Banks rush to invest in new tech to combat rise in AI-driven fraud
Banks and financial services firms are rushing to invest in new technology to combat rising levels of fraud, according to a survey, as artificial intelligence unlocks new ways to create scams.
The survey, by regtech firm Complyadvantage, found that 86 per cent of financial compliance chiefs were investing in new technology, including AI, to help fight fraud, with two-thirds (66 per cent) flagging AI-powered scams as a growing threat.
However, the company’s research found that only 40 per cent of bank consumers were comfortable with banks using AI to fight financial crime.
The poll involved 600 financial services compliance professionals and 3,000 consumers.
“Today, AI is being utilised by both criminals – who are using it as new ways to defraud customers – and institutions, who are using it to stay ahead of fraudsters and defend their customers,” Vatsa Narasimha, chief executive of Complyadvantage, said.
A previous study from banking trade body UK Finance in November found 91 per cent of financial services firms were using predictive AI for fraud detection and risk analysis.
Fraud makes up around 40 per cent of crime in England and Wales, and is a growing problem for banks, with Britons losing some £580m in the first half of 2023 alone.
FCA chief Nikhil Rathi said in July that AI-based scams, including deepfakes of well-known people endorsing investment schemes, could disrupt financial services “at a scale not seen before”.
Big banks have voluntarily been refunding customers that fall victim to authorised push payment fraud since 2019.
However, new rules from the payments regulator set to come into force on 7 October will hold sending and receiving firms equally liable for reimbursing victims in nearly all fraud cases.
The banking industry has criticised the measures, saying they do not place enough responsibility on social media platforms – where the majority of scams originate.