How AI Is Battling Fraud In Finance: A Quick Review
Financial Services & AI Financial services providers and banks are aggressively strategizing to tackle the growing menace of frauds and scams. One of the most crucial weapons in their arsenal right now is artificial intelligence. In fact, major wealth management firms have invested millions of dollars in AI tools and technologies as a failsafe measure against fraudsters and scammers.
Why AI Adoption Is Crucial As per the report and reviews of the Association of Certified Fraud Examiners (ACFE), companies end up losing up to 5% of their earnings just to fraud. Here, one also has to consider the fact that frauds and scams also bring down the reputation of financial services firms, and ultimately their market value. Given the stakes involved, it makes sense to divert a significant portion of profits towards scam, spam, and fraud prevention tools.
There are a number of benefits associated with using AI for fraud detection & prevention: 01
It is not prone to biases and the chances of errors are extremely low. Upon detection of suspicious activity, AI tools can immediately alert authorities or trigger cybersecurity measures to help protect consumer assets and the firm’s data.
02
It can detect anomalies in transactions in a matter of seconds. In addition to this, artificial intelligence tools can also be harnessed for more accurate credit checks for risk assessments of clients who apply for loans.
03
Unlike human workers, AI can work and remain alert 24/7 with minimal downtime. AI tools are also getting more and more affordable by the day.
Applications of AI: The Areas In Which AI Is Being Used For Fraud Detection
1. Detect & Review Fraudulent Transactions As reviewed at major financial technology conferences, fraudsters often gain access to credit card details of customers when they click on spam emails and divulge their financial information unknowingly. Cybercriminals then use the information to draw money from the customer’s account. Once the transaction is complete, it can be very difficult to get the money back. Thankfully, AI can now be deployed to study customer habits and immediately inform authorities the moment it detects suspicious banking activity. It can help to lower instances of fraud and fake transactions by a significant degree.
2. Phishing Phishing scams are extremely common in the world of banking. By impersonating bank officials, cybercriminals may fake it that the customer’s account may be terminated if they don’t update their personal details as soon as possible. After that, once the customer clicks on links in their spam emails, they are redirected to duplicate or mirror websites that look similar to the customer’s bank website. Thinking that the website is secure, the customer types in their sensitive information which is recorded by the fraudster. They can use the information to siphon off funds later. Google’s AI-enabled machine learning tools are playing a big role in keeping these financial spam and scam emails away from you. It is estimated that it wards off 10 million spam emails every minute.
3. Suspicious Insurance Claims Insurance companies are no strangers to fake insurance claims from individuals and organizations. It has been estimated that insurance fraud leads to losses worth at least $80 billion every year in the US. Artificial intelligence tools and machine learning models can help insurers analyze existing data of clients and then suggest the probability of fraud. In addition to this, advanced predictive tools are being increasingly used in the insurance sector to assess the veracity of such claims.
Thank you! Presentation prepared by: Shashank Tayal Manager, Money 2.0 Conference https://www.money2conf.com/