Artificial Intelligence & its role in the fight against fraud

Digital Upskilling tech background
  • Publication
  • June 15, 2023

Increasingly rapid advancements in modern technologies have unsurprisingly had substantial implications on the fraud risks faced by businesses and individuals alike. The ever-evolving tactics employed by fraudsters mean that the traditional methods of fraud detection and mitigation are becoming increasingly outdated and insufficient, leading many organisations to turn to more contemporary and innovative methods of tackling these threats. Artificial Intelligence (AI) solutions in particular are emerging as a powerful tool in the ongoing fight against fraud.

Fraud risks may encompass a variety of illicit activities, such as payment fraud, identity theft, investment fraud and more. Organisations facing these types of transgressions are likely to face considerable reputational damage and financial losses. Traditional fraud detection methods tend to rely on human intervention, potentially resulting in an inability to adapt to newly emerging fraud patterns effectively.

In contrast to this, machine learning algorithms and AI technologies are extremely effective at identifying anomalies and irregular trends, making them ideal instruments for addressing fraud risks. The ability of AI models to analyse vast quantities of data in real-time, enables them to establish baseline behaviours and hence detect complex fraud patterns that may have proved challenging to accurately identify manually. AI models are capable of learning from historical data and incorporating feedback from investigators, which in turn enables them to continually progress and develop over time. Sophisticated models are also able to recognise emerging trends, adjust their detection algorithm, and adapt to new fraud techniques accordingly. 

chief data officers

The ability to analyse historical data also enables AI algorithms to identify common features of fraudulent cases across a host of different industries. Through this analysis, risk scores can be assigned to specific activities, interactions, or transactions, aiding organisations to efficiently prioritise their resources and place greater importance on higher-risk cases, thus amplifying the effectiveness of their fraud mitigation efforts.

Another potentially vital application of AI-powered solutions in fraud prevention is transaction monitoring. AI models can accurately analyse substantial amounts of transactions in a matter of seconds, enabling them to promptly identify and flag any suspicious transactions or activities which deviate from expected patterns. Algorithms can be tailored to specific monitoring parameters and thresholds and are in turn able to distinguish transactions of unusual amounts, frequencies, or locations and flag them for further investigation. This facilitates timely identification and response to fraud attempts and can potentially go to great lengths to minimise the financial impact of these attempts on organisations.

chief data officers

The detection measures afforded by AI technologies are also capable of identifying potential cases of identity theft, through the use of behavioural biometrics. Analysis of unique behavioural patterns, such as voice recognition, mouse movements or keystroke dynamics, enable AI algorithms to accurately authenticate users and determine if behaviours are exhibiting any suspicious characteristics. This could have substantial ramifications on security across a wide variety of sectors and industries, such as e-commerce, banking, and various other online platforms. 

AI models and solutions have already begun to exhibit the potential to radically transform the way organisations tackle fraud risks, by providing them with cutting-edge tools to detect, mitigate and prevent fraudulent activities. Utilising the capabilities of AI-powered solutions enables businesses to adopt a proactive approach and, in turn, helps safeguard their reputations and financial assets. As fraud risks continue to evolve, AI tools can provide crucial support to individuals and organisations in their efforts to safeguard themselves against the rapidly evolving threats they face.

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Michel Ganado

Michel Ganado

Digital Services Leader, PwC Malta

Tel: +356 2564 7091

Vyas  Isnoo

Vyas Isnoo

Senior Manager, Advisory, PwC Malta

Tel: +356 7975 6979

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