Banks are using AI against rising fraud threat, but customers are not happy

investmentnews.com:

The ever-increasing threat of fraud – and the sophistication of methods – requires a robust response from financial institutions.

But while artificial intelligence presents greater risk to financial institutions and their customers, and also part of the suite of protective measures used, organizations need to explain how technology is being used to avoid customer pushback.

The challenge for financial institutions is highlighted in a new report from financial crime intelligence experts at ComplyAdvantage, which shows that financial institutions are investing in new technology to identify and prevent fraud, but that customers are not comfortable with AI being used.

The risk is clear, with two-thirds of financial industry respondents citing AI as driving increased risk through deepfakes, sophisticated cyberhacks, and malware created using generative AI. Almost nine in ten respondents said their organization is increasing investment in new tech. But only around half said they are prioritizing explaining its use to customers.

“Today, AI is being utilized by both criminals – who are using it as new ways to defraud customers – and institutions, who are using it to stay ahead of fraudsters and defend their customers,” said Vatsa Narasimha, CEO of ComplyAdvantage. “We know from our work with financial institutions around the world that AI-based technologies can significantly enhance the fight against financial crime. We see a tremendous opportunity for banks to show consumers how these new technologies and processes like explainable AI are being used to safeguard their finances.”

Customers know they are at risk and 23% said they have been a victim of fraud in the last three years. However, while 89% express concern about fraud,