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Every Entrepreneur has two Best Friends : Opportunity and Security.
It is essential to adopt technologies that provide both in the quickly developing field of digital banking.
AI : A Powerful Technology is already transforming industries and crucially, it’s setting a new benchmark in Fraud Detection.
WHAT ARE PHANTOM TRANSACTIONS?
Phantom Transactions are the invisible nemesis of banks worldwide, costing millions annually. They are seemingly legitimate but actually unauthorized, have been a costly menace for banks, casting a shadow on their balance sheets.
The Global Cost of Fraud reached an eye-watering $5.3 trillion in 2022 with Phantom Transactions accounting for a startling $1.2 trillion.
Fortunately, a knight in shining armor, Artificial Intelligence (AI), is here to the rescue, transforming the way banks tackle these fraudulent transactions.
Here are seven crucial facts that every banker and entrepreneur must know about AI’s role in combating phantom transactions.
1. Phantom Transactions : A Rising Threat
In 2022, the global cost of fraud was estimated to be $5.3 trillion, with phantom transactions accounting for $1.2 trillion.
AI, with its ability to analyze and learn from vast volumes of data has become the guardian against this growing issue.
Example : Paypal‘s AI and machine learning prevent around $25 million in fraudulent transactions daily.
2. Real-Time Fraud Detection: A New Reality
AI’s real-time fraud detection isn’t futuristic; it’s operational. It can instantaneously analyze and flag suspicious activities, including phantom transactions.
Example : Mastercard‘s Decision Intelligence provides real-time detection, reducing false declines.
3. Scalability and Learning from Past Transactions
AI processes and learns from enormous data volumes, scaling with your business. This continual learning makes it a robust and adaptive shield.
Example : Stripe utilizes AI to scale its fraud detection capabilities, learning from past transactions to become more accurate over time.
4. Efficiency and Automation
AI reduces the time and cost of detection and rectification, freeing up human analysts for more complex cases.
Example : Danske Bank witnessed a 60% reduction in fraud cases and a 50% decrease in operational costs with AI-based solutions.
5. Constantly Evolving, But Not a Silver Bullet
AI’s continual evolution increases its effectiveness, but it’s not a perfect solution. Banks must also invest in other fraud prevention measures.
Example : Visa’s AI platform adapts to new fraudulent tactics, but banks still need strong passwords and multi-factor authentication.
6. Enhancing Customer Trust and Regulatory Compliance
Ensuring transaction security, AI helps win customer trust and keeps businesses compliant with regulatory standards.
Example : American Express uses AI for secure transactions; HSBC uses it for anti-money laundering compliance.
7. Investment in AI is Essential
To stay ahead, banks must invest in AI. AI-powered systems protect customers and the bottom line, making it an essential tool for growth.
Example : Many leading banks have invested heavily in AI to keep pace with the rapidly changing landscape of financial fraud.
WHILE AI ISN’T A MAGIC WAND, IT’S UNDENIABLY A POTENT ALLY IN THE FIGHT AGAINST PHANTOM TRANSACTIONS.
As we explore the labyrinth of AI possibilities, it’s evident that it offers more than protection—it provides the catalyst for secure and sustainable growth.
For more insightful explorations into the world of AI, keep your eyes on AI Officer.
We are committed to navigating you through AI’s potential, unlocking the power of secure growth for your business.
