# How to outsmart the tech-savvy criminal Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2021-10-12 Category: TECHNOLOGY Category URL: https://financedigest.com/category/technology Meta Title: Combat Financial Fraud with AI: Trends, Threats, and Meta Description: Discover how AI-powered technologies and processes can effectively supervise modern financial systems in real time to prevent fraud and protect against URL: https://financedigest.com/how-to-outsmart-the-tech-savvy-criminalhtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/young-couple-using-technology-multitasking-smarpthone-tablet-and-notebook-in-the-stree-sbi-304345111-1736837576528-compressed.jpg) _By_ **_Martin Rehak,_** _Resistant AI_ In the first half of 2021 criminals stole a total of £753.9 million, which is a 30% increase from the same time last year.  The report from UK Finance, also highlighted that advanced security systems used by banks prevented a further £726 million being taken, but it is still clear that these criminals are evolving at pace, hunting down new opportunities and infiltrating any gaps they find in these systems. Since the Pandemic began there have been increases in card fraud, synthetic [identity fraud](https://www.financedigest.com/why-an-orchestrated-digital-identity-strategy-is-vital-for-financial-organisations-in-fighting-fraud.html "Why an orchestrated digital identity strategy is vital for financial organisations in fighting fraud"), account takeovers and recruiting money mules to pass stolen funds through their accounts.  It appears that authorised push payment (APP), when a customer is tricked into authorising a payment to an [account controlled](https://www.financedigest.com/fingerprint-scanners-to-remain-top-selling-accounting-for-over-one-third-of-access-control-demand-in-2021-future-market-insights.html "Fingerprint Scanners to Remain Top-selling, Accounting for Over One-third of Access Control Demand in 2021: Future Market Insights") by a criminal, was the area that saw the biggest increase of 71%. It is very apparent that fraud isn’t going away, so [banks and fintechs](https://www.financedigest.com/attacking-banking-and-fintech-fraud-head-on-through-ai-infused-strategies.html "Attacking Banking and Fintech Fraud Head-On Through AI-Infused Strategies ") need to strengthen their existing automated systems.  So, the million-dollar question is what is the best way to outsmart these tech-savvy criminals who are out for everything they can get? What is required is financial automation oversight, a set of AI powered [technologies and processes that can effectively and efficiently supervise modern financial systems in real time](https://www.financedigest.com/why-its-time-to-centralise-public-sector-technology.html "Why it’s time to centralise public sector technology").  [Artificial intelligence and machine learning](https://www.financedigest.com/machine-learning-in-artificial-intelligence.html "Machine learning in artificial intelligence") systems excel at fraud prevention, as they identify subtle trends in the cybercriminals approach which enables a three-fold impact: 1. Predict – today’s AI [powered solutions](https://www.financedigest.com/the-collective-power-of-partnerships-integrating-payment-solutions-to-drive-business-success.html "The collective power of partnerships: integrating payment solutions to drive business success") can identify advanced fraud and manipulation earlier and faster by looking for inconsistencies and high-dimensional correlations in data. Continual learning from such behaviours ensures [improvements in modelling](https://www.financedigest.com/polypropylene-fibre-market-witness-a-spike-in-growth-pace-recent-improvements-in-pricing-models-fmi.html "Polypropylene Fibre Market Witness a Spike in Growth Pace Recent Improvements in Pricing Models: FMI") efficacy. 2. Detect – [financial automation oversight engines are adept at identifying previously unidentified vulnerabilities and gaps](https://www.financedigest.com/tackling-the-cloud-skills-gap-in-financial-services.html "Tackling the cloud skills gap in financial services") in third-party systems that are ripe for exploitation by high level criminals. They recognise new patterns of [financial crime](https://www.financedigest.com/australia-financial-crimes-regulator-opens-investigation-into-britains-entain.html "Australia financial crimes regulator opens investigation into Britain’s Entain") as they emerge, with millisecond latency. 3. Deter – where fraud is identified, a treatment [strategy must be implemented](https://www.financedigest.com/how-to-implement-a-holistic-digital-marketing-strategy-in-finance.html "How to implement a holistic digital marketing strategy in finance"), such as an elevated challenge or re-validation of identity. This narrows the focus of when human intervention is required by prioritising and contextualising alerts, thus improving the role of [financial crime](https://www.financedigest.com/ai-the-hidden-weapon-in-the-battle-against-financial-crime.html "AI – the hidden weapon in the battle against financial crime") analysts. The main areas of vulnerability in the [customer journey that need to be protected](https://www.financedigest.com/banks-can-provide-a-protective-shield-to-defend-customers-from-cyber-attack.html "Banks can provide a protective shield to defend customers from cyber attack") are onboarding identity integrity and ongoing transaction integrity. In the general [onboarding process](https://www.financedigest.com/fraud-protection-why-customer-onboarding-requires-digital-identity-processing.html "Fraud Protection: Why Customer Onboarding Requires Digital Identity Processing"), identity validation is the first step to ensure an applicant actually exists.  