behaviour and calculate risk figures to identify potentially fraudulent purchases, transactions or access.

The software is mostly used by the IT and compliance departments of e-commerce companies and digital banks, as well as other institutions, to continuously monitor the potential fraudulent actions of their users. An increasing number of businesses and institutions alike are choosing to adopt these tools to ensure the legitimacy of transactions while protecting sensitive information for both businesses and customers.

We’re shining the spotlight on Fourthline, an Amsterdam-based fintech startup founded in 2017, that works with some of the fastest-growing financial institutions in Europe to fight financial crime.

The young company focuses on helping regulated enterprises like banks, online brokers and fintech businesses to achieve compliance and ensure protection against illicit financial activity. Its technology enables organisations to authenticate and verify the identities of thousands of users every day. Fourthline’s customers include the likes of challenger bank N26 and trading platform Trade Republic. They also partner with the French National Police and perhaps most notably, Europol – supporting its anti-financial crime initiatives.

We recently had the pleasure to catch up with Krik Gunning, the CEO and co-founder of Fourthline, to discuss how their technology works, how customers deploy it and what it is used for.

Hello Krik, thank you for being with us today. Would you be so kind as to share with us your journey in the IT/Fintech industry? How did you come to build Fourthline?

My journey began as an M&A advisor at ABN AMRO and I went on to co-found a Dutch M&A boutique before building Fourthline.

We initially began our business as a deposit platform. The idea for Fourthline came about when we were looking for a client onboarding solution for our own business as a regulated payment institution.

We couldn’t find anything in the market that would meet our high-quality standards. So, we decided to build it ourselves.

At the end of 2017, we shipped the first version of our digital identity and verification product. Soon afterwards we signed N26, the largest digital bank in continental Europe, and a few other fast-moving fintech companies. Today, we have over 250 employees in Amsterdam and Barcelona helping us in our mission to fight financial crime. 

Fourthline is based in Amsterdam in the Netherlands. What can you tell us about the tech environment there (local government, support, tech hubs, etc.)?  

Amsterdam is a great city for building and growing a technology company. There is a great culture of innovation with dedicated hubs such as Amsterdam Science Park and the Startup Village. It was also recently named as one of the world’s most AI-ready cities in the world!

Krik, could you tell us more about Fourthline’s core mission and how your technology works for your customers?  

Our mission is to fight financial crime and build a safer financial ecosystem for everyone. For regulated enterprises with digital identity challenges, Fourthline offers a bank-grade identity stack and unmatched expert guidance. We know regulated enterprises require the highest quality fraud detection, user experience, security, data privacy, and compliance — that’s why we’ve developed proprietary technology that enables our clients to be compliant with ease.

Contrary to other Know Your Customer/Anti Money Laundering providers, what we offer goes beyond point solutions. We have a holistic approach to fighting financial crime. We firmly believe every collaboration with a client is a partnership and we’re focused on catching fraud and keeping enterprises safe throughout the entire user lifecycle.

Part of this end-to-end approach is having the highest-quality, proprietary technology that is built in-house. We are continuously evolving and innovating our tech. For instance, we have built and control our facial recognition screening we can avoid bias.

End-to-end also means that we look at the full picture of fraud and risk. No piece of data tells the whole story. We are continuously monitoring and screening throughout the user lifecycle because we know that what was low-risk and compliant one day, doesn’t necessarily mean it’s the case a couple of weeks down the line. We use our machine learning algorithms paired with anti-financial crime analysts to cross-check metadata, analyse trends, and deliver conclusive actionable insights – never leaving our clients with grey unknown areas.  

According to some of your latest insights, fraudulent activities are on the rise in Europe. How can artificial intelligence help institutions protect their customers and their data against it?   

We have and will continue to invest heavily in automation, algorithms, and AI. Yet applying AI to KYC is extremely challenging as it requires in-depth knowledge of regulatory requirements. It also requires data on specific markets and on both fraudulent and authentic ID documents.

We have set the bar high and only automate an identity check if we can objectively prove it leads to a higher quality outcome. This rigorous focus on quality made it a daunting task to apply AI at scale, but last year we shipped six new AI models and our proprietary Optical Character Recognition (OCR) models outperformed those of Google Vision.   

The task of fighting financial crimes in the global market seems daunting. How do you make sure you attract the right talents to do so and how do you recognize them?

The only reason we are successful is because we have a great team. One of our strengths is that we have a clear mission, which is to use technology for good – in this case, to fight financial crime.

We always ask people what is the main reason for joining us. The most important reason for most of our employees is that mission. People want to be part of a company that makes a positive impact on society every day. That’s why we’ve been able to attract diverse talent as evidenced by the 57 nationalities in our team.

In addition, Fourthline is an interesting place to work because of the unlimited personal growth opportunities. We reward and promote people not only based on result, but also based on attitude. If you are ambitious, there is unlimited growth potential for you.

Which are the emerging types of financial fraud banks and other financial institutions need to look out for, and why are they on the rise?

The pandemic has led to a huge increase in financial crime. To avoid detection, criminals are growing more inventive, using deepfakes, social engineering techniques, and creating synthetic online identities. We expect social engineering and account takeover fraud to become even more widespread next year.

To combat this, financial institutions need to conduct holistic data checking beyond document verification at account opening and monitor customer identities throughout the customer lifecycle. Money mules, for example, appear to be perfectly legitimate people at onboarding, but transfer access to the account to money launderers after the account is opened. Banks and other financial institutions must adopt technology that can confirm the account user is the account holder throughout various points in the customer lifecycle.

Additionally, the sheer size of the crypto industry will force regulators to closely monitor the sector. This is expected to lead to stricter compliance regulation in some markets. We expect to see a continued trend where some players embrace regulation while others will fight or evade it.

Finally, what are the main lessons you have learned as an entrepreneur and founder of a fintech company specializing in digital identity technology? Any advice to young fellows looking to tackle issues in the global financial market?

Two things come to mind. First, truly build for scale from day one. The fintech industry is huge and you should not constrain yourself to a specific geography. Second, carefully think about what sets your apart in the war on talent. Being able to distinguish your company – in the way Fourthline has done with our mission to fight financial crime – will allow you to attract the talent you need to scale.

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Arnaud Terrisse
Arnaud Terrisse
Arnaud is a startup enthusiast from France with a passion for social entrepreneurship. He loves reading, surfing, and learning about new business ideas.

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