The Fintech industry is revolutionizing money operations all over the world. Services that we dreamed of in the past years are our present-day realities. We are enjoying more comfort and convenience since technology integration and the finance sector. From banking to insurance, traditional payment to digital payments, and physical currencies to cryptocurrencies, we are successfully heading towards a bright future.
Beyond the pleasant face of fintech, many uninvited guests and events occur in the finance world. Did you know that Attacks on Fintech Companies for Payment Fraud will increase by 70% in 2022? Moreover, Americans have lost over $28 billion in the past few years in online payments. These figures continue to rise every year, making businesses and consumers more vulnerable to such fraudulent activities.
Undoubtedly, the fintech industry has a lot to offer to humanity. But increasing numbers of scams and frauds are creating doubtful situations in people’s minds, leaving them confused about how far they should go while using fintech services. As finance leaders at the Money 2.0 Conference have pointed out – it seems like scammers are now becoming immune to conventional fraud prevention techniques, so we need more advanced, reliable, and robust technologies to combat scams and frauds in the digital world. Thanks to emerging technologies like artificial intelligence that spark a light of hope, in the near future, we may probably see a fraud-free fintech world.
Let’s explore how advanced technologies recommended by some experts at a recent digital finance summit will contribute to reducing or eliminating scams and frauds in the fintech industry.
Credit Card Security With AI
Every scam or fraud happens to steal either money or personal identity. If you somehow manage to protect your digital money and credentials, then scammers will have nothing to do with you. Most fintech scam cases happen while using credit cards, and artificial intelligence can be used to safeguard your credit card information and PINs during a transaction.
For instance, Visa deployed artificial intelligence (AI) in 2019 to spot fraudulent behavior by scanning more than 500 transaction parameters in real-time. These techniques allowed the detection of fraudulent transactions totaling almost $25 billion that year.
American Express started utilizing AI in 2010 and went as far as to transition all of its risk management systems to AI in 2015, considerably earlier than most other companies. According to Amex’s vice president of risk management, since they deployed their AI-powered fraud solutions in 2014, their digital resolution rate for fraud has increased by almost 100%.
Cybercriminals are also evolving their ways of scamming users, so it becomes tricky sometimes to identify possible scams. It is hard and time-consuming to recognize red flags before it gets too late. AI enables intelligent and real-time solutions and can identify scams and frauds on any suspicious behavior. The faster credit card companies and online users get alerts for scams, the easier it will be to prevent any catastrophe.
Biometrics – A Game Changer
Biomerics are already helping online users to experience frictionless and fraud-free transactions and will continue to do so in the future. Biometrics is an indispensable tool of AI that creates unique passwords by using individual identities such as voice recognition, fingerprints, face recognition, iris identity, vein patterns, and much more. Since these features are unique to every human being, it is almost impossible for any hacker to get through transactions.
As discussed in a recent digital insurance summit, the banking and credit card industries are only two examples of the various sectors, businesses, and products that employ biometric security. These techniques are instrumental in verifying identity and preventing fraud in the financial industry.
The Royal Bank of Scotland abandoned passwords in 2015 and established a service that logs clients into their accounts using fingerprint scans. In addition, a British bank tested a system that used clients’ unique heartbeat frequencies to identify them.
Virtual credit cards
A virtual credit card is an extension of your regular credit card without any plastic body. It has random sixteen digits numbers, and elements like expiry date, CVV numbers, and PINs will show on the screen in real-time. Some card issuers let you create a virtual credit card for one-time usage, which you may then delete after using it to make a transaction. Online transactions now have a whole new level of security.
Virtual Credit cards are much more reliable due to their digital structure. There will be in-build fraud prevention technology that will alert us if any abnormal activity is observed without any delay. It’s simple to understand why many financial leaders believe that cryptocurrencies will become mainstream in the coming future.
Security Via Blockchain
Web 3.0, driven by blockchain technology, seems more resistant to scams and frauds since data on a blockchain cannot be modified or withdrawn. Blockchain is a distributed and decentralized network in which no intermediary may disrupt the transmission of any information. It means that no third-party participants will be able to access the data. Until recently, researchers have predicted that blockchain has the ability to eliminate scams in the digital realm. However, we can only notice this when we use it.
We are soon to reach a future where all information is gathered online and analyzed. For the past several years, industries like Big Data have been the subject of intense discussion. Although we know that this enormous quantity of data will help alter our digital experience, there are still specific concerns. While large corporations are working to acquire data on every internet user, new technologies, such as differential privacy, may be able to help separate personal information from valuable information.
Summing up, the global fintech market value is $110 billion and is expected to reach $698 billion by 2030. It means that despite ongoing scams and frauds, fintech will continue to rise and create a difference in our transactional ways. It will continue to reshape the finance industry by bringing AI-empowered technology and using modern-age solutions for the challenges we are facing now.
To gain more insights on how you as a consumer can prevent yourself from fintech scams or how businesses can scale their growth without falling into such frauds, attend top finance conferences like the Money 2.0 Conference. Many global finance leaders, entrepreneurs, and delegates will discuss numerous topics, including the prevention of scams and frauds in the fintech industry, fund-raising techniques for AI tech, the future of insurance, and much more.