Podcast: Austin Capital Financial institution CEO Erik Beguin on AI-driven fraud

Whitney McDonald 12:04:39
Whitney, good day and welcome to The Buzz a fin AI information podcast. My identify is Whitney McDonald and I’m the editor of fin AI information. Fin AI information has rebranded from financial institution automation information, marking the subsequent step in our mission to guide the dialog on innovation and Monetary Providers Know-how. Becoming a member of me at this time, November 18, 2025 is Eric start, CEO of Austin capital financial institution. Eric is right here to debate the state of fraud in monetary companies at this time and methods to navigate an surroundings the place AI is each streamlining fraud for dangerous actors and supporting safety at FIS. Thanks for becoming a member of us, Eric. Effectively,

Erik Beguin 12:05:14
good. Whitney, thanks a lot for having me. Yeah. So Austin capital Financial institution is a financial institution positioned in Austin, Texas, we’re a few half a billion {dollars} in belongings rising fairly quickly. I feel we grew about 60% in belongings final yr. And we focus on digitally delivered merchandise nationwide. We construct our personal, say, FinTech merchandise. Now we have merchandise for credit score constructing. And our most up-to-date product that we’re launching is a product designed to guard American shoppers and small enterprise from fraud. Personally, I’m a non conventional banker, and I actually take into consideration banking in neighborhood as a set of shoppers or set of small enterprise house owners with frequent unmet wants, versus being geographically positioned in shut proximity. So we serve clients in all 50 states throughout the nation. Good.

Whitney McDonald 12:06:03
Effectively, you talked about one of many merchandise that you’ve is to handle the state of fraud at this time. Let’s sort of discuss large image. We’ll get into what you guys provide, and we’ll get into Fort Knox particularly. However why don’t you sort of inform me about the place we stand at this time, the state of fraud from that, from that broader lens,

Erik Beguin 12:06:22
Whitney good, fraud is a extremely giant drawback and rising exponentially. There are estimates for fraud vary anyplace from like, I feel there’s an FTC estimate from $12 billion of shopper losses a yr to the Aspen Institute simply put one thing out that estimates fraud could be $150 billion of losses to Individuals in only one yr. And when no matter these these numbers are, they’re truly understated, as a result of when any individual is the sufferer of fraud, typically they don’t notice they’ve been defrauded. Typically they’re in denial that they’ve been defrauded, and typically they’re simply too embarrassed to inform anybody that they’ve been defrauded. So regardless of the fraud numbers are, and they’re giant and rising quickly, they’re understated. So fraud is a large drawback, and it would even be a what some would possibly take into account a safe nationwide safety risk at this level.

Whitney McDonald 12:07:13
Now, we will’t actually speak about fraud or monetary companies or something lately with out speaking about synthetic intelligence, and similar to monetary establishments and tech suppliers are investing in AI, fraudsters are clearly additionally leveraging the expertise to defraud folks. How is fraud making it simpler for fraudsters? What are a few of these threats that monetary establishments and shoppers alike ought to be watching out for

Erik Beguin 12:07:41
Yeah, that’s an incredible query, Whitney, and what, what actually has occurred is fraud has moved from, , the hacker and the hoodie of their mother’s basement into giant firms with 1000s of employees. And I take advantage of the phrase employees deliberately, not staff. These are people who find themselves often tricked into coming into some nation the place they’re basically held hostage, and the businesses are run by legal syndicates in these secure haven nations, and there could be 1000s of staff in a compound, and they’re utilizing the easiest in expertise. They’re investing in expertise as a result of they’re making billions and billions in {dollars} a yr in fraud beneficial properties. They usually flip round they usually use that, they usually vest it to similar to a enterprise, proper? They’re within the enterprise of fraud to maximise the beneficial properties they get. In order that they have the perfect instruments, they’ve the perfect expertise. There’s truly coaching on psychological methods to psychologically break any individual down, after which these employees are punished if they don’t herald cash. So what would possibly they do? So previously, each American ought to know that every one of our data has been bought and is obtainable readily on the darkish internet. And so previously, I’d say these efforts have been extra broad primarily based and hodgepodge by these firms, however with AI, they’ll now particularly goal a person shopper. They’d say, like, I need to goal Joe Smith. And they’ll have aI get all the data for Joe Smith, after which particularly goal Joe Smith. Like, the place does he financial institution? What’s he concerned with? Go learn his social profile, all this stuff, after which then resolve on the kind of assault they may do utilizing AI, and earlier than this might be a particularly laborious course of, taking a number of hours, and similar to a standard enterprise, like they need to make investments, they need to get the utmost return on the hours they make investments, however with AI, they only speed up these efforts and make them a lot broader, in order that. Crimson is rising exponentially with AI.

