How Al is transforming fraud prevention in banking

BANKS are increasingly making use of technologies in a bid to thwart criminals. With a need to balance fulfilling customers’ desires for instant gratification in terms of having items delivered ASAP with the extra time it takes them to verify transactions, new solutions such as artificial intelligence (Al) are increasingly coming to the fore.

- NICOLA MAWSON

Adrian Schofield, veteran ICT commentator noted that “putting your money into someone else’s hands for safe-keeping and for enabling transactions has inherent risks that offset the planned advantages”.

“Fraud is nothing new,” Schofield said, given that third parties with criminal intentions have constantly found ways to insert themselves into the relationship between banker and client to deprive them of their “cash”.

“As fast as the banks adopt new technologies to secure the transactions, the criminals use the same or newer technologies to divert funds to themselves,” said Schofield.

The widespread adoption of AI in the banking environment has improved banks’ ability to detect and prevent crime in real-time, as they can monitor behaviour, identify anomalies, and authenticate transactions more effectively, said Schofield. Mark Walker, who leads the telecoms data and analytics practice at IDC Middle East and Africa, explained that one of the biggest issues in banking is managing risk, especially since it is a highly regulated sector. “You're dealing with massively confidential data.”

Banks have, Walker said, always used technology to monitor transactions and key aspects of managing risk through aspects such as anti-money laundering and know-your-customer.

“They all involve the use of technology to monitor and react to any unauthorised transaction. So, they do a lot of pattern recognition. This is where AI comes in. Al is good at pattern recognition,” he said.