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November 7, 2021

Real-Time Fraud Detection in Banking: Protecting with AI

Could artificial intelligence protect banks from fraud? What are the benefits of real-time fraud detection? Explore how AI-based real-time fraud detection can help banks!

Fraud detection is a series of activities carried out to detect individuals who want to obtain money or property by resorting to various tactics. Fraud detection, which may be required by all institutions that we may encounter at any time during the flow of our lives, such as banking, insurance, medicine, public and government institutions, stands strongly against the ever-changing fraud methods, inspired by today's technologies. With the modern fraud detection tools that always take a new form from the latest technology and developments, it has become very easy to detect the frauds that can be done in an increasing and unlimited variety.

Fraud detection tools that fight many dangers such as identity theft, fraudulent money and check transactions, cyber-attacks and stolen credit card transactions, which create a great business danger for every company and institution that enter the virtual world, can monitor every move instantly and reveal the data flow in front of you and suspicious flows. They are tools that can warn you and stop the flow if you wish, by making use of the latest technological systems such as artificial intelligence and machine learning.  

Why Fraud Detection is Important for Banking  

The banking sector, where money exchange is at the highest level and almost all workflows and transactions are based on money, is one of the most popular sectors for fraudsters. This situation reinforces the importance that banks should attach to fraud detection compared to all other sectors, and the sensitivity they should show in operational processes.  

Every bank that wants to provide good and quality service to its customers should first aim to give them confidence and be able to assure to them that their money is protected. Undoubtedly, this guarantee of trust is the biggest factor that straightens a bank's stance and makes it a strong brand.  

Banks have to protect their users and be the future security of their money. For this very reason, fraud detection reveals an indispensable work unit for banks. Fraud detection experts working together with modern technologies allows a bank to root for the future now. Fraud detection tools, which track tiny anomalies in financial transactions within the organization, protect organizations from external impacts and money losses thanks to their instant monitoring, while also aiming to make organizations more reliable and stronger.  

Especially with the increasing mobile banking systems, customers are now carrying out many banking transactions with digital tools. The fact that customers are so adaptable to digital banking systems makes it necessary for banks to adapt to current technologies as quickly as possible and to develop security measures in this context.  

With the increasing transaction volume, manual and real-time inspection of customer movements becomes almost impossible. At this point, the need for artificial intelligence technologies that can rapidly process big data and gain self-learning skills from this data in order to act faster than fraudsters is increasing.  

The development of mobile banking and many institutions and companies that provide virtual money flow are undoubtedly obliged to protect their customers from many threats today. The strongest form of this shield is fraud detection tools powered by artificial intelligence and machine learning. If the customer's information and movements, as well as the bank's information and workflow are protected by fraud detection programs, banking will be a profession that can be carried into the future.  

Artificial intelligence-powered fraud detection tools and technology-embracing risk experts are now banks' new and most powerful weapons in the war against fraudsters. Risk is always alive and transforming. For banks, catching up with the changing and rising risk is only possible with real-time fraud detection.  

The most common occupational fraud schemes in various industries

What is Real-Time Fraud Detection and How AI Can Improved It  

Today, artificial intelligence has become an indispensable business partner of institutions dealing with big data such as banks, with its fast and real-time successful works in every business field that exceeds the limits of human beings. While the image of money in the virtual world is taking its place in the material world, the types of fraudulent transactions have changed a lot. It is now completely impossible for banks to control the movements of millions of individual and corporate accounts. As a result of the speed that technology has added to our lives, real-time artificial intelligence control has become a must for fraud detection in banking, and thus artificial intelligence has become the most reliable and powerful element of banking.  

Thanks to artificial intelligence-powered fraud detection programs that allow you to instantly observe and control suspicious movements by sifting through a large number of transactions, it is now possible to protect your bank and your customers by making fast, data-driven predictions. Thanks to the fraud detection tools supported by artificial intelligence, the past and instant movements of the customers can be analyzed simultaneously and healthier scores can be achieved. Considering many factors, the scoring of your customers can be made more comprehensively and accurately compared to a manual review. Then, the data is presented to you by graphing so that you can observe transactions and interpersonal relationships more easily. In this way, while minimizing the false-positive ratio, you will reduce the inefficient workload for your risk analysis teams and you will have the chance to focus on more critical cases.  

Another benefit of AI-based fraud detection programs is that they allow you to protect yourself by following constantly changing and changing fraud methods. Artificial intelligence, which can diffirentiate real behaviours from abnormal ones on each transaction thus present you the information you need to protect your company from fraud in the fastest and most accurate way.  

Why Banks Should Detect Fraud with Artificial Intelligence

The biggest investment of today's banks in the future is undoubtedly to increase the place they give to artificial intelligence in their business lives and to benefit from the blessings of technology early. In 2019, the loss of money due to fraud in the United States alone amounted to 439 million dollars. Today, it is estimated that this number has increased considerably as the shopping habits that have changed with Covid -19 have become more digital. According to FT data, credit card and identity fraud increased by 45% in 2020 compared to 2019, reaching 4.8 million. That's exactly $4.5 billion in fraudulent money loss. Undoubtedly, the support they will receive from technology is very important for banks to safely adapt to digitalized customer habits.  

