Alberta Machine Intelligence Institute

AI for Real-Time Fraud Detection and Risk Management

Industry

Financial Services

Accurately Identify Fraud

Financial fraud has become increasingly sophisticated. Traditional methods can't keep up, but AI is changing the game. By analyzing vast amounts of data in real time to identify fraudulent activities with unparalleled accuracy, AI-powered systems are helping banks spot suspicious activities before they cause harm.

The Problem

Fraud in banking and financial services continues to rise, with increasingly sophisticated attacks targeting institutions and their customers. For every dollar of direct fraud loss, institutions lose nearly three dollars when accounting for associated costs, creating a devastating multiplier effect across the industry. Traditional detection methods, reliant on static rules and historical data, fail to adapt to evolving tactics, leading to delayed responses and cascading financial impacts.

The AI Opportunity

AI solutions analyze vast datasets in real time, detecting anomalies and fraudulent activities with precision. These tools adapt to new fraud patterns while reducing false positives, offering financial institutions a robust approach to mitigating risk. AI-powered systems also cut bank losses on delinquent accounts by up to 25%, showcasing their ability to enhance fraud detection and protect assets with precision.

Why It Matters

Real-time fraud detection protects customer assets, builds trust, and ensures compliance with legal standards. AI-driven systems empower financial institutions to mitigate risks efficiently, reduce financial losses, and improve customer confidence. Addressing fraud at this level strengthens the integrity of financial systems and fosters more peace of mind for customers.

Benefits & Impact

Enhanced Fraud Detection Accuracy

AI systems demonstrate unparalleled accuracy in identifying fraudulent activities across diverse contexts, ensuring faster and more effective detection and response.

Real-Time Monitoring and Prevention

By analyzing transactions as they occur, AI systems can prevent fraudulent activities before they impact customers. This reduces financial losses and mitigates reputational damage for financial institutions.

Cost Savings

Machine learning reduces bank losses on delinquent accounts by up to 25% and prevents costly fraud attempts through early and accurate detection.

Improved Customer Trust

Minimizing disruptions to legitimate transactions while ensuring the security of customer accounts enhances overall customer satisfaction and loyalty.

Scalability and Adaptability

AI systems can continuously learn, and adapt to emerging fraud tactics, ensuring long-term effectiveness in safeguarding assets as fraud strategies evolve.

AI Methods & Models

  • Purpose: Instantly detect and block fraudulent transactions.

  • Why: Protects assets and reduces response delays.

  • Tools/Models: RNNs (e.g., GRU), anomaly detection (e.g., Isolation Forest), rule-based filtering systems.

Build Your AI Solution with Amii

As one of Canada’s three national AI institutes, Amii brings decades of expertise, advancing AI innovation and delivering industry solutions to your team. Whether you’re just starting to explore the possibilities of AI or are ready to develop advanced AI models, Amii is here to help.

Training

A successful AI solution requires both technical know-how and a strong understanding of your business. Our training aligns technical and non-technical teams, creating a shared language and fostering the collaboration needed for successful AI implementation.

Strategy

We collaborate with your team to brainstorm, evaluate, and prioritize AI use cases aligned with your business goals, building your internal capacity along the way. Our experts then validate the top idea, positioning your team for a smooth transition into development.

Development

Our unique approach places a full-time Machine Learning Resident within your team, supervised by Amii experts, to help build a custom AI solution. After the project, you have the option to hire the resident, ensuring continuity to deployment and expanding your internal AI capacity for future AI innovation.

Ready to get started?

Connect with our Investments & Partnerships team to explore how Amii can help make AI work for your business.

Sources

McKinsey & Company: Financial crime and fraud in the age of cybersecurity (2019)

Khandani, Amir E. & Kim, Adlar J. & Lo, Andrew W., 2010. Consumer credit-risk models via machine-learning algorithms. Journal of Banking & Finance, Elsevier, vol. 34(11), pg. 2767-2787.

P. Zanke, 2023. AI-Driven Fraud Detection Systems: A Comparative Study across Banking, Insurance, and Healthcare. Adv. in Deep Learning Techniques, vol. 3, no. 2, pp. 1–22.