A data analytics company has been awarded a contract worth more than £3m (more than $3.7m) to help the UK government in its battle against fraudsters.
The Public Sector Fraud Authority (PSFA), an entity set up last year as part of the Cabinet Office and HM Treasury, is working with London-headquartered Quantexa to use ‘new data and cutting-edge technology, including artificial intelligence (AI), to find and prevent more fraud across the public sector’, according to an announcement issued today (30 January) by the company.
Quantexa’s contract is ‘part of a wider investment across government to take the fight to those committing fraud against the taxpayer – rooting out fraud and using modern tools and techniques to stop it before it happens,’ according to the press release.
The Cabinet Office has previously worked with Quantexa to help detect fraud in Covid-19 loan schemes, specifically the Bounce Back Loan Scheme, on a one-year contract worth £362,280 (about $448,000). The company has also a separate contract, titled ‘Fraud Network Analytics and Entity Resolution (Covid-19 Loan Schemes)’ – worth £540,000 and running from March 2022 to March 2023 – according to the government’s contract award notice website.
Quantexa’s announcement of its latest assignment comes almost six months after the government announced details of the PSFA. The authority, which is receiving £25m in ‘additional’ funding across three years, is designed to house ‘counter fraud and data experts, using best-in-class tools and advanced analytics to help departments and public bodies protect public money’.
The PSFA has a target of £180m in ‘audited benefits from its services’ and is required to agree targets with departments and public bodies to ‘make transparent, system wide performance’, according to its plan for the remainder of the current financial year (to end-March 2023). This document, published on 19 December 2022, shows a PSFA budget of £11.3m for 2022/2023.
Part of the authority’s brief is to ‘build a new National Counter Fraud Data Analytics Service that will provide advanced data capabilities, such as social network analysis, to surface, fight and prevent fraud against taxpayers’; and ‘enhance the use of fraud intelligence across the public sector, and with other sectors, to combat specific threats.’
The contract award notice for Quantexa’s new assignment describes its remit as being the ‘provision of a Single Network Analytics Platform for cross-government/and UK banking sector use’. It states that the company’s £3.2m contract will run to 2 January 2026 and was awarded via a ‘call-off from a framework agreement’ (defined as a ‘mini-competition or direct purchase from a pre-established framework agreement’).
A ‘PSFA mandate’ document, published in September 2022, describes the authority as leading the government’s Counter-Fraud Function, which brings together the roughly 16,000 people who work in ministerial departments and public bodies to fight fraud. Estimates of the size of UK public sector fraud and error loss vary but the amount reaches at least £33 billion annually, according to this 24-page document.
In a report published in June 2021, the UK Parliament’s Public Accounts Committee warned that government ‘significantly increased’ taxpayer exposure to fraud and error by dropping typical checks in paying out Covid-19 loans, and supporting people and businesses with which it had no prior relationship. The Department for Business, Energy & Industrial Strategy (BEIS) estimated the Bounce Back Loan Scheme could cost the taxpayer £27 billion (about $33.4bn) in fraud or credit losses, with the 100 per cent taxpayer guarantee leaving the department ‘reliant on banks that it admits lack incentives given it is not their money on the line’.
Fraudsters’ techniques ‘evolving’
“We know that fraudsters are a capable and committed adversary and the way they commit fraud is diverse and evolving,” said PSFA chief executive Mark Cheeseman in the press release.
“As criminals develop more sophisticated tools, we too must innovate and modernise our approach to prevent fraud. By bringing together expertise and tools from the public sector and private sector we will raise our ambition and challenge ourselves to increase our impact on this often unseen and underestimated crime,” Cheeseman added.
“The most effective way to fight the rise of economic crime is with sophisticated data and analytics technology,” said Quantexa’s chief executive, Vishal Marria, who worked for professional services company EY before setting up Quantexa in 2016. “Fraudsters attacking citizens through public services need to be anticipated and stopped, which this partnership is set to do.”
Quantexa has developed what it refers to as its ‘Contextual Decision Intelligence (CDI) Platform’, which, it says, has 90 per cent greater accuracy and 60 times faster ‘analytical model resolution’ than ‘traditional approaches’. Its CDI technology has to date been predominantly used for anti-fraud purposes by major international banks including HSBC and Standard Chartered, although it has also worked with government authorities including the Belgian Tax Authority.
Other tech-based solutions to tackle fraud used by the UK government include Spotlight, an online automated due-diligence tool that ‘highlights areas of risk to inform grant-making decisions’.
‘Acceleration under pressure: governments tackle fraud with fintech’ – our report on a session at last year’s Global Government Fintech Lab (held in Estonia on 1 June 2022) that examined how governments are using fintech solutions to address fraud, error and debt (the session included a representative from Quantexa)
‘Governments turn to fintech in fight against financial fraud’ – a report on our ‘How can fintech solutions help governments tackle fraud, error and debt?’ webinar held on 16 November 2021
‘UK Cabinet Office enlists fintech company in Covid-19 fraud battle’ – our news story (2 November 2021) on Quantexa’s appointment to help the UK government detect fraud in Covid-19 loan schemes