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Is AI the ultimate weapon in the fight against financial crime?

Senior Business Solutions Consultant, Fraud Prevention, BAE Systems Read time: 4 mins
Artificial intelligence (AI) will prove invaluable in the banking landscape of the future – not only for attracting and retaining consumers, but also in the fight against financial crime.
Artificial Intelligence in the fight against financial crimeArtificial intelligence (AI) will prove invaluable in the banking landscape of the future. It not only holds enormous potential in the challenge to attract and retain consumers, but is also vital to the fight against financial crime.

AI will help us to crunch through the vast data stores being created every day, enabling us to perform smarter and faster analysis on the increasingly accurate information we gather about our customers.

AI is helping banks build detailed fraud profiles and track persistent criminals through financial networks. Increasingly, it is also helping to identify pockets of small, potentially fraudulent transactions.

These, based on amounts too small to raise traditional red flags, might otherwise evade even highly trained fraud experts. Collectively, though, they can add up to huge sums. AI also allows banks to build detailed pictures of customer behaviour, spotting and flagging abnormal transactions.

Human fraud experts will remain central, but AI will allow them to work smarter. By freeing up time and taking over vigilance duties, AI will leave banking employees with more capacity to work on crime prevention and customer services.
 
 

Data sharing as a priority

And AI offers the further benefit of being less corruptible than a potentially dishonest employee. These are, of course, in the minority, but removing the risk of insiders deliberately “missing” suspicious activity is a significant positive.

In order to work properly, AI needs data. It is vital that the industry gathers more and shares more. In January 2019, the Economic Crime Strategic Board was established for this purpose in the UK, with data sharing as a priority.

The board is urging the finance industry to work closely with law enforcement and government agencies to thwart the threat and protect customers. Internal collaboration is key too. All company departments must communicate with each other effectively on data collection rather than leaving the task to IT specialists, assuming it’s not their remit.

The shortage of cyber professionals renders the role of AI ever more important in the fight against financial crime. Ensuring that human expertise is most efficiently deployed – rather than spent on collecting data – will build competitive advantage. Using AI, financial institutions can combine static customer data, gathered from a customer or an external source, with behavioural data in the form of transactions, spotting unexpected behaviour and its potential significance.

But if banks are excited by the potential of AI, so too are their attackers. Financial crime is committed by increasingly sophisticated minds and technology.

It’s clear that AI must be used widely to combat crime, but it must also be used correctly. Knowing the problems that AI can solve and having a clear picture of data and how it’s being used are crucial. But with this must come an understanding of the ways AI is and will be used by criminals.
 
To find out more, get access to the full research below.
Future-Proof Banking

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The world of banking is transforming at enormous speed. Criminals are easily keeping pace. The most successful and profitable banks of tomorrow will be those that work hardest on financial crime prevention and defence today.
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Gareth Evans Senior Business Solutions Consultant, Fraud Prevention, BAE Systems 5 July 2019