AI startup BioCatch raises $145 million to help financial firms guard against fraud - without making their customers risk coronavirus exposure by using touchscreens

• BioCatch, a Tel Aviv-based security startup, pulls in $145 million at a time when much investment has been put on hold.
• The startup uses behavioral biometrics, in which AI monitors all kinds of gestures and behavior to verify a user's identity. Financial technology customers like American Express use it to guard against fraud.
• The coronavirus has given a boost to BioCatch and other startups as new kinds of security are needed - and fingerprints go away, as people worry about coronavirus exposure by using shared touchscreens and other surfaces.
• Bain Capital says it invested in the startup because financial firms are increasingly reliant on its wide range of security applications in a remote workforce.
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Behavioral biometrics, the kind of artificial intelligence that reads all kinds of body language, is pumping its fist right now, say analysts and a steady stream of global investments, including a $145 million round announced today by the growth investing fund of Bain Capital.

BioCatch, a 150-employee startup based in Tel Aviv, is the latest beneficiary of what analysts are saying are several key impacts of the global coronavirus pandemic: No one wants to risk contamination by touching a public keypad. And people are working from home in all kinds of new ways that necessitate additional cybersecurity considerations.

Another investor in the round stands out: American Express Ventures, the investment arm of the credit card giant that is also a customer, along with 40 of the world's largest global financial institutions. The round was notably closed after the arrival of the pandemic in the United States - an event that caused many investors to pull back on funding.

Big banks love the fraud protection of AI that watches every human aspect of an online transaction, and that slams down the virtual teller cage if you are not really you.

"We concentrate on fintech because the [return on investment] is so bloody compelling," says Howard Edelstein, BioCatch's CEO. He estimates his firm saves big banks 10 to 15 times what they pay in fraud prevention.

Bain says that - suddenly - what used to be a sci-fi notion of security is badly needed in daily life. "People working from home are doing more on multiple devices," says Dewey Awad, a managing director at Bain. "If someone is potentially wiring transfers of hundreds of millions of dollars with their smartphone from the couch, you bet banks want every bit of data proving they are who they say they are."

BioCatch's analytics watch many aspects of your interaction with a device. For instance, how fast you click with a mouse or your finger. "As you get older, you click slower," Elelstein says. "You lose 15 milliseconds every year." So behavioral analytics can tell when a scammer hopped up on Red Bull is trying to click into an elderly person's bank account.

How you swipe, how you talk, where you surf online are all behavioral traits that behavioral analytics learn over time - and knowing you that well sets off alarms when someone else tries to crash your accounts. The same way your dog goes nuts when it's not you at the doorstep, but that nemesis, the FedEx delivery driver.

'The whole notion of touch-based technology except for a smartphone is going away'

Those systems will be more in demand because of the virus, says Acuity Market Intelligence analyst Maxine Most. "The only thing people are going to want to touch is their own devices. The whole notion of touch-based technology except for a smartphone is going away."

We're going to use our phones more and public keypads less, and a simple one-time access of the phone with a security code, facial ID, or fingerprint is not enough. If you are managing your life - and your company's budget - with a device, the device and the company need to make sure it's really you.

Bain has previously invested in security firms, including Blue Coat, which was acquired by NortonLifeLock, and InAuth, which was acquired by American Express. Awad says the startup's technology is highly applicable to other verticals beyond financial services, and Bain is investing in that expansion.

Analysts and investors seem to agree biometrics growth is on the way - and that the fingerprint is on its way out.

"Apple devices have the fingerprint security in older devices, and now they've moved on to facial recognition. We'll see more and more changes like that," says eMarketer principal analyst Victoria Petrock. Business Insider and eMarketer are both part of parent company Insider Inc.

"It's always evolving. Behavioral biometrics could very well be the next frontier in terms of identification," Petrock said.