Whitney McDonald 12:09:42
Now I sort of needed to speak slightly bit right here about what to do to forestall that fraud. Look ahead to that fraud. Authentication is among the subjects that I needed to speak via, and that additionally sort of bleeds into Fort Knox as nicely. However authentication isn’t all the time, , the right answer. What are some examples of authentication that ought to or perhaps mustn’t, be trusted,

Erik Beguin 12:10:04
good. So authentication for for years now, we’ve been utilizing usernames and passwords. All people’s obtained usernames and passwords, and all people has too many username and passwords to allow them to’t keep in mind them. So most individuals truly recycle their username and a few passwords. And the dangerous factor is, is, if the hackers ever break into one web site along with your username or password, and I feel it’s one thing like I had the stats right here someplace, it’s like 60% of Individuals reuse their id. 62% of Individuals reuse their username or password, after which the fraudsters will use these username and passwords that they get off the darkish internet, they usually’ll do what’s known as credential stuffing. And they also will go in and they’ll attempt to use these credentials on each banking web site or monetary web site that that shopper is related to. And 50% of login makes an attempt use credential stuffing, proper? So username and password, I feel the time of the consumer and password is shortly coming to an finish. I additionally suppose one time use textual content codes. These codes will be intercepted pretty readily, in order that that’s multi issue authentication for all of your listeners, proper? You’ve obtained username password, and I’m going to ship you a textual content code. I can I can trick you into I should purchase your username and password, and I can intercept your your textual content code, and I can readily entry your clients monetary companies, curiously, additionally the place banks have been shifting to kind of authentication and utilizing AI for voice recognition authentication. I imagine the CEO of OpenAI got here out and stated, AI has already defeated voice recognition. And so there are some firms that use voice recognition to name and ensure a commerce, and I feel that the times of that being a safe technique of authentication are over. So username, password, one time, textual content, code to a to an unsecure cellphone quantity, and voice recognition authentication, I feel all of these are possible on their manner out. So the place are we going? So, proper? Effectively, we’ve changed that, yeah. So, , I feel the issues the place we’re going is biometrics, for certain, and I feel we’re going to on system biometrics and we’re going to off system biometrics. And there’s a distinction between these two. I can go into extra element in the event you’re thinking about that. I feel we’re going into consumer habits and system habits. And actually that is the place AI can are available and say, okay, is that this system being utilized in a spot, in a way that may be typical of a human, proper? After which it could be typical of this particular consumer. After which onto the biometrics match. After which, in fact, it’s important to defeat reside picture injection that’s powered by AI on the opposite facet. However I feel we’re going to finish up in a world like this, the place it truly is your system, your biometrics, after which additionally what , so some, some kind of like problem factor that . And I feel opposite on the on the inverse facet of that’s that one thing that we put in Fort Knox, and I feel that may turn into extra prevalent, is the power for the consumer to really problem the id of the financial institution, as a result of there’s a number of scams at this time, just like the Phantom hacker rip-off, for instance, the place the financial institution is looking the buyer, however it’s not likely the financial institution, and the buyer can’t actually confirm it’s the financial institution. So we’ve in-built the place the buyer can create problem questions, questions for us, and, , Vice like, we need to realize it’s them, after which they’ll show that it’s us. And we don’t know something about that problem query, besides whenever you’re on the proper stage of entry, you possibly can see like what the reply is to that query on our facet. After which we each know that we’re talking with the meant celebration

Whitney McDonald 12:13:54
for our listeners which may not know, are you able to share what Fort Knox is and what the innovation behind that’s,

