Businesses are ready to splurge on combatting increasingly sophisticated fraudulent attacks
While fraudsters’ attacks become more sophisticated, merchants and issuers will increasingly utilise advanced fraud detection methods. Source: shutterstock.com
A new study from Juniper Research has estimated that the global business spending on AI-enabled financial fraud detection and prevention strategy platforms will exceed $10 billion globally in a five-year term. The amount will rise by 57% from a little over $6.5 billion in 2022.
The report predicts that while fraudsters’ attacks become more sophisticated, merchants and issuers will increasingly utilise advanced fraud detection methods. In this respect, the ability of AI to recognise criminal payment trends at scale would be critical to combat fraud.
Benefits of AI in fraud detection
AI-enabled fraud detection and prevention market platforms can monitor transactions and identify suspicious transaction patterns in real time. Thus, the method helps reduce fraud risks by blocking potentially fraudulent transactions immediately.
In addition, cost savings from AI deployment will be critical to tackling fraud beyond regulatory compliance. The technology will provide a genuine return on investment in fraud prevention services, as improving models and greater data access will create a virtuous circle of improvement.
Namely, the report forecasts growth of return on investment by 285%. The estimated cost savings would reach $10.4 billion globally in 2027, up from only $2.7 billion in 2022.
Recommendations
Since AI is increasingly becoming a standard within financial fraud prevention services, making differentiation would predictably be a challenge. Therefore, the research recommends vendors focus on access to transaction and trends data. Only gaining the best level of network intelligence will allow businesses to benefit from fraud detection beyond their own transactions. For instance, vendors may cooperate with third parties, such as credit bureaus and payment networks, to improve data coverage.
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