According to latest Dynamics Fraud Analytics cyber crime are currently costing the global economy $600 billion. This’ll associates to 0.8 percent of global GDP and necessitates the need for stronger than ever safety mechanisms.
As the financial services changes, technology is providing the platforms and tools for rapid transformation. This evolution is being strengthened by Big Data, which has become broader and deeper than ever before. Financial institutions and Banks now have access to more information about customers and their spending habits.
While this has led to the deployment of chat bots for answering customer queries, banks are now more interested in applying innovative technologies such as, machine learning and AI to mitigate financial risks.
PwC’s 2018 Global Economic Crime and Fraud Survey states that 49 percent of global organisations have experienced in financial crimes in the past couple of years.
Additionally, cyber criminals now also have the new found ability to leverage cryptocurrency exchanges to withdraw and transfer stolen money from their fraudulent activities. Such unregulated channels make it imperative for financial institutions and banks to deploy advanced techniques to fight cyber crime.
Dynamics Fraud Analytics
The Role of Artificial Intelligence in Improving the Detection of Financial Fraud
When it comes to financial risk, fraud detection in real-time goes a very long way towards improving customer experiences and boosting company reputation. This is why financial institutions and banks are turning to modern solutions and advanced data models offered by machine learning and AI.
The flexibility offered by advanced analytics and AI can now be applied across all the banking functions right from customer engagement to improved risk management.
MasterCard was the first financial organisations to deploy such solutions for fraud management, and it was thus able to reduce the rate of false declines its customers faced by a whopping 80 percent.
Thanks to the availability of large volumes of transnational history and personalized customer data, AI and machine learning can now be used to instantly identify customer behavior patterns that are out of the ordinary. This can help to establishing a large database of information about specific customer patterns, which can then be leveraged to up-sell new products or services.
Transforming the Financial Services Industry of One Cluster at a Time
Generally, advancements in AI technology are also leading to a rise in AI-enabled cyber attacks as banks and financial institutions are storing data on public or private infrastructure. These institutions must focus on the implementation of learning models to identify user fingerprints and place a set of similar users into clusters.
Fraud detection applications routinely review customer’s work history, social media, education and more, to ascertain if an individual’s financial activities are in sync with those of the cluster they belong to. Such sophisticated models can be upgraded continuously for a wide variety of changing customer data to automatically adjust what constitutes financial fraud.
Now, many financial institutions and banks use a two-layered detection process to identify the possibility of financial fraud. The first screening stage is undertaken by AI, but the next stage involves manual checking a situation that is still vulnerable to the possibility of tampering or human error. These institutions should work towards scenarios where-in this second stage can be completely removed.
Financial fraud has been a constant throughout advancements in technology and human history have made it more complex and difficult to contain. However, financial institutions and banks now also have the ability to leverage self-learning technology to identify such activities and prevent them.
It’ll not only reduce the financial burden of cyber crime and also improve their customer loyalty and reputation.
Artificial Intelligence is already causing massive upheaval in the financial services and banking industry, and a cyber crime-free future looks increasingly within reach.
Locus IT understands the requirements of the industries and provides Microsoft Dynamics finance services, Dynamics finance support, Dynamics finance implementation, Dynamics finance migration as well. If you are a enterprise industry or mid sized and are considering an financial services project, please contact us. We look forward to hearing from you!