Financial crime fighter FrankieOne plots global expansion after funding win

FrankieOne chief executive Simon Costello says legacy technology systems are preventing banks from acting quickly to stop fraud, as the financial crime start-up plots its global expansion following a $20 million capital raise.

Founded in 2017, the start-up counts three of the four major Australian banks and Afterpay as customers - who can access the services of more than 350 anti-money laundering compliance and fraud prevention specialists - through FrankieOne’s platform.

A combined $2 billion in total fines have been handed down to major banks, the Commonwealth Bank of Australia and Westpac, since 2017 and the regulator has now escalated its oversight of the National Australia Bank after finding systemic problems with customer identification.

Where “anti-tipping off” laws prevent banks from sharing information about suspected money laundering, Mr Costello said fraud is largely unregulated, so banks can share information to plug loopholes and shut down fraud rings.

The COVID-19 pandemic has seen a major uptick in online fraud around the world, and Mr Costello said this has resulted in a boom in specialised fraud prevention services that help banks and other financial institutions detect and stop fraud.

“Fraud can happen quickly and usually, when they hit one bank and find it successful, they replicate across the sector. Speed is critical,” Mr Costello said.

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FrankieOne offers access to financial crime prevention tools in more than 46 countries, turns over millions of dollars each year and has signed up 80 new customers in the last 18 months.

It has now raised $20 million in a Series A funding round led by AirTree Ventures and Greycroft. Other investors include 20VC, Reinventure, Tidal Ventures, APEX Capital Partners, and Mantis VC.

High-profile investors - Robinhood chief executive Vlad Tenev and Monzo founder Tom Blomfield - also participated in the raising.

Mr Costello said the capital will help fund the company’s global expansion. It recently opened an office in Seattle and has its sights set on London and Singapore, as it further develops its platform.

While the major fines handed to the big banks have elevated the importance of compliance, Mr Costello said it has also resulted in cumbersome onboarding processes, adding that FrankieOne is working on tools to streamline onboarding.

“Normally it’s the fraud or compliance department that has heavy sway with how a customer is onboarded. Historically, that has led to a very clunky, not the best customer experience,” he said.

“Yes you want to be compliant, you tick all those boxes. But you also want to balance that with a beautiful and slick customer onboarding experience. And that’s the large part of what we do.”