In a world where advanced and subtle fraud types are on the rise, data driven fraud detection practices have proven to be the best approach to protect you from fraudsters. According to a report from the Association of Certified Fraud Examiners, businesses without solid fraud detection systems lose 5% of their revenue to fraud every year.
Virtually everyone who commits fraud today leaves digital trails behind. Therefore, you can reap a handful of rewards by using an AI fraud detection model. At the same time, you minimize your chances of experiencing external and internal fraud.
What is data-driven fraud detection?
Before now, businesses used rule-based methods to combat fraud. They served as powerful fraud detection tools in the past. However, they are not sufficient against increasingly frequent and complex fraud threats. So, data-driven AI and machine learning fraud tools can help fill the gaps that traditional fraud rule-based methods do not.
Data-driven fraud detection relies on advanced analytics and algorithms to help you identify anomalies in a large financial dataset. This technique monitors and detects fraud in real time. It also assigns a risk score to transactions that shows their likelihood of being fraudulent.
Data-driven fraud detection systems heavily use complex data analytics techniques. They use machine-learning models and algorithms to analyze data and identify patterns. Also, these models are trained either with supervised learning or unsupervised learning. This approach allows for better fraud detection and continuous learning at the same time.
Five benefits of data-driven fraud detection
1. Swift detection
When you use a data-modeled fraud detection system, you can detect fraudulent activities from a sea of transactions much faster than manually going through pertinent information. High-performing solutions like Transaction AI can process financial data and block threats in milliseconds, quickly identifying questionable transactions or patterns so you can take timely action against them.
2. Reduced chances of loss
It typically takes 30 to 90 days to detect fraud manually in a traditional rule-based system. This could mean your cash is already long gone, leading to massive and sometimes irrecoverable losses.
However, when you invest in a fraud prevention company with a data-driven solution, you mitigate these losses with fast AI execution.
3. Increased accuracy
Fraud analysts built traditional rule-based systems based on past fraudulent patterns and activities. Unfortunately, fraudsters can reverse engineer this method and change tactics to avoid being caught. On the other hand, data-driven fraud detection eliminates these risks for you, by learning from each new fraud attempt and denied or approved transaction.
4. Better decision-making
Data-driven fraud detection gives you the power to make decisions based on objective analysis, complex data and accurate results. Tracking hundreds of pieces of entity data across billions of potential transactions using traditional methods is too complex, even for a team of experienced fraud prevention specialists. Deep-learning models are now required to detect the sometimes subtle patterns of fraud. This helps you make more confident decisions and quickly curb fraudulent activities.
5. Preemptive fraudulent activity prevention
You can stop fraudulent activities based on real-time data shared by criminals. Fraudsters often share critical information with their “colleagues” or broader criminal enterprises. Data-based fraud detection models identify links between compromised data, fraudsters and broader criminal groups to help you connect the dots.
Fraud.net’s Data-Driven Technology Stops Fraud
Fraud.net’s cloud-based AI fraud detection solutions can help you quickly and effectively stop fraudsters in their tracks. At one glance, you can distinguish between fraudulent and genuine consumers within a streamlined case management portal. And, our solutions are informed by billions of data points within our data consortium, helping you identify fraudsters even if they haven’t affected your business yet.
You, too, can harness the power of data-driven fraud detection with our easy-to-use systems. Learn more about Fraud.net’s advanced technology for fraud detection and analysis by scheduling a demo today.