The financial industry is one of the forefronts when it comes to implementing new technology. For years, top financial institutions were among the first to use technology to perform better data analysis, improve service performance, and reduce fraud while improving security in general. The industry also supports the use of technology like no other.
With artificial intelligence (AI) creating headlines, it is only natural to wonder whether the financial industry will find new, interesting ways of implementing machine learning and man-made intelligence to improve their services. As it turns out, AI is already the next big thing in the financial world.
MasterCard and Fraud Prevention
MasterCard was one of the first companies to use artificial intelligence, and they are using it to help minimise credit card fraud. Instead of using passive algorithms to screen transactions, the company now has its own AI analysing every transaction for signs of fraud.
The implementation of AI to prevent – and minimise – credit card fraud comes with several major advantages. For starters, AI can sift through transactions at an incredible speed; it is so much faster than what us humans can do manually. Instead of manual checking, MasterCard can now rely on its AI to do the initial screenings.
The second advantage is accuracy. Artificial intelligence doesn’t just use a set of predefined parameters to screen transactions. It can take other factors into consideration, including the particular customer’s past transaction history. IBM Watson was among the first AI instances that could define patterns from seemingly random sets of information, so we know how useful this feature can be.
Reducing False Declines
One of the things MasterCard has been able to achieve through the implementation of AI to screen credit card transactions is the reduction of false declines. This has been a challenge in fraud prevention for years.
Even with the best algorithms in place, valid and actual customer transactions were still declined and flagged as fraudulent in certain situations. This didn’t just inconvenience the customer, but also added more pressure to the fraud detection system.
AI manages to get around the common causes of false declines by looking at every transaction in context; and that is the key word right here: context. Contextual analysis can be performed at an incredible speed, promising higher accuracy and reducing the number of false declined by a whopping 80%.
Getting the Customers Involved
MasterCard and other credit card companies are always in search for better ways to prevent credit card fraud, but the best way to stay secure is by getting the customers involved in the process. Simple safety tips such as using the credit card only at trusted merchants and keeping the credit card details safe are still the best ways to prevent credit card fraud.
At the same time, the use of AI by MasterCard is a promising sign. AI can learn from its mistakes and the data it processes, so the system will only get better. The company may be on their way towards developing the perfect fraud detection and prevention system as we speak.