Detection of Violations in Credit Cards of Banks and Financial Institutions based on Artificial Neural Network and Metaheuristic Optimization Algorithm

Abstract

Due to popularity of the World Wide Web and e-commerce, electronic communications between people and different organizations through virtual world of the Internet have provided a good basis for commercial and economic relations. These developments, although occurring for less than a century, electronic communications have always been subject to interference, cheating, fraud, and other acts of sabotage. Along with this increase in trading volume, there is a huge increase in the number of online fraud which results in billions of dollars of losses annually worldwide; this has a direct effect on customer service of banking systems, particularly electronic banking systems, and survival as a reliable financial service provider. Therefore, attention to fraud detection techniques is essential to prevent fraudulent acts and is the motive for many scientific researches. For this reason, business intelligence is used to identify financial violations in various economic, banking and other fields. Here, the focus is on algorithms and methods presented in data mining to deal with fraud by using neural networks. The main objective is to improve these methods or present new algorithms by studying the behavioral patterns of customers and the combined use of genetic algorithm to improve the performance of neural network and find the appropriate models for better decision making by implementing and testing the performance of the suggested algorithms. The results show that more strength was given to neural network by using genetic algorithm. In fact, genetic algorithm can raise our ability to control the training process. Moreover, it was concluded that criteria such as age, gender, marital status were not effective on detection; in fact, the most important effective criteria are information related to transaction.