Shocking but true! In its latest report, security company McAfee estimates that cybercrime currently costs the global economy some $600 billion, or 0.8% of Global Gross Domestic Product. Read here to know how using AI for fraud prevention is changing the scenario for the better.
Fraud has long been a major issue for financial companies.With the increase in the number of transactions happening across the globe, the threat of financial fraud has increased too. Artificial Intelligence has popped up as a powerful technology that has the potential to prevent financial fraud.
Of the 3 million identity theft and fraud reports received in 2018, 1.4 million were fraud-related, and 25 percent of those cases reported a loss of money. In 2018, consumers reported losing about $1.48 billion related to fraud complaints, an increase of $406 million from 2017.
Here in this blog, I have discussed how AI helps in fraud detection. So, let’s read further to know how financial companies are leveraging AI benefits to reduce financial frauds. You can also hire AI developers who can help you in embedding automation techniques in your business for driving huge profits.
How AI helps in Fraud Detection?
Leveraging AI for fraud prevention has helped companies to enhance internal security and in streamlining business processes. Thus, by driving improved efficiency, Artificial Intelligence has emerged as a major technology for preventing financial frauds.
Does Effective Attack Detection!
Artificial Intelligence is redefining the way companies do fraud detection these days. Before the advent of Artificial Intelligence, the fraud prevention systems relied on the set patterns and analyzed only restricted fraud patterns.
But things have changed now. All thanks to Artificial Intelligence! By combining supervised learning algorithms trained on previous data with unsupervised learning, Artificial Intelligence helps to gain a better understanding of the customers’ behaviors thus making it a good option for the effective detection of new and emerging fraud attacks.
While only 13% of organizations use artificial intelligence (AI) and machine learning to detect fraud, another 25% plan to adopt such technologies in the next year or two – a nearly 200% increase, says a press release.
Frees up Fraud Analysts!
Fraud Detection with AI helps to complete data analysis within milliseconds and detects complex patterns in the most efficient way which can be difficult for the fraud analyst to detect.
AI removes the time-consuming tasks and enables the fraud analysts to focus on critical cases, like when risk scores are at the peak. The work quality and efficiency of fraud analysts also get enhanced since their workload uses automated AI algorithms. This is why AI for fraud prevention is a preferred choice among large enterprises.
Industry-wide objectives such as FS-ISAC in the United States provide a more robust data set which helps to identify patterns. This allows fraud analysts to find financial frauds based on well-founded indicators of crimes, says a report by Mckinsey. You can also set up a team of AI developers to incorporate AI benefits in your business.
Reduces the Friction in Customer Experience!
AI reduces the friction customers’ experience by allowing the business merchants to approve online purchases and reduce false positives. Thus, fraud detection with AI helps to render an overall more positive customer experience. This is why companies NOW are choosing AI for fraud prevention more than ever before.
For 75 % of the companies that were surveyed, identity verification has become much more complicated and complex over the last 3 years, and in many cases leading to additional friction in the customer experience. Companies need to decrease customer friction in order to drive revenue and new customer engagement,says the Sixth Annual Fraud Report.
Artificial Intelligence uses scoring techniques such as Omniscore which combines the strength of supervised and unsupervised learning. This helps to reduce false positives thus decreasing the friction in customer experience. Read this to know about the future of Fraud Prevention with Artificial Intelligence.
Stops Nuanced Abuse Attacks!
Leveraging AI for fraud prevention helps to curb nuanced abuse attacks which include referring a friend abuse, promotion abuse, or seller collusion in the marketplace. AI-based algorithms evaluate historical data and anomalies. Knowing more about historical data prevents nuanced abuse attacks without affecting the customer experience.
Capgemini claims that fraud detection systems using Artificial Intelligence and Machine Learning minimize fraud investigation time by 70% and improve detection accuracy by 90 percent. Other than finance companies, Artificial Intelligence is being used by eCommerce industries too.
Achieves Regulatory Compliance!
Businesses that are competing in high technology industries these days need to stay in compliance with policies and regulations that protect key technologies as well. AI-based scoring techniques are used to keep businesses in compliance with these business policies and rules thus enabling them in fraud prevention. This is how AI helps in fraud detection.
Feedzai, a fintech company, claims that Artificial Intelligence along with fine-tuned machine learning algorithms can identify up to 95% of all frauds and minimize the cost of manual reconciliations, which accounts now for 25% of fraud expenditures
AI in Fraud Detection: A Few Words
By now, you would have got a clear idea of how AI helps in Fraud Detection. Artificial intelligence and machine learning applications use rule-based algorithms to analyze patterns and predictive analytics to block fraudulent transactions thus helping finance companies in preventing financial frauds.
Did I miss anything? Let me know in the comment section below!