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

Whitney McDonald 12:04:39
Whitney, hi there 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 following step in our mission to guide the dialog on innovation and Monetary Companies Expertise. Becoming a member of me at the moment, 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 the moment and find out how to navigate an atmosphere the place AI is each streamlining fraud for unhealthy actors and supporting safety at FIS. Thanks for becoming a member of us, Eric. Effectively,

Erik Beguin 12:05:14
excellent. Whitney, thanks a lot for having me. Yeah. So Austin capital Financial institution is a financial institution positioned in Austin, Texas, we’re a couple of half a billion {dollars} in property rising fairly quickly. I believe we grew about 60% in property final 12 months. And we concentrate on digitally delivered merchandise nationwide. We construct our personal, say, FinTech merchandise. We’ve merchandise for credit score constructing. And our most up-to-date product that we’re launching is a product designed to guard American customers 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 customers or set of small enterprise house owners with widespread unmet wants, versus being geographically positioned in shut proximity. So we serve prospects in all 50 states throughout the nation. Excellent.

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

Erik Beguin 12:06:22
Whitney excellent, fraud is a very giant downside and rising exponentially. There are estimates for fraud vary wherever from like, I believe there’s an FTC estimate from $12 billion of client losses a 12 months to the Aspen Institute simply put one thing out that estimates fraud may be $150 billion of losses to People in only one 12 months. And when no matter these these numbers are, they’re really understated, as a result of when anyone is the sufferer of fraud, generally they don’t understand they’ve been defrauded. Generally they’re in denial that they’ve been defrauded, and generally 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 an enormous downside, and it’d even be a what some may take into account a safe nationwide safety risk at this level.

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

Erik Beguin 12:07:41
Yeah, that’s an amazing query, Whitney, and what, what actually has occurred is fraud has moved from, you understand, the hacker and the hoodie of their mother’s basement into giant companies with 1000s of staff. And I exploit the phrase staff deliberately, not staff. These are people who find themselves often tricked into coming into some nation the place they’re primarily held hostage, and the businesses are run by legal syndicates in these secure haven international locations, and there may be 1000s of staff in a compound, and they’re utilizing the perfect in know-how. They’re investing in know-how as a result of they’re making billions and billions in {dollars} a 12 months in fraud beneficial properties. They usually flip round and so they use that, and so they 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 know-how. There’s really coaching on psychological find out how to psychologically break anyone down, after which these staff are punished if they don’t usher in cash. So what may they do? So previously, each American ought to know that each one of our data has been offered and is obtainable readily on the darkish net. And so previously, I might say these efforts had been extra broad based mostly and hodgepodge by these corporations, however with AI, they will now particularly goal a person client. They’d say, like, I wish 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 these items, 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 numerous hours, and similar to a standard enterprise, like they wish to make investments, they wish to get the utmost return on the hours they make investments, however with AI, they simply speed up these efforts and make them a lot broader, in order that. Purple is rising exponentially with AI.

Whitney McDonald 12:09:42
Now I type of needed to speak a bit of bit right here about what to do to forestall that fraud. Look ahead to that fraud. Authentication is without doubt one of the matters that I needed to speak by, and that additionally type of bleeds into Fort Knox as nicely. However authentication isn’t all the time, you understand, the proper resolution. What are some examples of authentication that ought to or possibly shouldn’t, be trusted,

