Artificial Intelligence, or AI, can enable us to make more accurate decisions by analyzing highly complex data. In the finance industry, AI has can help look out for financial fraud and crimes and decrease related risks for banks and their customers.
AI is capable of analyzing large amounts of data in a very short time. The more data it analyzes, the more it learns about customer behavior. This enables it to detect if there is something wrong with a financial transaction. As a result, financial institutes have started using AI more in their security systems.
AI uses data to analyze a situation from several perspectives and can provide real-time detection if something is wrong. For example, when a credit card is hacked and used by an unauthorized party, AI, which has learned the real card owner’s behavior, can detect this abnormal transaction taking place in a different location. It will then notify the card issuer so it can investigate further. If banks were to use a human analyst, they would have to look into all of the past transactions, personal preferences, and usual transaction locations in order to find out if there was an abnormality, which would take a lot more time making it practically impossible to do in real time.
This ability to analyze and understand data patterns enables banks to prevent and react to financial crimes within a short time, helping decrease risks and damages. Hacking and forging are not small problems — an unauthorized transaction happens once in every 100 online credit card transactions according to the Statistical Brain Research Institute.
Feedzai and DataRobot are developers of an AI that helps detect abnormalities and financial crimes accurately. They combined the expertise of DataRobot in making an AI model that can detect different types of risks, such as abnormal transactions and money laundering, with Feedzai, a bank security platform, to create a system that can detect risks within 0.01 seconds and instantly notify relevant authorities.
AI has become an important weapon in financial institutions’ battle against fraud. It will only get better with access to more data and better technology. This is a good example of how the rise of machine learning can help make our lives safer.