Fraud has long been a major issue for financial services institutions. And as global transactions have increased, the danger has too. Fortunately, artificial intelligence has enormous potential to reduce financial fraud. As automated fraud detection tools get smarter and machine learning becomes more powerful, the outlook should improve exponentially.
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. One of the most prevalent forms and preventable types of cybercrime is credit card fraud, which is exacerbated by the growth in online transacting. The speed at which financial losses can occur when credit card fraud takes place makes intelligent fraud detection techniques increasingly important.
Because of the availability of large volumes of customer data, together with transactional data that is updated as transactions occur, AI can be used to effectively identify credit card behavior patterns that are irregular for specific customers.