Seven tech breakthroughs in fraud detection for 2024

The US Federal Trade Commission estimates fraud losses exceeded US$10 billion in 2023. In Asia, the threat of fraud continues to surge, prompting analysts to raise the urgency for effective fraud mitigation solutions.

ResearchAndMarkets predicts the Asia-Pacific region will lead online payment fraud losses by 2025, and that global expenditure on financial crime prevention increase by 2027. OliverWyman estimates fraud losses in Southeast Asia have exceeded US$5 billion, with customers bearing most of the brunt.

“Fraud detection remains one of the foreboding challenges for both businesses and consumers,” says Kurt Nielsen, CEO of Partisia.

Partisia lists seven innovations making a difference in fraud detection in 2024:

1. Multiparty computation (MPC)
   “By using multiparty computation technology, it is possible to enable data sharing across different banks in a massive, secure network, preserving individual identities,” says Nielsen. This collaboration not only protects personal data but also enhances visibility into fraud patterns, reducing the risk of data leaks and improving detection rates.
2. Artificial intelligence and machine learning
   AI and machine learning are revolutionizing fraud detection. These advanced systems learn from historical data to identify suspicious patterns, analysing vast amounts of information swiftly to prevent fraud before it occurs. Organizations leveraging these technologies report significantly improved detection outcomes.
3. Behavioural analytics
   Behavioural analytics tools monitor user actions to establish a baseline of normal behaviour. Any deviations—like logging in from an unexpected location—trigger alerts for additional verification. This proactive approach effectively identifies potential fraud by focusing on user behaviour anomalies.
4. Blockchain technology
   Blockchain offers a secure, immutable record of transactions. By implementing blockchain, companies can monitor transactions in real time, making it nearly impossible for fraudsters to alter transaction histories. This innovation not only enhances security but also fosters customer trust.
5. Natural language processing (NLP)
   NLP can analyse communications, such as emails and messages, to detect potential fraud schemes. By identifying unusual phrases or patterns, NLP aids in uncovering social engineering scams, empowering organizations to confront these threats directly, as highlighted by the SAS Institute.
6. Real-time monitoring
   Real-time monitoring tools continuously track transactions and user activities. Utilizing advanced algorithms, these systems can instantly flag suspicious actions, enabling immediate response. By adopting these technologies, businesses can streamline operations and significantly mitigate fraud risks.
7. Biometric authentication
   Biometric methods, such as fingerprint and facial recognition, provide an additional layer of security in fraud detection. By requiring biometric checks, organizations can verify the identity of individuals making transactions, drastically reducing unauthorized access and enhancing overall safety.

As the landscape of fraud evolves, businesses must adopt these cutting-edge tools to combat fraud effectively. Nielsen says investing in the most advanced fraud detection technologies not only safeguards assets but also reinforces trust with clients and partners.

Technology is not enough

But technology alone may not be enough. Carmen Chu, executive director (Banking Supervision) with the Hong Kong Monetary Authority, concedes that techniques used by fraudsters are getting more sophisticated.

“Despite our best efforts at raising public awareness and the all-too-often warnings, individuals remain highly vulnerable in our global digital economy. In fact, as we speak, thousands of frauds may be taking place, achieving in minutes and hours what took months in “old-fashioned” cold calling boiler rooms.” Carmen Chu

Recognising that the issue of fraud will not be solved or fixed by any single agency, she advocates an ecosystem approach. “Bring more parties to the table and increase the toolbox,” says Chu.

“There is no doubt in my mind that as part of the move towards effectiveness and outcome-focused work, the understanding of the lifecycle of a financial crime, and being able to take action mitigating the various stages and opportunities for intervention, is a critical component to success,” she continues.