Distribution of financial fraud losses in the United Kingdom (UK) in 2020, by type
Distribution of financial fraud losses in the United Kingdom (UK) in 2020, by type

Today, when cybercriminals are modern bank robbers, the new security guard that will prevent cybercrime is believed to be artificial intelligence-assisted fraud detection programs. In this cold war of banks and fraudsters in the digital world, the biggest weapon of banks is undoubtedly fraud detection tools that can provide real-time service and work in full compliance with the company.

  1. Reducing and controlling operational risks and expenses

    Traditional fraud detection is no longer possible and not efficient enough in today's world shaped by technology. Today's banking, where retail banking is increasing, is left alone with huge data every day. With the introduction of digital banking and wallets into our lives, scammers are now stealing by hiding among your bank's data instead of entering your bank's door and robbing you. For this very reason, using an artificial intelligence-assisted fraud detection application is a vital necessity for modern banking.
  2. To maximize the user experience

    Time is very precious for modern bank customers who want to handle their transactions and applications instantly in the fastest and safest way. For this reason, using artificial intelligence supported fraud detection tools that support you to provide real-time control that can give instant feedback means customer happiness.
  3. To be able to serve faster and safer

    The definitive solution for these scammers, who try to use the fast movement ability of technology against you, is to catch up with their speed. With detailed analysis, those who really risk fraud are falling, they don't waste time with false-positives, and they can catch real frauds quickly and prevent money laundering as quickly as possible and save this money before it is laundered. Thanks to artificial intelligence-assisted fraud detection tools that allow you to make instant observation and intervention, you will be following them on the back of the neck of the fraudsters.  Today, where self-protection is not an option but a necessity for all banks that are naturally vulnerable to fraud and cyber attacks, fraud detection has now taken the form of the bank's investment in the future, with the new dimension of digital banking with technology.

How AI Makes Real-Time Fraud Detection Possible

Real-time fraud detection seemed impossible for the banking industry, which is growing and becoming more individualized, at first. But with the use of artificial intelligence in fraud detection tools, it is now possible! While fraud develops new methods and techniques by taking power from technology, it is vital for banks to adapt to changing conditions and technology. Controlling the enormous data of retail banking, which is increasing day by day with the introduction of digital into our lives, is only possible with state-of-the-art fraud detection tools. Real-time monitoring is essential for fraud detection in modern business life, where even minor changes in the organizational structure can open the door to fraud. In today's world where money is digitalized, banks that have to protect millions of data and customers at the same time, have to prefer real-time fraud detection tools and prevent fraudsters.

Artificial intelligence fraud detection tools, which can instantly monitor countless account movements that occur every day, take every action in your bank as data. Afterwards, it becomes the best colleague of professionals who follow up with fraud, by filtering through the special rules that are set ready or transferred over time by you, bringing suspicious movements that you only need to observe.  

AI-powered fraud detection tools not only function as a ledger that presents data to your risk experts during their follow-up and monitoring, they also provide a toolbox full of various tools that allow them to intervene and take action with ease such as fraud graph, scoring and advanced filtering.. During the follow-up of suspicious transactions, they detect new fraud methods by comparing the suspicious transaction with other transactions occurring at the same time. They can easily integrate the new fraud method they detect into your fraud detection program for you to apply as a filter later.  

Fraud detection tools, which have become even smarter and customizable thanks to the scoring system made with AI and machine learning-supported structure to make a transaction be considered suspicious, are the healthiest precaution you can take against fraud attempts, which are changing constantly. Artificial intelligence-powered fraud detection applications allow customization and personalization. They allow you to create filters specific to your bank or to take immediate action by marking suspicious movements detected by your risk specialist and keeping them under observation.  

Thanks to artificial intelligence supported fraud detection applications, the huge data traffic that increases with every customer movement can be instantly controlled. This large data pool helps your fraud detection analysts provide a more efficient working environment by preventing your bank from wasting time and workforce by bringing only suspicious transactions that need attention. You can intervene as well as monitor suspicious movements that are instantly reflected on your analyst's screen. Fraud detection is an important department where your bank is face to face with risk and danger and immediate action prevents big losses. Real-time monitoring and intervention will be the biggest weapon of your department, which is always face to face with risks, against fraudsters. Hundreds of artificial intelligence supported bots are ready to intervene with one click of your risk experts by following all the movements like Sherlock Holmes.  

Banks will be able to keep their future success at a more stable and increasing rate, thanks to fraud detection tools that ensure our fast-changing money spending and investing habits and enable them to track changes successfully. Being able to turn technology into a business partner or employee undoubtedly means controlling it. Banks that will invest in technology and advanced technological tools such as artificial intelligence-assisted fraud detection will undoubtedly control the direction of their sectors in the future.

Learn more about how machine learning helps fraud detection in our next blog post.