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Pioneering the prevention of banking fraud

Vaud-based company NetGuardians has developed an innovative technology to help fight financial crime and is currently supplying its solutions to companies in over a dozen countries.

NetGuardians is a company based in Yverdon that is active in fintech and has gained worldwide recognition for its fraud prevention and risk attenuation solutions developed by experts specializing in risk, in particular risk among financial institutions. "We combine our understanding of the sector and our advanced analysis technology to lead the fight against financial crime," explains spokesperson Mine Fornerod.

Given that financial institutions have their own organizational systems and capacities when it comes to risk, NetGuardians’ solutions are adapted to each specific demand, with their packages helping banks to fight internal, e-banking, and mobile phone fraud, as well as other such crimes.

The company was founded in 2007 by two software engineering students from the School of Management and Engineering Vaud (HEIG-VD), Joël Winteregg and Raffael Maio, as a spin-off from the school. Its main innovation is its ability to detect fraud before it happens via behavioral analysis technology. Its holistic approach, i.e., its ability to analyze human behavior throughout the entire banking system, enables it to detect the most complex fraud which previously would have gone unchecked. The Gartner research institute named the company a "cool vendor" in 2015, praising the effectiveness of its technique.

Profiling and machine-learning

What makes NetGuardians, who employ over 70 people, unique is the use of profiling and machine-learning, and also associating user behavior with banking transactions. NetGuardians’ solutions help financial institutions to fight fraud and assist them in complying with regulations. "We use the metaphor of a Nespresso machine to describe our solutions," Fornerod explains. "Our software platform represents the machine. We prepare the solutions – the capsules – which integrate various fraud scenarios or different types of regulations."

The company relies on big data to analyze user behavior throughout the banking system. Using dynamic profiling, it establishes a risk profile on an individual level, either for a client or an employee. When unusual behavior occurs, real-time alerts are then sent to those monitoring so that they can prevent fraud in a timely fashion. Moreover, machine-learning means that the company’s model can permanently improve its capabilities, enabling it to achieve risk modeling that is ever more reliable whilst reducing costs for banks.

Unlike most of its competitors, NetGuardians primarily specializes in fintech instead of offering data analysis solutions to different sectors such as health or governments. It currently has over 60 clients in 15 countries in Europe, the Middle East, Asia, and Africa.
NetGuardians was the first company to come out of the Y-Parc incubator, and it continues to carry out research projects into machine-learning and artificial intelligence with the HEIG-VD. In addition to its head-quarters in Yverdon, it has offices in Kenya, Poland, and Singapore, with yet more expansion planned. With incredible growth of over 50% per year, NetGuardians is looking to double its staff to around 120 employees by this time next year.

A valuable support from the Economic Promotion

When it first began, NetGuardians received financing from the Foundation for Technological Innovation (FIT), enabling the company to get started. "Our attachment to the region is deep-seated," says Fornerod. "We were born here. The prototype of the software was developed by Joël Winteregg at the HEIG-VD. We have a global vision, but with Swiss roots firmly planted in the canton of Vaud."

Over the years, the company has established partnerships and synergies with companies such as Temeour, Swisscom, Sofgen, EY Singapore, and Sysmosoft (which also came out of the Y-Parc). NetGuardians is now classed as a scale-up, having raised capital on three occasions – the first for a million francs in 2011, the second for CHF 5 million in 2014, and the third for CHF 8.5 million in 2017.

The business owes some of its global success to the support it received from the Office for Economic Affairs and Innovation (SPEI). "This department has helped us financially in recent years in the scope of our sales and marketing activities abroad," Fornerod says. "For example, we obtained financing for the international events which we took part in and where we presented our solutions. This enabled us to branch out into new markets and to get Scale Up Vaud certification."