Exclusive: ‘Who are you, GB29 NWBK 6016 1331 9268 19?’ – David-Jan Jans and Marcel Rienties, SurePay in “The Paytech Magazine”
David-Jan Jans and Marcel Rienties, Co-founders of SurePay, designed a cutting-edge Confirmation of Payee solution to match account names, so payments never go astray. Mobiquity developed the IT from scratch to a sound service.
If a letter is either incorrectly or incompletely addressed, it may well go astray; a wrong ‘address’ on a payment instruction means it may not only fail to reach the right destination, but be deliberately diverted to the wrong one.
That’s because fraudsters are actively exploiting transaction weaknesses and leaping on any opportunity to harvest funds through authorised push payments (otherwise known as bank transfer scams).
With the massive growth in online and mobile transfers, and the relentless quest for faster payments, the risk of a delivery error is increasing, whether malicious or accidental. Finding a solution to this problem was the inspiration behind Dutch fintech SurePay, a specialist in Confirmation of Payee (CoP), which developed a way to validate transfers by matching entered payee name with the genuine account holder’s name.
If you make this vital match at the point of payment, you can be sure you are transferring money to the intended person or company, which SurePay says is reducing online banking-related identity fraud by more than 80 per cent and misdirected payments by 67 per cent. As an indication of the scale of the misdirection problem, in 2019 alone it issued 53 million warnings of a mismatch between between the entered payee name and the genuine account holder’s.
A spinoff from Rabobank, the multinational banking and financial services company which owns a majority stake in the company, SurePay was co-founded in 2016 by former Rabobank staffers David-Jan Janse and Marcel Rienties, now its chief executive and chief product officer respectively.
Janse describes how he joined Rabobank from university and, for 25 years, has been involved in innovation projects and ways to improve customer experience. From the very beginning of the internet revolution, he was developing online banking initiatives and mobile banking services. Then, in 2015, came the watershed moment.
“Everything came together with algorithms, Cloud, application programming interfaces (APIs) and big data,” says Janse, and this was when he and Rienties realised emerging technologies could solve a growing problem. Namely, if you have to pay with an IBAN, how do you know it is correctly paired with the intended recipient? How do you ensure the payment goes to the right person or company? Their solution was IBAN-Name Check (aka Confirmation of Payee), which today is employed by all the Dutch banks and used for more than 98 per cent of online payments in the Netherlands.
Janse says that although there had long been a compelling need for this kind of verification, it proved more complex to develop than one might think, partly because it needed the organisations acting on behalf of the payee and beneficiary to communicate and partly because there’s just so much in a name.
“It’s a huge problem to fix,” says Janse, “because a payer bank has to check on the data of the payee bank. And then there’s the possibility of name confusion. For example, because my name is Janse, without an ‘n’, and Jansen is the most common name in the Netherlands, will I get a true match? If you say ‘no match’, I don’t get paid. If you say ‘match to Jansen’, it’s a mistake. Other examples would be the difference between ‘Elizabeth’ and ‘Liz’ or ‘Limited’ and ‘Ltd’. False negatives and false positives are the heart of the problem, so you need to address all the permutations and nuances.”
Across Europe, and indeed the world, nomenclature has discrete rules – the order in which a name is written, the use or omission of a dot here or a comma there. All of which the algorithm is capable of.
Janse adds that because of the General Data Protection Regulation (GDPR), there was also a permission issue, which limited what personal data could be disclosed.
In short, payments were stuck in a rut, with transfers being made to numbers rather than to individuals or companies. But the innovation gene was strong in Janse and Rienties. They refused to accept the banks’ way of thinking, which was often ‘we cannot, we may not, and we don’t have to’ –an excuse not to improve something –insisting instead that ‘you can, you may and (perhaps more importantly) you should’. Jumping those three hurdles were the motivation for a creative breakthrough. The SurePay algorithm solved the ‘may’ part, enabling checks without disclosing more information than was permitted.
SurePay has performed three billion checks since 2016 and has been constantly tweaking and improving the algorithm ever since, says Janse.
The serious development began in 2017, when SurePay selected Mobiquity, a team-as-service provider and digital enabler, to build the algorithm and work on data aggregation and APIs.
“We chose Mobiquity because, at that time, it was one of the few companies in the Netherlands that could build a platform-as-a-service Cloud solution. And remember, this was when ‘Cloud’ was not the best word in a banking environment.”
But opting for the technology gave SurePay ‘runway speed’ in the early days, because it didn’t have to build and code the environment. It also helped to keep costs down. With the team-as-a-service support from Mobiquity, the startup created a minimum viable product, which was relentlessly tested, including among Rabobank employees, before going live. But it was all accomplished within a year. From day one, it performed three to five million checks a day.
Mobiquity has been a good cultural fit for the project, says Janse, not least because it had already proved itself on another innovation project at Rabobank.
“One of the key benefits was Mobiquity’s team-as-a-service approach,” he says, “and it was well organised from the start. We don’t want the Mobiquity team to be a Mobiquity team; we want it to be a SurePay team. That means SurePay email addresses, SurePay phone numbers, and the SurePay voice and brand.”
Janse emphasises that clear communication and well-connected teams are essential for innovation so that a single ‘team vibe and spirit’ permeates the organisation – and the Mobiquity team truly integrated into the SurePay team in spirit, in actions and in delivery. It proved valuable not just in startup mode, but also subsequently as the company expanded into other countries and products – because expansion and diversification have been features of SurePay’s early life. Having scaled very quickly thanks to the Cloud-as-a-service, the team-as-a-service approach and, of course, the creative enthusiasm and can-do attitude of its founders, co founders and business developers, SurePay’s algorithm has many more use cases and potential customers.
Following its success with Dutch banks, the solution has found favour with many corporates, which is why there are now two generic services: IBAN-Name Check for Banks, and IBAN-Name Check for Organisations. There is also a service called Pay To Mobile, where customers can easily and securely make banking app payments to people on their mobile contact list, and SurePay Switch Check, which lets them know immediately if a contact person or company has switched banks.
For the UK – SurePay’s biggest market outside Holland – it provided a bespoke solution that met the regulator’s requirement for Confirmation of Payee, which the UK’s six biggest banks were obliged to introduce for customers by the end of June 2020. The SurePay solution has been adopted by Tier 1 banks as well as challengers, NatWest and Atom among them, to combat fraud and misdirected payments. SurePay currently validates 25 per cent of all online payments in the UK, although it can perform the check on all UK CoP participants, which respresents 90 per cent of the payments. That solution is also playing a key role in safeguarding UK tax office COVID-19 payments. Likewise, SurePay is helping to verify COVID-19 payouts in the Netherlands.
Fraud comes in many forms and new scams are continually evolving. Genuine mistakes can also result in unintended and damaging consequences for industries and businesses, insurance being an obvious example. SurePay can help not only with claims fraud but also with achieving swift payouts.
“We’re no longer a startup,” says Janse. “We’re a fully-fledged, ISO-compliant fintech, audited by a range of banks and corporations with more than 20 bank brands and more than 100 corporates connected to our service. We continually improve our algorithm so the product just gets better and better.” Tackling crossborder payments may well be next.
SurePay’s early momentum and creative energy has already carried it far. From a promising idea, cultured in a Rabobank lab in 2015, to a successful private limited company in 2020 with a Tier 1 client list, SurePay at least knows where it’s going – unlike all those misdirected payments it’s helping to prevent.
“It’s all about drive and social purpose,” says Janse, “and the conviction you’ll find the right answers.”