Shift Technology Uses AI to Battle Insurance Fraud #insuretech

fraud detection

When I first spotted Shift Technology with their focus on fraud detection for insurance, I assumed I would find a venture in Israel (which is known for smarts in finding the bad guys in cyberspace, as we outlined when we went to Israel on our Fintech global tour). So I was surprised to find that Shift Technology is a Paris based venture. There is a lot more tech innovation in France than the image of economic sclerosis would lead you to assume. The next thing that jumps out at you is that they recently closed a $10m Series A round in a tough market from a top tier VC (Accel Partners). So they must be doing something right.

Pattern matching in the data

Call it AI or Machine Learning or Big Data or Data Science, the buzzwords accumulate, but this is about recognising the patterns of behaviour that indicate that bad actors are involved. Credit Card networks have been using this kind of technology for a long time. So have cybersecurity vendors and intelligence agencies. What we are witnessing now is this technology becoming more mainstream and being applied to new use cases. We looked at some of these use cases during our AI Week on Daily Fintech.

Fraud detection is the key and not just for Insurance

When you look at breakthrough innovation in e-commerce and payments, you often find fraud detection tech at the core. This is the story behind Klarna.

Fraud detection is also key to P2P/Marketplace Lending and Crowdfunding.

Shift Technology is currently laser focussed on the Insurance use case, as is evident from their home page where they have a real time clock showing the number of insurance claims analysed to date (over 54m at time of writing).

SAAS Model Could be for Incumbents or for Upstarts

Their business model is simple – they license via a SAAS model. One secret to venture success is to innovate on only one front at a time. You can be quite conventional on the business model while innovating on the technology or vice versa. Fraud detection  is a problem that incumbent Insurance companies will pay to solve. One can also easily imagine this as part of the solution  stack for an upstart P2P Insurer.

Data Aggregation & Sharing based on shared interest

The key to their business is the fact that clients are motivated for Shift Technology to aggregate and share the data. Writing smart fraud detection algos can be replicated by anybody with the budget to hire good developers. It’s the data that matters. In fraud detection, customers have a motivation to share. So this business has network effects and barriers to entry.

Daily Fintech Advisers provide strategic consulting to organizations with business and investment interests in Fintech. Bernard Lunn is a Fintech thought-leader.

 

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