52% of Financial Institutions Intend to Utilize Machine Learning and Artificial Intelligence to Fight Fraud

Financial institutions are increasingly turning to machine learning (ML) and artificial intelligence (AI) tools to combat fraud, and the results are promising. According to a report by PYMNTS Intelligence in collaboration with Hawk, FIs using ML or AI to mitigate fraud are seeing significant declines in common scams.

The report, based on surveys with 200 FIs with over $1 billion in assets under management, found that those utilizing ML or AI anti-fraud solutions were 17% less likely to experience tech support impersonation and IRS imposter scams. Additionally, they reported lower rates of lottery, romance, utility, rental, and Social Security scams.

While the tools were less successful in identifying charitable-donation scams and fake debt-collection scams, FIs are impressed with the overall effectiveness of ML and AI in fraud prevention. In fact, 52% of FIs surveyed plan to implement or increase their use of ML or AI fraud prevention models.

By adopting ML or AI fraud-prevention models, FIs are not only stopping more bad actors from inflicting damage but also increasing customer confidence in the security of their accounts. This, in turn, is likely to lead to higher customer satisfaction rates as fraud levels decline.

Overall, the use of ML and AI technology in fraud prevention is proving to be a game-changer for financial institutions, with many ready to expand their use of these advanced tools to further protect their customers and institutions.