Detecting Financial Fraud in the Digital Age: The AI and ML Revolution

Abstract

Along with innovations in technology, swindlers are becoming smarter. Fraud is a major concern for the financial services industry. Earlier frauds in this industry were limited to robbery and loan defaults as the customers had limited ways to interact with their financial institutions. The technology innovation opened up various ways of interacting and transacting with financial services providers, which has led to a significant increase in several types of financial fraud. Technology is making a positive impact across many industries, including the financial sector. Technology is redefining what is possible in combating fraud and financial crimes. Artificial Intelligence (AI) and Machine Learning (ML) have grown drastically from being mere technology buzzwords to the commercial reality it is today. The aim of the present study is to understand the types of financial fraud and the role of AI and ML in financial fraud detection. Secondary data collected from websites and reports are used for the study.