Financial frauds can be devastating for an economy and can impede the progress of an entire nation. Banking sectors around the globe need to be on constant vigilance to prevent fraud and it has been the biggest challenge for the banking industry since its inception. Recent studies found that every dollar lost to fraud costs banks between 3.5 to 5 dollars!
Moreover, with technological advancements, fraudsters have come up with many techniques that can puzzle and dupe even the best security measures. From Phishing, Vishing to fake insurance claims to credit card frauds, LOU frauds, and large-scale loan scams, the world has witnessed scams that are both innovative and highly difficult to detect.
The banking sector requires constant upgrades of prevention techniques and state-of-the-art systems so that it can detect frauds even before they can cause trouble.
This is where Artificial Intelligence has been playing a crucial role. AI implemented systems can recognize potential security breaches and alert security officials in real-time. Such systems never sleep and are in a constant state of alertness to fight fraudulent activities.
Banking institutions and financial services organizations are continuously deploying AI to streamline and strengthen their operations. A survey by McKinsey claims that 1/4th of the companies in the financial services sector are already using AI for risk management and security. Another survey by Deloitte tells us that more than 70% of all financial services companies are already using AI or ML for activities like the prediction of cash flow accurately fetching credit scores or detecting scams. This has also led to an enormous increase in demand for professionals skilled in AI or ML in the banking and financial services sector. Moreover, this has also given rise to start-ups and companies offering AI solutions like the Resistant AI that raised more than $16.6 million worth of investments recently which showcases the continued market demand for AI. Importantly this is also good news for students pursuing AI or professionals looking to shift to the domain of AI. Getting enrolled in the best artificial intelligence course is the advice given by most career counselors!
Let us take a look at how AI fights financial fraudsters:
- Real-time identification and flagging
Identifying and flagging fraudulent activities out of a humongous data pool can be a very difficult task like finding a needle in a haystack. Traditional techniques require hard coding and are a painstakingly slow process. Moreover, manual supervision of all financial transactions is an impossible task since thousands of transactions take place per second. This is where an AI-driven system comes in as it is instrumental in singling out suspicious transactions out of thousands and lacks. If the AI model is trained using historical data, the entire process of identification and flagging can be automated and streamlined. Banking institutions use such AI systems to identify fraudulent transactions and decline all such transactions on a real-time basis. Thus, next time your credit card is saved from an intrusion, thank the AI behind it!
- Risk management
Risk management is an important part of all financial service providers. Without accurate risk management, a company might suffer huge losses and even get bankrupt. An insurance provider needs to know whether an individual’s claim is a genuine one and a loan provider needs to know whether an individual is a credit worthy enough to approve loan applications. In an era of complete digital transformation, applications for loans or insurance claims can be made online with minimum documentation. Moreover, the pandemic made it mandatory for the entire banking and finance sector to go online and offer all services in the online mode. This in turn made risk management an arduous task.
However, AI solution providers came up with both innovative and efficient systems which when deployed can streamline the entire process of risk management. From tracing the credit history of a person to tracking insurance claims by an individual Artificial Intelligence can do it all that too without any human intervention or supervision.
- Data security
One of the most important tasks and responsibilities of every banking institution is to keep customer data safe and secure from cyber-attacks, phishing, vishing, etc. Real-time monitoring of intrusions by hackers is extremely crucial for all financial services providers. This is where an AI-driven system becomes extremely useful. AI can not only detect intrusions but also assess security hazards and loopholes thus providing a proactive defense.
Importantly, the need for AI-driven systems has increased the demand for individuals skilled in AI and you can take advantage of it by getting enrolled in the best artificial intelligence course such as the one provided by Analytix Labs.