Fraud is an issue that remains constant in the financial services sector. It creates trust problems between consumers and FIs, it can discourage consumer uptake of new services and it’s expensive for everyone involved.
Over £1bn has been stolen from bank customers through credit and debit card fraud in the past 12 months and one in 10 people in the UK have cancelled their credit or debit card in the past year because of attempted fraud. This is a problem that’s impacting the masses – with an estimated 5 million people in the UK having fallen victim to cybercrime in the last year.
In a world where financial institutions – from banks, to niche service providers – are ramping up the pace of innovation by launching new services and introducing new ways of engaging with their customers, the issue of security (and of fraud in particular) has never been such a hot topic.
Recent research from Akamai has found that as many as 43% of online login attempts globally are made by bots, rather than real customers, as attackers increasingly explore new ways of credential abuse.
Potentially compounded further by the emergence of the IoT and the growing drive towards automation within the financial services sector, fraud is an epidemic that threatens to become further-reaching still. So, to address the issue, organizations need to be able to offer a connected defense across multiple, integrated channels.
With only (an estimated) 50% of money laundering and terrorist financing incidents detected by current controls, many FIs are adopting new technology such as artificial intelligence to combat fraud. AI, indeed, can help FIs react to the threat of fraud and cybercrime in a more holistic way, by strengthening their existing end-to-end security portfolios.
AI is more than just a buzzword in the world of fraud detection and prevention. With its ability to work with big data to spot, detect, link and learn from patterns of behavior, it offers a fresh approach where more traditional operations are beginning to fail.
With existing approaches to mitigating fraud becoming increasingly unable to cope with emerging trends, it stands to reason that AI should be the next innovative trend in this sector. With machine-learning at its heart, AI can quickly adapt to protect users and service providers from emerging threats.
Indeed, such is the potential of AI that companies such as MasterCard and Worldpay have already started using AI to detect fraudulent transaction patterns and prevent card fraud. PayPal has joined their ranks too, with the online provider using its home-grown artificial intelligence engine to detect suspicious activity, and more importantly to separate false alarms from true fraud.
It is unrealistic to expect that we’ll ever be able to eliminate fraud entirely, but perhaps it’s time we, as an industry, embraced the world of AI to find a new approach. Perhaps, after all, a new powerful combination of industry expertise and artificial intelligence will give fraudsters a taste of their own medicine.
Our experts are on the front lines of the fight to thwart fraudsters. If you want to ensure your network is secure, contact us today.
This article originally appeared on Finextra.com.