Over Half of All FIs Plan ML and AI Deployment to Combat Fraud
- A growing number of FIs deploy machine learning and AI to fight back against fraud
- Steep declines in fraud are noted
- However, less success is noted in preventing charitable-donation and fake debt-collection scams
According to PYMNTS Intelligence’s “Leveraging AI and ML to Thwart Scammers,” a report created in collaboration with Hawk, a growing number of financial institutions (FIs) are deploying machine learning (ML) and artificial intelligence (AI) tools to fight back against fraud.
And with good reason. Bank fraud is on the rise -- check fraud in particular -- and perpetrators are taking advantage of highly effective and easily accessible technology.
PYMNTS Intelligence’s report is based on surveys with 200 FIs with more than $1 billion in assets under management. The FIs that now use ML or AI to address fraud are getting results in the form of steep declines in common forms of fraud.
For instance, tech support impersonation and IRS imposter scams are two of the most frequently reported scams, yet FIs using ML or AI anti-fraud solutions were 17% less likely to report experiencing these leading scams than FIs relying solely on more traditional fraud prevention tools. Likewise, they were 18% less likely to report IRS imposter scams as a top concern.
Great Results, and Getting Better
PYMNTS Intelligence’s report data also reveals room for improvement in both ML- and AI-based solutions, and tools were less successful in identifying charitable-donation and fake debt-collection scams. These two scams are less common, and less data is created from which the data can operate.
Despite these small hurdles, FIs are apparently impressed. Fifty-two percent of the FIs surveyed plan to implement or increase their use of ML or AI fraud prevention models. In fact, FIs using AI or ML are 17% more likely to have plans in place to implement additional ML or AI solutions than their counterparts that do not use ML or AI fraud prevention solutions. In other words, many of the FIs now using the advanced technologies are ready to expand their ML and AI tool chest.
As noted by PYMNTS:
Our study also found that by adopting ML or AI fraud-prevention models, FIs are not only stopping more bad actors from inflicting damage but also increasing the confidence their customers have that their accounts are protected. So, in turn, customer satisfaction rates are likely to increase as fraud levels decline.
AI and machine learning technology have been key for financial institutions to fight check fraud -- both transaction and image-based. These technologies enable FIs to monitor the behavior of an account, while also analyzing the images of deposited checks for indications of counterfeits, forgeries, and alterations.
While adoption of these technologies has been slow, mounting check fraud attempts and losses in the past 2-3 years have resulted in increased adoption to ensure protecting the funds of their customers.