HOW CAN ARTIFICIAL INTELLIGENCE BE SUCCESSFULLY DEPLOYED TO DETECT FINANCIAL FRAUD? Inthefirsthalfof2022,Americansreportedalossof$3.56 billiontoonlinefraud. Thefrauddetectionprocessinthebankingsectorhasalways beenapriority.Overthedecades,manyfinancialfraudcases havebeenincreasingthebankingandfintechindustry challenges.Fraudstersareusingadvancedmodern technologiestoexecutetheirfraudtasks.Utilizingartificial intelligencetodetectfraudcanbeaboonfortheindustry. Artificialintelligencesolutionsproviderisworkingtowardsto combatsystemsthatcangeteasilymanipulatedforscams orfrauds.
Throughthisblog,wewillbediscussingwhyAIisessentialfor financialfraudcases.
WHAT IS FRAUD DETECTION?
Frauddetectionisarefinedprocessofcatchinganyfraudulent actionsandscams.Fraudcasescanunderminethefoundation ofanybusinessandcausefinancialandimageloss.Most fraudulenttrytoobtainfinancialresourcesinformationunder falsepretences,suchashackersaimingforanorganization’s reputationinsteadofonlygettingfinancialbenefits.
TYPES OF FRAUD
First-partyFraud
Underfirst-partyfraud,apersonasksforadealtoreceivegoods orserviceswithnointentionofreturningorpayingback.Ina bankingsituation,fraudsmayapplyforaloantogetalarger sumatalowerrateandfleewiththesame.
IDTheft
WithIDtheft,anindividualimpersonatesanotherperson,using theirbankdetails,creditcardpin,oranyotherpersonal credentialtomakepurchases,etc.Thefraudpersonusesthe otherperson’smoneyincashorthroughonlineshoppingand spendsmoneywithnointentionofreturningthesame.
Advancedanalyticsservicecompanycanhelpyoudealwiththe prevalentfraudcases.
BotAttacks Botattacksincludeasetofautomatedscriptsthatdisrupta website’sworkingorturntocausefraudulentactivities.They mayinitiatespamming,leadingtobiggercrimesandfurther branchingtoillegalactivities. DeepFake Deepfakeisoneofthemostcommonfrauds,risingdaily.This technologyemploysacollectionofimages,videos,andaudio togeneratearesemblancetoapersonandmakeitseemas iftheyareperformingorspeaking.Thesedayssuch technologycanbeusedtocarryoutillegalactivities.
HOW CAN ARTIFICIAL INTELLIGENCE HELP WITH FINANCIAL FRAUD? BankUtilizationofArtificialIntelligencetoDealwith FraudDetection In2021,FintechNewsreportedthatbigandsmallfinancial institutionsaredeployingAI-basedsystemstopreventfraud andaccessrisk-leadingtoanexpenditureofmorethan$217 billion. Inanotherreport,itwasfoundthat64%offinancialinstitutions believethatAIcandetectfraudevenbeforeithappens. Infinancialservices,therearedifferentmethodstotackle fraudandscams.Eachapplicationiscapableofbuilding powerfuldetectionstrategy;belowaresomeoftheleading waysbanksareusingAItodetectfrauddetection; DevelopPurchaseProfiles Tocatchfraud,financialinstitutionsfirstneedtounderstanda typicalscammer’sbehavior.Usingmachinelearningtocome throughabundleofdatafrompastandpresentfinancialand non-financialtransitions.Purchaseprofileshelpprovideupto-dateinformationonanyaccountandpredictuser purchasebehavior.
Investigatingandprosecutingdozensoffraudclaimscan beincrediblytime-consuming,soagentsarearmedwith toolsthatcanhelptheefficiency.Andwiththeapplication ofneuralnetworks,thistechnology,anditscapacityis furtherenhancedbyreal-timedecisions.Bothtechnologies successfullymanageflaggedtransactionsthatcould occur,deliveringfurtherinvestigationbyahuman counterpart. ArtificialintelligenceKYCisusedthesedaysheavilyinthe bankingindustry.
BuildFraudScores Allonlinetransactionisassignedafraudscorebyusingthe
KYC(KnowYourCustomer) Transactionamount Timeofthetransaction Cardusagefrequency TheIPaddressofthepurchase ExtensiveFraudInvestigation 1. 2. 3. 4. 5. Machinelearningisanotherimpactfultechnologythatcan assistanalyzethousandsoftransactionspersecond!
datagatheredfrompreviouslegitimatetransactions,fraud incidents,andriskparameters-allofwhicharesetby financialinstitutions.Thefraudscoretakesintoaccount certainaspects,suchas
AI-backendKYChelpstoverifyIDanddocumentation,suchas tomatchfingerprintsand,insomecases,toperformfacial recognition. PushNotificationsforUnusualActivity Anti-fraudartificialintelligencecandetectanyattemptthat triestoblockthetransaction.Forexample,ascammerhas yourdebitcardnumberandistryingtopurchasesomething onlineorinperson.Thenanotificationissenttoyouviaa noticeaskingifthatisreallyyou,soifthereisanymistake,you canoptfornoandfreetheaccount.Therewouldbenot decreaseisconsumerexperience,infactAIcanelevateauser experiencewithsmartsolutions.
TO CONCLUDE
Artificialintelligenceisablessingregardingimpossible monitoring,gatheringmassiveamountsofdata,andkeeping aregularupdate.WiththeproperintegrationofAI,youcan enhanceyourbusinessdataprotectionandsecuritylevels. Advancedanalyticsservicecompaniescanassistyouin developingAIsolutions.Ifyouarestillindoubt,youcanaskfor areferencefromacertifiedartificialintelligencesolutions provider.
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