Generative AI in Fintech: Advancing Risk Assessment and Fraud Detection in Digital Payment Technologies

Abstract

This article explores the transformative potential of artificial intelligence (AI), particularly generative AI, in enhancing risk assessment and fraud detection within digital payment technologies. As financial fraud evolves in sophistication, traditional detection methods often fall short. We propose a novel approach leveraging generative AI to create synthetic data that mimics real-world scenarios, thereby training more comprehensive and adaptive fraud detection models. This article addresses limitations in historical datasets, improves the accuracy of predictive models, and reduces false positives. Furthermore, we demonstrate how this approach enables proactive detection of emerging fraud trends, allowing fintech firms to stay ahead in the ongoing arms race against fraudsters. Our findings suggest that integrating generative AI into fraud detection systems can significantly enhance the security and reliability of digital payment platforms, potentially revolutionizing risk management in the fintech industry. This article contributes to the growing body of knowledge on AI applications in financial security and provides a foundation for future developments in this critical area.