🏴☠️ When Orca Tackles Fraud...
The future? Well, sci-fi fans asked for it so this startup delivered real-world holograms. So when Metaverse meetings fall flat you can just beam yourself to boxes around the world instead.
In this Open Letter:
- Cyber play: Orcas and AI fraud detection for Africa.
- Radioactive rhinos, recurring gold subs & how to sell a bank.
- Human element: How to build an HR Tech startup in SA.
- Who needs more profit: The latest poll results are in.
- The lead: 100+ SA business ideas — get access.
Together with WigWag
TRENDING NOW
Africa’s AI-Powered Fraud Busters
20-odd years ago, you could stay safe on the internet as long as you didn’t reply to any emails from “Nigerian Princes”.
But things have gotten complicated in the last few years. Online fraudsters have seen SA record a 600% increase in fraudulent activity between 2018 and 2022.
Just on the banking side, the gross loss due to online fraud in 2022 was as much as R740 million for the year, a 68% increase from the year before.
But what’s worse, it is estimated that up to 80% of fraud goes undetected. So the problem is bigger than many people realise.
In comes AI
The introduction of AI to fraud is a double-edged sword.
On the one hand, you have criminals who use these tools to create, among other things, deep fake videos. Some of these AI-created ads have scammed millions from over 150 South Africans.
On the other hand, AI can be particularly good at analysing large amounts of data (like customer transaction data) in real-time, to identify anomalies that might indicate fraud.
Pretty useful in 3 key places:
- Identifying fraud in real time to freeze accounts and prevent damage.
- Analysing large datasets to investigate incidents.
- Pattern-spotting and identifying fraudster strategies to implement future countermeasures.
Dealing with fraud
When it comes to online fraud, big banks deal with it in two ways: prevention and insurance.
They implement world-class solutions that often employ AI to detect and prevent fraud. Anything that slips through, is typically covered by insurance.
However, this approach doesn’t work for FinTechs in emerging markets for two reasons:
- The tools deployed by big banks are typically built in developed countries, where the cost is higher. Not to mention the impact these tools have at the scale they operate – they are super expensive. Bring them to Africa and their ROI on fraud prevention is way less impactful.
- FinTechs (especially startups) often can’t afford comprehensive insurance to cover all cases.
Not to mention that fraudsters employ different tactics in emerging markets than in developed countries.
That’s where Orca comes in. Orca (which derives its name from fraud prevention orchestration), is a South African startup that specialises in fighting online fraud in emerging markets, with AI.
Orca’s machine learning modules combine KYC (Know Your Client) data, transaction data, case management data and reporting to spot anomalies and help FinTechs and banks manage their fraud risk better.
And whilst they only started the company earlier this year, they're already making waves in fraud prevention on the back of a recently raised round of funding and a few flagship clients. We are watching this space.
For the water cooler or your next braai…
Key takeaways from this trend & the startup capitalising on it:
What is it: 600% rise in fraud in SA between 2018 & 2022 and AI is making it easier to combat. AI can also fight fraud with real-time transaction analysis to spot anomalies.
Market size in SA: Fraud in SA is R740m per year, but with 80% undetected/unnoticed could be as much as R3.7 billion. Preventing that from happening one could justify charging a decent chunk of it. We’d say it’s likely a R1bn opportunity at the moment and growing fast.
Featured Startup: Orca AI
Founder(s): Thalia Pillay and Carla Wilby
Investors/Backers: Norsken22, First Circle, Musha Ventures, Everywhere, Kara Ventures - latest round: $550k
IN SHORT
🥇 Gold-Level Subs. Troygold has partnered with Precium to launch a gold subscription service where you can purchase fractional amounts of gold for as little as R10 per month.
🦏 Radioactive Rhinos. The Rhisotope Project, a local startup implanting radioactive pellets into rhino horns to deter them from being poached (as the horn will not be safe for consumption), has entered the final research stage of the project and is seeking VC support to launch.
🛒 Shoprite’s Bulk Buy. Shoprite has launched its Cash & Carry stores’ e-commerce platform for bulk buyers. The platform offers visible stock access (to cut down on excess inventory and cash flow constraints) and free delivery within 50 km.
📺 Streaming SABC. The SABC’s streaming platform SABC Plus has just relaunched with a few enhancements, as well as apps available for the service on Apple TV & Google TV coming soon.
🏦 Wanna Buy a Bank? Bidvest Finacial Services is looking to sell Bidvest Bank and FinGlobal as it restructures the group to focus on core areas of the business. The group is already in the process of disposing of Bidvest Life.
😎 The Stack. Need tools or services to help your business grow? Check out our Founder’s Stack. Packed with tools like Apollo that help you find customers and Metavolve which helps founders stress less by providing a framework for growth.
Get Paid Faster, Easier
Nothing greases the wheels better than an easy payment process.
Just ask VISA — seamless payment experiences increase satisfaction by 23%, up conversion rates by 35.26% and reduce cart abandonment by up to 21%.
And with the number of online transactions in SA is set to double by 2027, card payments will be more important than ever.
That’s why you need a payment provider that:
- Utilises innovative yet trusted payment technology
- Offers simple setup and receiving of funds
- Enables 24/7 instant payouts
- Offers responsive human support
- Has competitive pricing
WigWag uses Stitch’s world-class technology to offer:
- E-commerce plugins: Integrate your Shopify, WooCommerce, Webflow or Squarespace site with WigWag to seamlessly accept card payments.
- Embedded payments: Check out WigWag’s API docs if you are building a tech solution and want to embed payments.
- Global receiving: WigWag processes any Visa and MasterCard, globally, getting you paid, from anywhere in the world.
- Instant payouts: Real-time withdrawals for smooth business operations.
- Human support: WigWag is always available to help.
- Ad hoc payments: Use checkout links or add card payments to Xero invoices for payments outside of your store.
New to card payments? Check out this simple payments directory to easily guide you step by step.
Ready to simplify your payment processes? WigWag is offering Open Letter readers 1 month free (Up to R20 000)* if you sign up before 30 July using this link.
That’s zero fees in your first month!
HOW WOULD YOU BUILD IT?
Building mass-market HR tech for developing markets.
If you’re looking for insights on building solutions for corporates this week’s podcast is for you.
We spoke to co-founder Caroline van der Merwe about how they built SA HR Tech solution Jem HR, and she shared some gold insights about how they arrived at strategic decisions such as building the entire employee-facing experience via WhatsApp.
Catch the highlights
1. The No. 1 way to reduce friction for users
Solving key problems, boosting delivery and security while driving value where your end-user already engages – see how Jem’s WhatsApp approach works.
2. Building a business off clients with little-to-no budget
When the entire industry underinvests in HR, it pays to look for the spaces where you can actually generate a real saving – here’s how Jem ended up focusing on the “bakkie crowd”.
3. Drop everything and do this for 1 day a week
From building what you think is best and chasing deadlines to getting serious about your business and doing what it takes – learn how to do the hardest thing for founders.
4. Building a solid team via baptism of fire
Hopes, dreams, reality and building a solid startup team by becoming the leader you know you need to be – discover the one type of question you need to ask to succeed.
Check out all our startup podcasts.
YOUR VOICE
We asked what industries could use a profitability boost, and school she goes…
🟨⬜️⬜️⬜️⬜️⬜️ 🙋 Mine, I need more cash. (17%)
🟩🟩🟩🟩🟩🟩 🎓 Teachers, they should be paid more than soccer players. (57%)
🟨⬜️⬜️⬜️⬜️⬜️ 🍜 Restaurants should boost efficiency, not just hike prices. (11%)
⬜️⬜️⬜️⬜️⬜️⬜️ 🎨 Design – must be a way to do more and earn more. (0)
🟨⬜️⬜️⬜️⬜️⬜️ 🛍️ E-commerce – gotta be a way to make it profitable. (11%)
⬜️⬜️⬜️⬜️⬜️⬜️ 💬 Other (tell us in the comments) (4%)
Your 2 cents…
“I really like teachers, but right now I need the cash myself.”
Michael
Oh, we hear you, Michael! It’s like “When’s month end?” (and it’s only the 5th).
“Live music”
Wendy
Definitely, Wendy. Did you catch our piece on Okhayi a week back? That solution could help musos get paid, too.