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Image: Christine Roy/Unsplash
Today’s criminals have an ideal playing field called the internet. As technology continues to advance, so too does crime, with criminals using the latest tools to commit a wide array of offences. Some even say criminals are the early adopters of new technology. The one thing that hasn’t changed is the criminal’s acumen and dexterity when it comes to the act of the crime — whether it’s pickpocketing, cyber-enabled identity fraud, or holding an organisation’s critical data hostage for ransom.
Ken Chenis, chief architect at financial crime management solutions company ACI, told ZDNet that advances in technology — including new software, hardware, algorithms, and data sources — are allowing banks and financial services organisations around the globe to fine-tune their fraud mitigation strategies and explore approaches that were previously impossible due to technical resource constraints.
Artificial intelligence (AI), including its machine learning subset, is considered one of the most promising technologies that can help combat crime, and financial services is commonly cited as the industry that has much to gain by harnessing AI.
“AI is benefiting financial institutions, intermediaries, and merchants by enabling much more robust and complex fraud strategies that create a fine balance between fraud prevention strategies and maintaining a positive customer experience,” Andreas Suma, global head of Fraud and Data at ACI, told ZDNet.
“In the merchant space, AI enables more granular fraud scoring behind the scenes, allowing better conversion rates and reducing false positives. For financial institutions, AI further enables enterprise fraud protection by monitoring transactions and interactions across channels and allowing a customer to have the same experience on all networks, regardless of whether it is in a branch, via call centre, or on a mobile app.”
Combining artificial intelligence with human intelligence
Mark Wiesman, SVP and head of Fraud Management Solutions at Mastercard, told ZDNet that while AI is enabling the organisation to “dig deeper into data to understand where there are relationships that are trusted and not trusted”, AI needs to be combined with human intelligence.
This is because AI and algorithms, as they exist today, still struggle with ambiguity and grey areas; they are not able to understand context or nuance, and therefore cannot make fully-informed judgment calls.
As such, the technology can end up flagging non-fraudulent transactions, and applying a layer of automation on top of it to halt suspicious transactions without human examination can create additional inefficiencies if the errors are frequent.
“There’s this belief that you just plug in some new technology and it just starts to learn and does everything all by itself. Our experience here is that’s really not the case. We have a lot of subject matter experts who are able to monitor and check what’s going on,” Wiesman said.
“I think it’s a combination of the technology, the data, and the people that really make all of this work. Even though we’re using AI techniques, there is still a need to get people involved.”
Michelle Weatherhead, BAE’s head of Financial Crime Solutions Australia & New Zealand, said the company’s portfolio of products — including its NetReveal platform used by banks globally — also requires human analysis. The platform takes in large amounts of data to build profiles, subsequently determining what is normal and not normal.
“It’s churning through vast amounts of data in real-time and then highlighting incidents that need to be investigated. For those incidents that are really suspicious, it can block that in real-time. For payment fraud, it’s really important to be able to halt that in real-time, because if you have to alert and then have a human look at it, the money is already gone, out the door by the time that you’ve actually figured out that you need to stop it,” Weatherhead told ZDNet.