In-Focus Interview Series with Nick Lally, co-founder of Ravelin

From credit card fraudsters to organised crime Nick Lally’s Ravelin is using machine learning to help some of the fastest growing tech companies fight fraud 


Nick Lally caught the entrepreneurial bug in the late noughties working closely alongside Mark Shuttleworth, a Dotcom millionaire now worth £500 million according to the Sunday Times Rich List.


During his five years at Shuttleworth’s software company Canonical Ltd, the business grew from forty employees to over 600. But it wasn’t until Lally joined the next startup - the ride-hailing app Hailo - that he was able to come together with a team of like-minded individuals around a common problem: fraud.


“We went from losing a few thousand pounds to losing a few hundred-thousand

pounds in a very short space of time”


As Finance Director at Hailo, Lally came into direct contact with the damaging impact that fraud can have on small businesses.


“I started to get these letters from the bank saying there's been a fraudulent transaction on your business account. Over the proceeding weeks, these letters started to come with more and more frequency. We went from losing a few thousand pounds to losing a few hundred-thousand pounds in a very short space of time,” says Mr. Lally.


The types of crimes ranged from people paying for fares with stolen credit cards to organised crime gangs using black cabs to ferry drugs around the UK. Here, some of the heaviest losses were incurred as £700 fraudulent fares would have to be covered by Hailo.


Lally’s team started working internally to solve this issue because the systems in place at the time were not fit for purpose.


A decade ago, most fraud detection systems used human beings to scan transactions for fraudulent activity. At peak times, like rush hour for taxi-hailing apps, hundreds of orders would come in every minute. It was impossible for a person to accurately process that many transactions.


Mr. Lally and his team set about designing a software that could spot fraud more effectively. As it happened, they got such good results with the tool they had built that some of the team decided other businesses should be able to benefit from the software they had created. And so at the end of 2014, Ravelin was born.


“We had to come up with a new way of doing things”


Nick and his four other co-founders from Hailo put machine learning at the heart of Ravelin. Ravelin’s fraud detection technology works through a combination of artificial intelligence, graph networks and human insights. The software detects fraud in real time often before a sale happens, saving merchants millions of pounds in “chargebacks”.


A chargeback is when payment is returned to a customer because they successfully disputed an item on their bank statement.


In the early years they picked up customers like Deliveroo, JustEat and a range of other taxi apps including Hailo. Within their first 18 months Ravelin had already protected hundreds of millions of pounds worth of revenue.


“A lot of companies prioritise growth over security really early on”


According to Mr. Lally, once businesses reach a certain scale everyone in the market including fraudsters becomes aware of them. Usually it’s at this point that businesses encounter increased levels of fraud.


“A lot of companies prioritise growth over security really early on. Usually it’s not until you get hit with problems that you realise they exist,” says Lally.


With the limited resources that law enforcement have, Lally says police won’t always be able to catch every case of fraud. This is where Ravelin comes in:


“It's very hard for the police to go and look at low-level criminal activity, like when a fraudster gets an online purchase delivered to their house. That means it's up to companies like Ravelin to make sure that the businesses can still trade with confidence. Because they know that there's a system out there that can stem the flow of losses and weed out the bad actors on their platforms.”


“This is a very rewarding part of my work and something that still drives me”, says Mr. Lally, “We’re solving crime every day.”


Secrets to success


Lally says Ravelin has some of the most advanced technology in the fraud prevention space. But he admits that if it wasn’t for the people they’ve hired into the business they wouldn’t be where they are today.


“Our technology is only as good as the people we hire to build it”, says Lally.


Last year Ravelin secured £16.4 million in their Series C investment round.

The In-Focus interview series is a collection of articles commissioned by Atara Partners with some of the world's fastest-moving technology businesses and their leaders.

Find out more about Atara Partners by clicking here