In 2023 alone, global fraud incurred a staggering cost of $485 billion, as reported by the Nasdaq-Verafin Global Financial Crime Report. „It’s a growing challenge that’s becoming more acute for market participants with the advent of real-time payments and can incur significant reputational damage in addition to financial cost.” – Swift said.
Starting this month, Swift is piloting „an exciting new enhancement to our existing Payment Controls Service, which enables financial institutions to flag or block anomalous payments before they are made.” – according to the press release.
The pilot will involve five Payment Controls customers, including India’s Axis Bank, and test a new approach that uses AI-based algorithms to help them better detect fraud in transactions. The new AI model will be trained using historical patterns of activity on the Swift network to create a more nuanced and accurate picture of potentially fraudulent activity.
„Importantly, this work will use live, in-production traffic data so that the findings of our pilot have real-world application. Working alongside pilot participants, we’ll test and refine the new enhancement with the ultimate aim of making it generally available to all 500+ Payment Controls customers worldwide.” – Swift explained.
Developing a pan-industry defence against fraud
There’s a growing consensus that global information sharing and collaboration between financial institutions is critical to the fight against fraud. Yet a recent report by the U.S. Department of the Treasury highlighted that current information sharing on fraud between financial firms is limited, when compared to the more common practice of sharing information about cybersecurity threats.
In this context, there has been a drive by countries and regulators to encourage initiatives that leverage recent advancements to ramp up anonymised intelligence sharing about fraud. But, while the number of projects in this space is growing, they typically lack global reach.
That’s why Swift is launching another new initiative to explore new opportunities for financial institutions to share insights and collaborate and improve fraud detection at the global level. The initiative brings together an industry pilot group of 10 leading financial institutions across the world – including BNY Mellon, Deutsche Bank, DNB, HSBC, Intesa Sanpaolo and Standard Bank – to trial the use of recent technological breakthroughs to share intelligence and improve the financial community’s ability to detect fraud.
During the trials, Swift will test the use of both secure data collaboration and federated learning technologies.
„Initially, we’ll enable data collaboration by building a secure infrastructure to allow financial institutions to exchange relevant information with strong privacy-preserving controls. We’ll then apply federated learning to train our AI anomaly detection model on a much richer and broader dataset to identify patterns and gather insights. When combined, the techniques will enable us to arm our community with a defence against fraud that is far greater than any institution can achieve alone.” – according to Swift.
This work showcases the power of collaboration in creating solutions that raise the bar in the fight against fraud and greatly enhances our AI fraud detection model – all in a way that is wholly anonymous, secure and confidential.
The preparation phase of the pilot initiative kicked off earlier this year, and Swift will present the initial findings at Sibos in October.
What participants are saying
Isabel Schmidt, Executive Platform Owner, Payments Enablement, BNY Mellon, Treasury Services, said: “Combatting fraud successfully will require industry collaboration, collective action, and strong leadership from operators like Swift. We’re excited to help lead the first wave of innovation in this space and look forward to seeing even more banks join the initiative.”
Ole Matthiessen, Global Head of Cash Management & Head of Corporate Bank APAC, Middle East & Africa at Deutsche Bank, said: “Through these industry initiatives, we have the potential to enhance our ability to detect fraud and reduce operational costs, whilst delivering a premium customer experience and contributing towards a more secure market environment.”
Manish Kohli, Head of Global Payments Solutions at HSBC, said: “Building financial resiliency and strengthening risk management is a key priority for our clients and they are looking to us to help them better manage uncertainty and threat through our solutions while supporting their businesses to grow and transform. By utilising new technology and collaborating across the industry to fight fraud, we are helping protect our customers, our data and the bank.”
Enrico Canna, Head of Anti-Fraud & Customer Protection Center at Intesa Sanpaolo, said: “Extending and strengthening the collaboration of anti-fraud experts and the exchange of data also at an international level will improve the prevention of and fight against fraud.”
Banking 4.0 – „how was the experience for you”
„So many people are coming here to Bucharest, people that I see and interact on linkedin and now I get the change to meet them in person. It was like being to the Football World Cup but this was the World Cup on linkedin in payments and open banking.”
Many more interesting quotes in the video below:
