Fraud is an ever growing problem for our financial institutions, with criminals using a wide variety of

methods to attack organisations across systems, channels, processes and products.

Technology has made major advances in recent times, particularly with regards the ability to analyse
large volumes of data very quickly. With the development of high performance analytics and in-memory
processing, fraud detection systems can and must look past traditional rules-based approaches and use
the data they have available to its full potential. Advanced technology enables banks to implement a bi-
lateral defence strategy.

As a financial institution, your customers are your most important asset. They count on you to protect
both their money and their personal information. It’s a huge responsibility, especially in today’s
environment with identity theft rates increasing and fraudsters continually finding new ways to steal.

For 2015 through 2020, card fraud worldwide is expected to total $183.29 billion.4 The effects of fraud
hurt everyone – consumers, merchants and financial institutions.

Impact on Financial Institutions

With fraud and data security threats coming in so many different forms and from so many different
channels, it’s crucial for your financial institution to have a strong understanding of how criminals
operate and how risk management is changing. With this knowledge, along with a strategic plan, there is
a better chance of mitigating risk and recognizing attacks before they do serious damage to your
institution. In some cases, this may mean investing in new technologies; in others, bridging
organizational silos and training staff. In all cases, it requires taking steps that help improve your
institution’s ability to detect threats before they reach your customer.

Trends in Fraud Of course, traditional fraud still exists. Criminals continue to steal credit, debit and gift
cards both physically and electronically and use them to pay for unauthorized goods and services; they
still snatch checks and bills out of mailboxes in order to steal identities of both consumers and
merchants. In today’s world though, there are fraud threats that require more advanced strategies and
tactics to address. Hackers, identity thieves and money launderers are focusing on different channels
and spawning attacks that traditional fraud management strategies are not designed to address.

Five trends in fraud.

1 Growth of Online Fraud

2 Increasing Sophistication of Fraudsters

3 Emergence of New Data and Channels

4 Increase in Internal/Occupational Fraud

5 Increase in Account/Identity Theft Fraud

Consumers gravitate more and more towards the internet to purchase goods and services, growing the
spend volume for card-notpresent activity, and so do the criminals using stolen information to rack up
billions in unauthorized sales.13

The role of the financial institution is the most crucial. As a result, you have a responsibility to have a
solid, proactive fraud management strategy that utilizes the most current fraud detention and
prevention technologies. To maintain trust and confidence, you must constantly educate employees,
provide information and tools that help protect individual customers and merchants – and continually
invest in the most modern, innovative technologies available to help keep funds and data secure

An effective authentication system is necessary for compliance with requirements to safeguard

customer information,3 to prevent money laundering and terrorist financing,4 to reduce fraud, to inhibit
identity theft, and to promote the legal enforceability of their electronic agreements and transactions.

Fortunately, the digitization of banking services also brings about new

technological solutions able to tackle modern security challenges and
detect suspicious behavior efficiently, helping banks to protect digital data
from fraud.
In this article, we cover the different approaches to AI banks can employ for
detecting payment fraud, loan fraud, and customer onboarding fraud. We also
discuss the data each approach requires and how that data is used for fraud
detection purposes. More specifically, this article explores:

An Overview of Machine Learning Fraud Detection in

Banking
Banks could benefit from a machine learning-based fraud detection solution in
that they would be able to instrument it across more than one channel of data
to be analyzed. This would mean the model could be trained to detect fraud
within more than one type of transaction or application, or both of these at the
same time.

Artificial Intelligence (AI) is the software at the centre of the Fourth Industrial Revolution. Today AI is
already a part of our daily lives, as we engage with these systems through various applications including
search, recommenders and even customer support.

Today, one of the most important emerging technologies is artificial intelligence (AI). AI is a set of
technologies that enable computers to perceive, learn, reason and assist in decisionmaking to solve
problems in ways that mimic human thinking.
Artificial Intelligence (AI) is extraordinarily popular when judged by today’s banking headlines, but those
headlines have outpaced today’s practical banking reality.