Next is verification, which links that [person to the information they have provided in the validation](https://www.financedigest.com/fime-empowers-issuers-with-unionpay-card-personalization-validation-testing-services.html "FIME empowers issuers with UnionPay card personalization validation testing services") stage.  In many automated workflows there are risks from forged or manipulated documents that support the [customer journey in online](https://www.financedigest.com/online-marketplaces-embracing-embedded-finance-to-benefit-both-customers-and-vendors.html "Online marketplaces: embracing embedded finance to benefit both customers and vendors     ") lending, trading, insurance, financing, factoring and payments. In fact, 1-20% of documents in the application and onboarding process can be subject to manipulation, such as forged [bank statements](https://www.financedigest.com/bank-of-england-statement-on-purchase-of-long-dated-bonds.html "Bank of England statement on purchase of long-dated bonds"), modified invoices and amended pay slips.  By protecting automated processes that use unauthorised documents from third-parties, banks can be [sure that all digital](https://www.financedigest.com/making-sure-that-finservs-digital-transformation-doesnt-mean-digital-exclusion.html "Making sure that FinServ’s digital transformation doesn’t mean digital exclusion") documents are genuine. Once an identity has been validated, by no means a trivial task involving both the initial authentication and subsequent verification – identity [data becomes somewhat static for the remainder of the transactional](https://www.financedigest.com/going-cashless-how-transaction-data-can-help-you-meet-your-customers-needs.html "Going Cashless? How transaction data can help you meet your customers’ needs") relationship, however even a validated identity can be taken over. [Continuous assessment of transaction integrity](https://www.financedigest.com/neptune-continues-expansion-with-integration-into-flextrades-buy-side-ems-platform.html "Neptune Continues Expansion with Integration into FlexTrade’s Buy-Side EMS Platform") typically requires a 360-degree view of each and every customer-merchant transactional interaction.  A customer’s behaviours and actions within a session, across sessions and between sessions may hold clues to [financial crime through anomalies in behaviours](https://www.financedigest.com/how-behavioural-biometrics-can-help-financial-organisations-tackle-complex-ato.html "How behavioural biometrics can help financial organisations tackle complex ATO"), device characteristics, internet provider, contact information, geo-locations, spikes of related activity or unusual switching between closely related activities.  If anomalous behaviours perpetrated by [human or robotic](https://www.financedigest.com/robots-are-making-french-fries-faster-better-than-humans.html "Robots are making French fries faster, better than humans") actors can be recognised, emerging attacks can be addressed before any losses occur. Failing that, attacks in progress may be recognised by reasoning about transactions in the context of similar transactions.  However, given the goal of a frictionless [customer experience](https://www.financedigest.com/solving-the-customer-experience-conundrum-how-fs-organisations-can-use-data-to-level-up.html "Solving the customer experience conundrum: How FS organisations can use data to level up"), these interventions must take place with minimal latency even at scale. Transaction volumes and the desire for [almost instantaneous response in the on-demand economy](https://www.financedigest.com/uk-economy-almost-flat-lined-in-october-adding-to-rate-hike-doubts.html "UK economy almost flat-lined in October, adding to rate hike doubts") make human oversight impractical.  Instead, the combination of AI and the human brain offers the strongest defence when it comes to [fighting cybercrime](https://www.financedigest.com/boosting-customer-retention-by-taking-the-fight-against-cybercrime-seriously.html "Boosting customer retention by taking the fight against cybercrime seriously").  Using AI technology to strengthen the validation, [verification and transaction processes ensures security](https://www.financedigest.com/how-digital-identity-verification-will-revolutionize-security-defenses-in-the-financial-services-industry.html "How Digital Identity Verification Will Revolutionize Security Defenses in the Financial Services Industry") is enhanced, but not at the expense of the customer journey.  Not only will this create a safer and more [trusted customer](https://www.financedigest.com/how-to-maintain-customer-loyalty-and-trust-in-the-face-of-a-pandemic-and-digital-competition.html "How to maintain customer loyalty and trust in the face of a pandemic and digital competition") experience, but it will also play a key part in improving company reputation and attracting new customers. --- This blog is powered by Superblog. 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