The place of AI in fraud detection

Fraud detection is a substantial challenge. This is due to the fact that fraudulent transactions only can ever represent a very small fraction of financial activity, which makes finding them equivalent to a needle in a haystack. Using rules-based systems to detect fraud is very difficult, as it's a phenomenal challenge to create a rule that encompasses every anomalous transaction. Fraud detection instead relies on an understanding of what's "normal" and being able to detect deviations from standard activity. To combat this, machine learning (ML) systems have long been recognised as a key technology for fraud prevention; they can process a large quantity of data very quickly, and identify the typical qualities of fraudulent and non-fraudulent transactions.