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Fraud detection software, or the vigilant cyberguard

As the saying goes, he who owns the information, owns the world. The development of digital technologies consequently leads to a complication and increase of data volumes. To manage datasets and provide security, fraud detection software companies offer a wide variety of powerful tools. 

A lot of vendors unite their efforts in an attempt to prevent and fight financial crimes. And FICO is one of the best in the field of fraud detection software development. Its Falcon Platform’s analytic capability is chosen by world’s leading financial companies to prevent data security breaches and make digital data safer. 

FICO Falcon Platform potential is based on Artificial Intelligence in combination with Machine Learning algorithms. AI-technologies discover fruitful fields of activity for the financial industry. They manage routine transaction processes and make predictions. But the true value of AI  within its heuristic algorithms, which reveal anti-fraud and anti-money laundering activity.

Fraud detection software: anti-criminal digital lock 

AI-technologies in the financial industry started their journey in the early 1980s. And Machine Learning, a subset of AI, together with predictive analytics have become powerful allies of retail banking and Fintech. They manage a great number of routine transactions like bill paying or account checking. 

Undoubtedly, data is a set of information. And it is very short-sighted to deny the value of this resource. That is why the theft of commercial information, personal data or Internet accounts is the same as stealing a wallet or robbing a bank. 

Internet and mobile devices give fraudsters the perfect opportunity to commit crimes distantly and abruptly. That is why fraud detection services are always in demand. 

To prevent fraudulent activity, Artificial Intelligence (AI) and Machine Learning (ML) in the finance industry come to the battlefield armed with fraud detection algorithms and fraud detection data science. And it is not a surprise that due to their powerful analytic capability AI and ML were summoned to confront and counteract fraudsters.

Financial fraud detection is a severe modern challenge 

Financial fraud is a serious issue with wide-reaching consequences both in business and everyday life. It can reduce confidence in the industry, destabilize economies and worsen people’s cost of living. 

There are many types of financial fraud, as well as a variety of data mining methods. 

AI and ML have already shown their efficiency in preventing fraudulent activity. But fraud detection is primarily considered to be a classification problem. Many AI-powered approaches are efficient classifiers and are applicable to fraud detection due to their capability of processing large datasets effectively. 

But it is evident that there are still facets of intelligent fraud detection that haven’t been investigated yet. And financial fraud detection software will become smarter and faster.

Fraud detection systems: your navigator in the stream of data 

Digitalization of the modern world is a virtue and a curse at the same time. People are engulfed with waves of information. At the same time, they also create data volumes. 

And, in its turn, the security of personal and business information becomes the cornerstone of our life. To prevent crimes and secure data fraud detection solutions and systems are called to service.

Fraud detection system (FDS) is a solution for on-line fraudulent activity discovery in the course of bank-client transactions. 

The main aim of FDS is to improve the bank’s distant services security and make them less vulnerable to scams. Fraud detection in banking is a severe necessity that prevents banking institutions from misunderstanding or even ignoring information security importance on the customers’ side. 

FDS automatically estimates transactions according to their compliance with certain rules and clients’ behavior patterns. 

The key advantages of FDS:

  • high anti-fraud efficiency;
  • high processing speed and scalability;
  • flexibility, i.e. opportunity to integrate it into other systems;
  • pre-installed fraudulent activity rules;
  • system management reports and statistics.

Artificial Intelligence and Machine Learning in finance

The financial industry is a very fruitful field where AI and ML can be effectively applied due to its quantitative nature. The world of finance demands a high level of accuracy and speed. 

That’s why the use of computing power has become an excellent solution when a human’s brain reaches its limitations. But can computers make smart decisions and react flexibly in changing circumstances? 

Yes, they do. AI-powered software and neural networks are not only fast and precise in Big Data processing. Today,Artificial Intelligence in the finance industry has come to play an integral role in many parts of the financial ecosystem. 

