Operators recommend AI for detecting financial fraud in banking

Tope Dare, former executive director of e-business and infrastructure at Inlaks Computers Limited and a board member of CitiData Centre Ltd., has advocated for the use of artificial intelligence (AI) in detecting fraud within the financial sector.

Dare emphasized that AI is transforming banking by enhancing transaction speed, fraud detection, and customer service. However, he noted that cybercriminals are becoming more sophisticated, and only AI-driven fraud detection systems can stay ahead of them. AI analyzes transaction patterns to flag suspicious activities and prevent fraud in real-time, though it’s not without its challenges.

Dare shared a personal experience in Lagos, where AI led to the wrongful deactivation of a foreign bank account after a transaction in Nigeria, illustrating the risks of AI without human oversight.

He also highlighted the role of AI chatbots, like those by eBanqo, in revolutionizing banking services. These AI systems now handle routine tasks like balance checks and loan processing, offering convenience but raising concerns about data security and potential biases in decision-making.

Dare concluded that while AI is here to stay, banks must strike a balance between automation and human expertise. A hybrid model, where AI handles routine tasks and humans manage complex issues, will ensure a secure and inclusive banking experience.

At the FITC Risk Round Table, Dr. Chizor Malize, CEO of FITC, emphasized AI’s importance in combating rising cyber threats. He pointed out that AI-driven frameworks and tools are crucial for enhancing financial system stability.

The Nigerian Deposit Insurance Corporation (NDIC) also acknowledged the escalating threat of financial fraud, with a recent report highlighting a 50% increase in fraud-related losses and a 100% surge in digital fraud incidents in Nigeria’s financial services sector between Q1 and Q3 of 2024.