PCM vol. 3 Issue 8

Thought Leaders Corner
Artificial intelligence is our past,
present and future
by Roberto Valerio
Artificial intelligence (AI) is the current buzzword of
business. Computer software is helping us choose our
films and music, dealing with our customer service
enquiries, and improving our healthcare 1 . It is also
helping fraud managers across the world to spot and stop
fraudsters, keeping us safe online.
Concepts of artificial intelligence have existed for hundreds
of years 2 . More recently, mathematics and engineering have
combined to produce algorithmically-driven probability-based
systems that can perform pre-defined tasks. The advent of
today’s digital technologies has opened infinite possibilities
and fostered tremendous progress in the theories and
capabilities behind these algorithms.
Essentially what we mean when we refer to artificial intelligence
is the ability of a machine to solve tasks. The ultimate goal is
often seen as mimicking human intellect as closely as possible,
but the reality is that we are seeking automated solutions that
make our lives easier.
In modern fraud fighting, machine learning is the essential
reasoning system that enables fraud managers to track and
respond to the rising threats faced around the world. More
of us now transact online, which means greater potential
rewards for fraudsters. But all of us leave a trace online, in
everything we do, generating huge amounts of data. Using
“stream processing”, we can constantly ingest huge streams
of data, which enables faster reactions to emerging threats –
a significant enhancement on rule-based fraud systems that
process data in batches.
AI learns from this data, meaning that businesses can address
their specific fraud problem rather than requiring expensive
custom-built solutions that drain resources. More data also
means we are beginning to understand how fraud itself works,
which means we can get ahead of it.
Let’s look at a specific fraud issue as an example. From June
2015 to June 2016, we saw an increase of up to 300% in account
takeover attempts on our ecommerce customers. The relative
ease with which fraudsters can access less secure accounts
is causing a major headache for retailers. Fraudsters can buy
login details from the black market, or steal them through
malware or phishing attacks, or sometimes simply run through
the most common passwords to crack a customer’s online
shopping account.
The challenge in tackling account takeovers is that they’re
typically hard to detect. Fraudsters operate from within
genuine and trustworthy user accounts, often with an
impeccable purchasing history, but will make small changes
to the account so they can obtain goods to sell for a profit.
Importantly when it comes to AI, fraudsters will also change
their tactics frequently, whether it’s going for lesser-known
brands, smaller value items, or masking attempts via proxy
services or numerous devices.
In Europe, data privacy regulations are stricter than elsewhere,
and will become more so after GDPR is implemented in 2018,
but by anonymising the data, we can still identify fraudsters
based on these ever-growing data pools. Artificial intelligence
provides us with levels of information above and beyond
individual fraud. The speed and scale at which AI can analyse
and make connections between different data points enables
us to identify orchestrated attempts of fraud; in other words,
we can stop multiple attacks in parallel.
1 https://www.forbes.com/sites/jenniferhicks/2017/05/16/see-how-artificial-intelligence-can-improve-medical-diagnosis-and-healthcare/#1bb649e86223
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2 https://www.forbes.com/sites/gilpress/2016/12/30/a-very-short-history-of-artificial-intelligence-ai/#74ab649a6fba