GenAI: Dynamic Signals for Better Fraud Management

June 24, 2024

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The dichotomy between technological advancement and financial fraud is becoming more pronounced in the ever-evolving digital landscape. On one side, technological advancements, especially in generative AI (GenAI), are enabling more sophisticated and large-scale fraud activities. Conversely, the same technology is significantly bolstering fraud prevention efforts, offering financial institutions enhanced capabilities to identify and mitigate fraudulent activities.

The Current Fraud Landscape

According to Nasdaq, financial fraud remains a significant global issue, with reported losses reaching a staggering $485.6 billion in 2023. Traditional Know Your Customer (KYC) measures are increasingly becoming insufficient against the growing sophistication of fraud tactics.

Threats Posed by Generative AI

1. Scaling Synthetic Identity Creation:
Generative AI empowers criminals to create numerous fake identities more easily, bypassing security measures and scaling fraud attacks. This technology allows scammers to generate and test countless ID combinations rapidly until they find the one that works.

2. Manipulating Biometric Data:
AI can generate realistic images, videos, and voices, complicating the authentication processes that rely on biometric data. For instance, deepfake technology can produce lifelike videos and voices, making it difficult for traditional verification methods to detect fraud.

3. Creating Fraudulent Documents:
Advanced AI tools enable the creation of persuasive fake documents, undermining traditional identity verification methods. These documents can appear authentic, making distinguishing between real and fraudulent identities challenging.

Challenges in Fraud Detection

Fraudsters using generative AI can operate at unprecedented speed and scale, making it difficult for financial institutions to respond effectively. Traditional reliance on static or deterministic data for KYC proves inadequate in the face of synthetic identity fraud, which combines authentic elements of real identities in fraudulent ways.

Opportunities Offered by Generative AI

  • Dynamic Data Utilization:  By leveraging machine learning and analyzing dynamic data, financial institutions can comprehensively understand customers’ digital footprints, identifying behavioral patterns indicative of fraud. Instead of focusing only on who the person is, dynamic data-based solutions consider how they act and whether their behavior makes sense. For instance, why would an individual apply for a loan or a credit card with a phone number they’ve never used before? Or with an email account they just established yesterday? Or from an IP address 2,000 miles away from the state they say they live in? “Unlike deterministic or static information, these dynamic signals can’t be purchased and are much more difficult to manipulate.”
  • Enhanced Fraud Detection Models:  AI-powered solutions can continuously update models to reflect evolving fraud tactics and legitimate customer behavior, improving fraud detection accuracy. These models can analyze vast datasets to identify patterns, flagging suspicious activities that deviate from established norms.


While generative AI introduces significant risks by facilitating more sophisticated fraud techniques, it also offers powerful tools for enhancing fraud detection and prevention. Financial institutions can leverage AI-driven insights and dynamic data to stay ahead of fraudsters, ensuring better protection for their organizations and customers/members. The key to success lies in adopting more sophisticated, adaptable solutions to keep pace with the rapidly evolving landscape of financial fraud.

By embracing the promise of GenAI and utilizing dynamic data, financial institutions can transform the fight against fraud, turning potential threats into opportunities for growth and security.

Quinte Financial Technologies (Quinte) is building advanced GenAI solutions that can help better fraud detection and facilitate much faster investigation. Quinte has also helped several banks and credit unions identify high-impact opportunities in GenAI and automation, achieving up to 50% cost reduction in fraud management, or dramatic CX improvement in dispute management, and other compliance processes. Some of Quinte’s work evolves around augmenting existing fraud detection systems with new dynamic signals-based detection.

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