Much has been written about the threats and perils that artificial intelligence (AI) poses to financial services and how cybercriminals can use it to infiltrate customer accounts. In an industry already plagued by ongoing fraud issues, where the overall cost of fraud is expected to exceed $40 billion by 2027The explosive popularity of AI and the additional dangers it presents have not necessarily sparked widespread enthusiasm across the industry.
Since using AI does not require deep technical knowledge as an operator, it can actually enhance the capabilities of ordinary criminals motivated to exploit it for offensive purposes. Launching an attack on a financial institution may require little more than telling the AI what to do. Technology can support many activities that criminals once had to learn on their own, such as writing scripts for phishing scams. And all this with much greater speed.
That said, there is a flip side to the coin that hasn’t gotten as much attention. AI also has an important role to play in strengthening the defensive posture of financial institutions against cybercriminals. It can be integrated with security tools to detect suspicious activity, better protect information, and protect customers better than humans or existing technology ever could.
We will see an increase in AI-based cyberattacks in 2024 and beyond. At the same time, we can expect to see AI play an increasingly important role in helping banks and lenders manage risk and thwart bad actors in some of the following key areas and ways.
Accelerated fraud and threat detection
In 2023, credit card transactions accounted for nearly 50% of payments revenue in North America. Combined with other payment methods, these numbers only grow year after year. Humans cannot monitor this volume of activity and detect irregularities that could constitute fraud quickly enough to prevent a customer from becoming a victim.
Financial institutions have been using technology for some time to do this work. AI can improve these systems by monitoring signs of fraud much more quickly and accurately, all in real time. AI can process information and derive meaning from patterns to detect cyber threats, respond more quickly to incidents, and accelerate decision-making and action, helping financial institutions reduce fraudulent transactions.
Improved customer engagement
Attempting to extract personal account information through identity theft is one of the most common approaches used by fraudsters. Unintentional customers, especially the elderly, often fall prey to these scams, resulting in billions in losses. Increasingly, banks are turning to AI to help their customers distinguish between genuine and false communications and requests for information.
For example, artificial intelligence can help banks with their own customer outreach processes. Integrated into a bank’s mobile app, AI can help neutralize the risk of fake phone calls that trick customers into divulging sensitive information. In 2024, we can expect to see more AI-powered applications, like these, emerge to preserve the sanctity and security of communications between financial institutions and their customers.
A move towards orchestration
Consider the appliances in a typical kitchen, many of which are now connected or equipped with some level of modern technology. A microwave, refrigerator, and dishwasher can all be individually integrated with aspects of AI to make them more efficient. But there is no overall orchestration between these devices. Human input and management are still necessary.
The same can be said for many AI-based security tools currently in use. Although AI is used in toolsets for threat detection and modeling, it occurs in an ad hoc manner. In the coming year, we expect a shift toward a more orchestrated approach to security, marked by increased connectivity between different security functions and less management by humans.
For financial institutions, technology is a force that allows them to follow the evolution of a market and raise the bar when it comes to customer experience. It is also essential for maintaining a high security posture. AI is already we see greater adoption in financial services than in many other sectors. Banks must now seize the opportunity to strengthen security using all the tools at their disposal. This requires modern infrastructure enabling integration into new technologies, including AI-based tools. Those who are willing to adapt will see the investment pay off.