Erik Beguin 12:10:04
excellent. So authentication for for years now, we’ve been utilizing usernames and passwords. Everyone’s acquired usernames and passwords, and all people has too many username and passwords to allow them to’t keep in mind them. So most individuals really recycle their username and a few passwords. And the unhealthy factor is, is, if the hackers ever break into one web site along with your username or password, and I believe it’s one thing like I had the stats right here someplace, it’s like 60% of People reuse their id. 62% of People reuse their username or password, after which the fraudsters will use these username and passwords that they get off the darkish net, and so they’ll do what’s referred to as credential stuffing. And they also will go in and they’re going to attempt to use these credentials on each banking web site or monetary web site that that client is related to. And 50% of login makes an attempt use credential stuffing, proper? So username and password, I believe the time of the person and password is shortly coming to an finish. I additionally assume 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 acquired 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 prospects 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 corporations that use voice recognition to name and make sure a commerce, and I believe that the times of that being a safe methodology of authentication are over. So username, password, one time, textual content, code to a to an unsecure cellphone quantity, and voice recognition authentication, I believe all of these are possible on their means out. So the place are we going? So, proper? Effectively, we’ve changed that, yeah. So, you understand, I believe the issues the place we’re going is biometrics, for positive, and I believe we’re going to on gadget biometrics and we’re going to off gadget biometrics. And there’s a distinction between these two. I can go into extra element should you’re interested by that. I believe we’re going into person habits and gadget habits. And actually that is the place AI can are available and say, okay, is that this gadget being utilized in a spot, in a way that might be typical of a human, proper? After which it could be typical of this particular person. After which onto the biometrics match. After which, after all, it’s a must to defeat reside picture injection that’s powered by AI on the opposite facet. However I believe we’re going to finish up in a world like this, the place it truly is your gadget, your biometrics, after which additionally what you understand, so some, some kind of like problem factor that you understand. And I believe opposite on the on the inverse facet of that’s that one thing that we put in Fort Knox, and I believe that can turn out to be extra prevalent, is the flexibility for the person to truly problem the id of the financial institution, as a result of there’s numerous scams at the moment, just like the Phantom hacker rip-off, for instance, the place you understand the financial institution is asking the buyer, nevertheless 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, you understand, Vice like, we wish to comprehend it’s them, after which they will show that it’s us. And we don’t know something about that problem query, besides if 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 supposed social gathering

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, positive, 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 wanting on the fraud panorama, and I simply thought fraud was going to blow up. And I actually noticed this, this conundrum that banks had been dealing with, the place they’re making an attempt to supply comfort and so they’re making an attempt to supply 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, you understand, 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, with the intention to have the comfort of your checking account and the safety of Fort Knox to your financial savings. And actually beneath the premise that you just shouldn’t hold all of your cash in a single bundle. And whereas you want the flexibility to shortly transfer cash for funds, you may have your utility fee, you may have purchases and whatnot, and people are all connected to your spending account, your checking account, you don’t want the flexibility to ship your cash immediately in a single day to sub Sahara Africa or Southeast Asia to 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 mean you can 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 we’ve got lined that financial savings account as nicely. For extra particulars about that. We’ve, you understand, lined that too. Now you talked a bit of bit concerning the starting, and that about this firstly, 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 know-how at Austin capital, however but additionally, you understand, by the improvements that you just give you, however something within the pipeline? What’s, what’s, you understand, sparking your your curiosity? Yeah. So we

Erik Beguin 12:16:26
have an current product line referred to as credit score sturdy, proper? We’ve a whole bunch of 1000s of shoppers on that. We had near 1000 every single day, and that’s actually for folks with no credit score, then credit score or spotty credit. And actually what we’re seeing over there’s numerous and that is what acquired us into the fraud area. Is also numerous id theft and artificial id theft and first social gathering fraud. So we’ve got numerous curiosity in that. We’re constructing out some knowledge instruments that we’d share with another banks. They’re very within the analytics that we’ve developed right here. So we’re taking a look at that, after which actually we’re taking a look at Fort Knox at the moment, it’s designed to guard your financial savings for customers, account takeover. And company account takeover is an enormous downside for small enterprise. The losses there are a lot bigger and the variety of folks which you can 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 broaden to defending small enterprise money reserves, after which it’s going to broaden into funds and receivables. We’ve an entire product product roadmap for Fort Knox to supply these excessive safety measures. Won’t ever be an all encompassing financial institution with Fort Knox, as a result of it’s going to carve off the items that should be extremely safe and safe these and nonetheless mean you can hold your present banking relationship and the pliability and the relate the most likely native relationship that you’ve got there. I believe the issues that we may hit on is that training is just not sufficient. Everyone’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 refined. I believe we additionally must deal with 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 and products which have safety and fraud prevention constructed into the product to guard the buyer after they simply aren’t conscious of what they even should be shielded from.

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

Transcribed by https://otter.ai