the battle against fraud escalates

The growing adoption of biometrics as a security measure has reduced our reliance on passwords. For many people, it’s made life easier – there’s less pressure to remember umpteen different passwords, knowing that your face or your fingerprint is enough to sign into your mobile banking or social media.

However, generative AI has made it easier for fraudsters to bypass these mechanisms through deepfaking (images, audio or video that are edited or generated with AI, depicting real or non-existent people).

When combined with other identifying factors – such as an individual’s national insurance number or first line of address – deepfakes are increasingly finding gaps in finance institutions’ security measures, giving fraudsters access to bank accounts and much more.

As well as helping scammers impersonate banking customers to gain access to their accounts, generative AI is also helping target customers by impersonating customer service representatives. In days gone by, spotting fraudulent text messages or emails was typically easier – they might have spelling mistakes or grammar issues, or be written in a tone of voice that was not aligned with your bank.

Now that scammers are using generative AI chatbots, however, generating an email that sounds exactly like your bank is far easier – they can match the corporate email tone with ease and will never make a spelling mistake.

This side of financial fraud extends far beyond just emails, too – there have also been a number of instances of scammers creating entire fake websites using AI-generated content and designing the pages to mimic that of a trustworthy bank.

Thankfully, just as fraudsters are using AI to commit fraud, banking and finance institutions are using machine learning to detect fraudulent activity – and getting progressively better at doing so. HSBC, for example, partnered with Google in 2021 to develop an AI system for detecting financial crime.

Their Dynamic Risk Assessment system is becoming increasingly accurate; initially, false positives were common, but these reduced by 60% between 2021 and 2024. The more accurate these systems become, the better chance we have of eliminating financial fraud altogether.

Generally, banks are doing a good job of shoring up their biometric systems against deepfaking – the more scammers they detect via their own machine-learning algorithms, the quicker they’ll be able to identify them.

It’s not just about combatting fraud at an institutional level, however. Part of ensuring that fraud doesn’t take place in the first place is about education – teaching banks’ customers to spot new and developing scams to avoid being caught out.

With AI and other technological advances changing the fraud landscape on an almost daily basis, however, this can be challenging. If individuals receive communications from their bank via email, phone call or any other method, they need to interrogate what they’re actually being asked to do. Most banks will never ask you for specific details, so people need to make sure they are clued up at all times.

Stuart Wilkie, Head of Commercial Finance at Anglo Scottish

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“AI versus finance: the battle against fraud escalates” was originally created and published by Leasing Life, a GlobalData owned brand.

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