Erik Beguin 12:14:01
yeah, certain, so Fort Knox is, I imagine, America’s first excessive safety banking platform. So about 5 years in the past, I sit in my workplace throughout covid, and I used to be trying on the fraud panorama, and I simply thought fraud was going to blow up. And I actually noticed this, this conundrum that banks have been dealing with, the place they’re making an attempt to offer comfort they usually’re making an attempt to offer safety. And the issue with that is these two issues are basically juxtaposed towards one another. The extra handy you make it to maneuver your cash. 24/7, actual time funds, , P to P funds, the much less safe it’s, and the safer i. You make folks’s cash, the much less handy it’s to maneuver it. And so we actually checked out breaking these two aside. And so what we created is Fort Knox, and it’s actually complementary to the present checking account that you have already got, in an effort to have the comfort of your checking account and the safety of Fort Knox in your financial savings. And actually beneath the premise that you just shouldn’t maintain all of your cash in a single bundle. And whereas you want the power to shortly transfer cash for funds, you will have your utility cost, you will have purchases and whatnot, and people are all hooked up to your spending account, your checking account, you don’t want the power to ship your cash immediately in a single day to sub Sahara Africa or Southeast Asia in your financial savings account. And so actually, you break these two aside and Fort Knox, dot financial institution excessive safety financial savings focuses solely on financial savings, and it has an entire host of mechanisms to maintain your financial savings secure and nonetheless assist you to have the comfort of your present checking account.

Whitney McDonald 12:15:38
Now our listeners ought to learn extra about that. I’ll plug up that now we have lined that financial savings account as nicely. For extra particulars about that. Now we have, , lined that too. Now you talked slightly bit in regards to the starting, and that about this in the beginning, and also you simply talked about Fort Knox as one instance. However you actually do have an entrepreneurial mindset. You search for these wants, and also you attempt to innovate towards these wants of the market, fraud being one. Some other improvements within the pipeline? What’s peaking your curiosity proper now? Possibly even simply an method to the way you method expertise at Austin capital, however but additionally, , via the improvements that you just give you, however something within the pipeline? What’s, what’s, , sparking your your curiosity? Yeah. So we

Erik Beguin 12:16:26
have an current product line known as credit score robust, proper? Now we have lots of of 1000s of shoppers on that. We had near 1000 on daily basis, and that’s actually for folks with no credit score, then credit score or low credit. And actually what we’re seeing over there’s a number of and that is what obtained us into the fraud house. Is also a number of id theft and artificial id theft and first celebration fraud. So now we have a number of curiosity in that. We’re constructing out some information instruments that we would share with another banks. They’re very within the analytics that we’ve developed right here. So we’re that, after which actually we’re Fort Knox at this time, it’s designed to guard your financial savings for shoppers, account takeover. And company account takeover is a large drawback for small enterprise. The losses there are a lot bigger and the variety of folks that you may doubtlessly compromise are a lot bigger, as a result of all they want is one worker to make use of enterprise e mail compromise, for instance, get right into a enterprise and simply monitor and simply wait and get entry to these business accounts. So Fort Knox goes to increase to defending small enterprise money reserves, after which it’s going to increase into funds and receivables. Now we have an entire product product roadmap for Fort Knox to offer these excessive safety measures. Won’t ever be an all encompassing financial institution with Fort Knox, as a result of it should carve off the items that should be extremely safe and safe these and nonetheless assist you to maintain your present banking relationship and the pliability and the relate the most likely native relationship that you’ve there. I feel the issues that we may hit on is that training will not be sufficient. All people’s been preaching training for fraud prevention for therefore lengthy and and it simply doesn’t work as a result of the fraud assaults are so subtle. I feel we additionally must concentrate on defending our elders. Over 50% of fraud makes an attempt are towards people who find themselves 60 years or older. And so to reinforce our efforts, actually, we have to have a look at structurally constructing services which have safety and fraud prevention constructed into the product to guard the buyer once they simply aren’t conscious of what they even should be protected against.

Whitney Mcdonald 12:18:44
You’ve been listening to the thrill a fin AI information podcast. Please comply with us on x and LinkedIn, and as a reminder, you possibly can fee this podcast in your platform of selection. Please be sure you go to us at finaI information.com for extra finaI Information. Thanks for listening. You.

Transcribed by https://otter.ai