In this post I would like to look at the starting pillar of the Fraud Management strategy – “Detection” and look at AI’s influence in this very important step. A traditional approach to Fraud detection has been through Rule Engines which could be:
- If-Else Conditions
- Evaluating Data Patterns
For eg: for a threshold based detection humans have to feed the rule engine that count of records above a certain threshold is suspicious.
Following diagrams shows how this looks like
After looking at the diagram above an important question arises, should this threshold value be a straight line or can it bend based on how data behaves. Now there are ways for rule engine to behave like mentioned in the diagram,
for eg, instead of having a single rule lets have multiple rules
- Per Customer Category
- Per Destination
- Per Age of Customers
And multiply that with other dimensions in data which are
- Phone Number
- Caller Number
- Called Number
- Country Code
And multiple that with other set of measures per dimensions
And throw an additional billion volumes at the datasets
Now I am not saying FM teams are not skilled enough to fly, but a fraud team in a modern Digital Service provider should be more focused on other important factors.
This approach thereby helps in achieving multiple KPI’s of fraud management teams there by increasing efficiency.
- Higher Accuracy – Because AI can learn and adapt to Business scenarios faster, AI can significantly increase True Positive ratio
- Reduced time to detect – How fast a fraud event can be detected
- Self-Learning – How over a period changing business scenarios and seasonality in data can be adopted to Fraud detection
- Fraud Intelligence– How customer or any other entity behaviors can be learnt and categorized for better fraud detection
- Proactiveness – Ability to mine for unknown patterns not seen in the data earlier
Application of Artificial Intelligence has its own significant challenges and requires a new frame of thought, however looking at the Data Tsunami that has hit the fraud management teams, it looks an AI pro approach would only help Fraud Management teams to scale further.
Product Line Manager, Fraud Management – Nithin has more than 10 Years of experience in Fraud Management. He started his career as an Implementation Consultant with Subex Ltd and has been part of many Fraud Management implementations across APAC & Middle East. He has also been a Subject Matter expert & Business Solution Consultant earlier. Nithin is currently working as Product Line Manager for Fraud Management and machine learning developments at Subex.