“Progress is made by the improvement of people, not the improvement of machines.”
As more consumers turn to digital banking for their everyday transactions they will generate huge amounts of data that banks can use to identify trends and highlight suspicious behavior.
As digital transaction volumes increase, and real-time payments become the norm, banking solutions to identify frauds are often inadequate. In most cases these systems will need to determine if a transaction is genuine or not in a fraction of a second. Thanks to the AI wave, as fraudsters get better, machines spotting them get better too.
Cybercrime is estimated to cost the global economy 400 billion dollars. Credit card fraud accounts for a large proportion of this cost. Artificial Intelligence (AI) can provide faster, cheaper and more accurate fraud detection.
Some of the key considerations of a payments infrastructure (using AI) while solving the fraud detection problem are,
- Initiate the payments safely
- Handle billions of transactions
- Identify relationships through graph maps
- Social media integration and Sentiment analysis
- Behavioural analysis
- Adapt quickly as fraudsters evolve their modus operandi
An AI system can use thousands of data points in every transaction and do a fuzzy lookup to billions of other transactions to identify patterns, coincidences and anomalies.
Most payment giants are increasingly turning to AI and Mastercard is no exception. They have been acquiring firms focusing on fraud detection as AI deal activity hit all time highs in Q1 2017. In March 2017 Mastercard announced the acquisition of NuData Security to deliver online and mobile anti-fraud solutions using session and biometric indicators.
“Our unprecedented use of artificial intelligence on our network is already proving successful. With the acquisition of Brighterion, we will further extend our capabilities to support the consumer experience.”
– Ajay Bhalla, President of Enterprise risk and security for Mastercard
Earlier this month, Mastercard announced the acquisition of Brighterion. Brighterion’s portfolio of AI and machine learning technologies provide real-time intelligence from all data sources regardless of type, complexity and volume. Its smart agent technology will be added to Mastercard’s suite of security products already using AI.
“Progress is made by the improvement of people through the improvement of machines.”
Arunkumar Krishnakumar is a Fintech thought leader and an investor.
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