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Deltec Bank Bahamas says AI Is Transforming Fraud Prevention in Banking and Finance

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Deltec Bank Bahamas says AI Is Transforming Fraud Prevention in Banking and Finance

May 04
15:10 2020
Deltec Bank Bahamas says AI Is Transforming Fraud Prevention in Banking and Finance

Deltec Bank – Innovation
Those algorithms enable this type of system to flag suspicious situations that fraud analysts would never think to include. In addition, machine learning can also process data more quickly than other, less advanced systems.

Did you know that $6 billion dollars were lost to fraud in 2016?  Make no mistake, fraud is a major issue in the financial industry. So, what can banks do to fight fraud?

AI can help. Read this post to learn how this advanced technology can play a big role in fraud prevention.

Rule-Based System Vs Machine Learning

In the fight against fraud, machine learning is far better suited to the task than rule-based systems.  The difference between the two methods lies in the ability to detect discreet activities that signal the possibility of fraud.

Let’s compare the two.

Rule-Based System

This method relies on algorithms that run manually-written scenarios created by professional fraud analysts. This enables the system to catch obvious signs of fraud, such as unusual transaction amounts or locations.

New scenarios can be added, but it must be done manually.  Furthermore, rule-based systems lack the ability to detect more subtle indications of malicious attempts.  

Machine Learning

Machine learning, on the other hand, has the remarkable ability to uncover more discreet cases of fraud.  This is accomplished by complex algorithms that allow for the processing of a multitude of variables. 

Those algorithms enable this type of system to flag suspicious situations that fraud analysts would never think to include.  In addition, machine learning can also process data more quickly than other, less advanced systems.          

How Banks are Using AI for Fraud Prevention

According to Deltec Bank, Bahamas-“With more consumers making mobile payments, the need to improve fraud prevention is crucial.”  This can be achieved by implementing reliable AI systems that work at a lightning-fast speed.

Here is a list of some of the ways that AI can be utilized by banks to detect and prevent fraud.

Data Analyzation

As already mentioned, systems governed by AI can spot suspicious behaviors that point to fraud.  This is accomplished by the system’s tremendous capacity to analyze large amounts of data.  AI reviews transaction data, which lets the bank know when questionable activities have occurred.

The system’s algorithms consider various aspects of each transaction, such as location and device.  Furthermore, the credibility of the data is tested by searching for gaps in a series of transactions.  Without the aid of human intervention, those algorithms conduct the reconciliation of paper documents and system data in order to perform verifications.

When looking at transaction data, AI picks up on unusual behaviors.  For example, when purchases are made at unexpected times or in unlikely locations the system zeros in on that particular transaction.  The customer receives a verification request from the system, which is used to verify the absence of fraud.  

But how does the system know what should be considered abnormal? This knowledge is acquired by analyzing the average behaviors of individual customers.  The system can then compare previous data patterns to the transaction that’s currently being reviewed.

Preventing Duplicate Transactions

Duplicate transactions are possible signs of fraud.  Although such cases are often the result of an error, there are some instances where companies attempt to double charge customers.  The rule-based method is unable to discern between the two scenarios, but machine learning can be trusted to sort out the honest mistakes from the scams.

Helping Fraud Analysts

AI’s ability to handle fraud prevention benefits fraud analysts.  This technology gets the job done quickly and efficiently, without sacrificing accuracy.  This is incredibly helpful considering that it’s becoming harder for analysts to keep up with the increase of threats. 

Furthermore, fraud analysts are able to devote their attention to more urgent matters instead of getting hung up on monotonous, manual work.

Reducing False Positives

AI can also help reduce false positives. The system analyzes a large amount of data, searching for typical patterns of fraudulent behavior. The end result is fewer false positives, which leads to fewer disgruntled customers.

There is no doubt that AI is changing how banks find and prevent fraud, and it seems to be for the better.  With this technology’s advanced capabilities, we can hope that fraud will occur far less frequently in the days to come. 

Disclaimer:  The author of this text, Robin Trehan, has an Undergraduate degree in economics, Masters in international business and finance and MBA in electronic business. Trehan is Senior VP at Deltec International www.deltecbank.com. The views, thoughts, and opinions expressed in this text are solely the views of the author, and not necessarily reflecting the views of Deltec International Group, its subsidiaries and/or employees.

About Deltec Bank

Headquartered in The Bahamas, Deltec is an independent financial services group that delivers bespoke solutions to meet clients’ unique needs. The Deltec group of companies includes Deltec Bank & Trust Limited, Deltec Fund Services Limited, and Deltec Investment Advisers Limited, Deltec Securities Ltd. and Long Cay Captive Management.

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Company Name: Deltec International Group
Contact Person: Media Manager
Email: Send Email
Phone: 242 302 4100
Country: Bahamas
Website: https://www.deltecbank.com/