Rise of the Machines: The use of Artificial Intelligence in fraud and detection

2023 was the year Artificial Intelligence (AI) went mainstream. People can see that it has the potential to proliferate in every walk of life, so it is expected to make waves in the fraud space, too. How fraudsters commit fraud is constantly evolving, and they are very good at using the latest technology.

We have already started seeing headlines, such as: “Employee scammed out of millions after a video call with deep fake ‘chief financial officer’”. This blog intends to look at AI as we see it now and the risks and explore some ways we can mitigate these challenges.

Artificial Intelligence and the banking industry

AI is a broad term. It can be as simple as an automated opponent in a chess game, but many of us are now familiar with more advanced technologies and applications. Things like Chatbots, like ChatGPT (an artificial intelligence chatbot?that uses natural language processing?to create humanlike dialogue). Deepfakes are used to create convincing copies of moving images and audio.

Banks have always had to adapt. With the advent of the internet, banks had to load their defenses against fraudsters taking people’s accounts. Gradually, the industry strengthened its defenses and regulations, and post Strong Customer Authentication, the fraudsters determined the best way to steal money was to target the genuine user with a social engineering scam and persuade them to hand over their money.?

When AI represents an opportunity for cybercriminals

Unfortunately, deepfakes and chatbots make the process of social engineering much easier. What historically has been a one-to-one fraudster-to-victim relationship can now be automated by AI.

Recordings of faces and voices can be cloned and adapted to make the scam seem all the more realistic. Chatbots can initiate automated and convincing two-way messaging campaigns to encourage people to hand over money.

AI against online banking fraud

It’s not all doom and gloom, though. Thankfully, the good guys can use this technology, too.

Banks have been deploying AI techniques in the fight against fraud for years. Whether it’s machine learning algorithms to identify a suspicious transaction or deep learning models to verify your identity, AI has positive applications.

Although fraudsters are not going anywhere quickly, Cleafy strongly feels that AI will permeate the industry to build robust barriers to protect against fraud. AI will be leveraged at every level in the customer lifecycle to improve defenses.?

Joining forces to protect online customers

It starts with social media companies, which should be mandated to identify social engineering on their platforms.

The mobile networks and internet service providers will become better at spotting ‘phishing sites’ and ‘fraud’ call centers.

The banks already bear a massive responsibility because of the PSR to protect their customers' money.

They can use solutions like Cleafy, whose real-time AI mechanisms provide a swift response to new AI threats, enabling banks to protect their customers automatically without disrupting the service.

Furthermore, the solution equips analysts with the necessary information to understand the nature and capabilities of the detected malware, along with off-the-shelf suggestions for response rules to maintain an optimal security posture.

Lastly, it’s incumbent on the customer to protect their own money. Something as simple as a codeword shared between loved ones is a simple solution to the most convincing deepfake. Customers must realize that it is vital to be cognizant of the risk and protect themselves accordingly.

Get in touch if you want to learn more about our solution.