Five Ways Artificial Intelligence is Driving a New Age of Fraud Detection

BENGALURU, India - Aug. 22, 2023 - PRLog -- The days of rule-based engines and simple prediction algorithms detecting most fraud attempts are long gone. As technology is advancing, the risk of being a victim of fraud is also growing. Now fraud-based assaults have a distinct pattern, sequence, and structure that makes them impossible to identify using only rules-based reasoning and predictive models.

This rapid development of complex, highly advanced fraud efforts can be countered only by AI. Artificial intelligence in cyber security (https://bfsiitsummit.com/blogs/operational-resilience-in-financial-services-5-ways-ai-in-banking-can-help/) can review years of transaction data in minutes to compute risk scores. As a result, AI is extremely useful in identifying fraud and other financial crime-related suspicious actions.

Here are five ways in which artificial intelligence is driving a new age of fraud detection.

1.  Analyze data with precision

One of the essential characteristics of machine learning is its ability to assess large volumes of transaction data in real-time and identify questionable transactions with exact risk scores. This risk-based analytics technique finds complicated patterns difficult for analysts to spot, allowing banks and financial institutions to run more efficiently while identifying more fraud. The algorithms analyze various elements to fully depict each transaction, including the customer's location, the device utilized, and other contextual data points.

2.  Detecting fraud in real-time

Rather than needing to wait six or eight weeks for fraudulent charges, AI allows fraud attacks to be detected in real-time. The potential of modern security software to detect fraud assaults in less than a second is the future of fraud control. When a digital organization depends solely on structured learning and rules, new assaults are challenging to detect. AI eliminates the need to constantly play catch-up to online fraud by balancing supervised and unsupervised learning.

3.  Better insights for fraud analysts

With the increasing number of new cyber-threats and massive volumes of data to evaluate, fraud analysts are faced with the near-impossible challenge of quickly recognizing anything that appears suspect. As a result, financial institutions must adopt a novel strategy that allows for rapid cross-channel data analysis and extraction while identifying fraud in real-time. In addition, AI provides fraud analysts with a complete overview of transactions, allowing them to examine past data in context.