Machine Learning, in its turn, makes AI even more flexible and dynamic by means of recording and further use of new patterns and scenarios that haven’t been uploaded by developers.

And AI’s smart and heuristic nature is applied in many spheres of the financial industry.

  • Portfolio management. The use of so-called “robo-advisers” – though special algorithms but not robots are used here – in calibration a financial portfolio is composed to meet the goals and risk tolerance of users.  
  • Algorithmic trading. Complex AI systems called Automated Trading Systems (ATS) are used for extremely fast trading decisions. Hence, this type of trade is called high-frequency trading (HFT).
  • Fraud detection. A combination of more accessible computing power, commonly used Internet capabilities and companies valuable data stored online, creates a “perfect storm” for data security risk. AI is thoroughly monitoring financial transactions and processes to prevent fraudulent ones. 
  • Loan/insurance underwriting. In large financial companies, AI does a tremendous job of processing enormous amounts of consumer data, on which Machine Learning algorithms can be trained. 

Today, AI has created big waves and even maelstroms in the still waters of one of the most conservative industries – banking. The era of Hammurabi’s rules has ended, when the digital storm started.

FICO Falcon Platform: watchful eagle-eyed guard

It is not easy for the financial industry to be in a continuous state of war for data security. Smart, fast and impartial assistance is needed to win it. FICO delivers high-volume analytics software and tools in its Falcon Platform, which guards your cybersecurity, seamlessly and effectively. 

Among the vast range of FICO products, Falcon Platform is a magnum opus against enterprise fraud management, detection, and prevention. It gives financial institutions real-time protection from fraudulent actions across multiple payment channels, products and services. 

The core of the platform is FICO Falcon Fraud Manager. It provides flexible, AI-powered protection to all transactions, carefully monitoring them for fraud, scams and cyber attacks. 

Watch the video to see what makes Falcon Platform an outstanding FICO anti-fraud software solution and the best choice for your security.

FICO Falcon Platform is a complex tool that covers different aspects of security. Its cognitive fraud analytics module protects:

  • real-time payments;
  • person to person (P2P) transfers;
  • card-not-present (CNP) transactions;
  • merchant accounting;
  • mobile wallets;
  • payment cards sector;
  • account takeover.

Look at Figure 1 to understand more about the FICO Falcon Platform structure. 

Fig. 1. FICO Falcon Platform structure

Due to its effectiveness in the cyber security sphere, Falcon Platform has been chosen by lots of the world’s most famous financial institutions. 

Why FICO Falcon Platform is the choice for leaders

Steve O’Malley, Director of FICO’s operations in the Nordics, the UK, and Ireland admits that enterprise-wide fraud management is a goal for many banks worldwide, since criminals are keen to exploit the gaps between fraud systems. FICO and Nordea are partnering in multiple parts of their business, including customer account management and scorecard development, and their work on customer fraud protection is a natural extension of that partnership.

Dave Schneider, President of PULSE, says in his press release, that in this era of digital commerce, criminals are constantly working to beat the system, so the system has to work equally hard to keep up. He is sure that with the Falcon Platform and its team of experts, PULSE have the flexibility and capacity needed to create and launch new fraud-detection and risk-mitigation services that are benefiting issuers today.

Yannick Leclerc, Head of Fraud in EnterCard Group, points out that the cloud-based version of Falcon Platform gives greater flexibility to serve their customers with better fraud protection. It also provides greater control over communication with customers when fraud is suspected, which helps improve the customer journey in relation fraud.

Conclusion

The growing number of financial cyber crimes makes banking businesses choose fraud detection software wisely. Anti-fraud solutions should be smart, flexible, scalable and effective to confront scammers successfully. 

FICO Falcon Platform possesses all these features. With its advanced, based on Machine Learning algorithms and cognitive fraud analytics, AI provides deep data analysis that recognizes fraudulent activity at the point of origin and stops it.


Sergei Artimenia

Director of Business Development

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