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How AI-Powered Fintechs Help Drive Resilience During Economic Uncertainty

Fintechs of all sizes are becoming a backbone of our digital economy, reinventing the ways consumers manage their finances, and businesses manage their operations. They’re leveraging technologies like artificial intelligence (AI) in new ways to enhance security and better protect the ecosystemand they’re doing all this despite a slowing global economy.  

While the pains of the current macroeconomic climate are being felt across all industries, many fintechs haven’t experienced the stress of a recession like the traditional banks and FIs have. At Visa, security is always our top priority, and we know it becomes even more important when confidence in the economy is shaky. When risks heighten, bad actors often take advantage of vulnerabilities, and we see an increase in fraudulent activity. To meet the need for more advanced security, new tools powered by AI and machine learning are being utilized to help in fraud detection and prevention.  

Leveraging AI to step up security 

Here are three ways fintechs can leverage AI to help guard against their own vulnerabilities and protect the ecosystem.* 

1. Transaction monitoring

Fintechs are using AI in transaction monitoring to identify patterns and quickly pick out anomalies or unusual actions based on a customer’s historical transaction data.  

Sardine recognized early on that up to 90% of financial crime comes from fully verified identities. That’s why they combine KYC and AML compliance with powerful fraud prevention in a single platform.

And Hawk AI is helping fintechs by integrating explainable AI to detect suspicious transactions, removing compliance as a hurdle to growth. 

2. Identity management

Identity management is critical in the fraud prevention and detection processes because it can guard against bad actors using resources that don’t belong to them.  

AI has been making identity management smarter over the years and we’re now seeing it used in even more unique ways – like determining a user’s age based on how they hold and use a device. It’s these nuances that AI is especially designed to pick up on, that traditional fraud prevention services may not be able to adequately meet. 

 Deepfake and generative AI detection platform Reality Defender flags fake users and fraudulent content. Reality Defender is helping companies uplevel their identity management authentication services with the ability to verify voiceprints, detect doctored documents, and find falsified media within user-submitted materials.

Persona’s identity infrastructure helps businesses centralize, orchestrate, and automate any identity-related use case. This includes verifying that users and businesses are who they say they are throughout the customer lifecycle, adapting to ever-shifting compliance needs such as KYC/KYB, and mitigating online fraud with powerful no-code case management, link analysis, and workflow builder tools.

3. Decisioning 

AI is powering more sophisticated ways to access data, which can help fintechs make more informed decisions.  

Both banks and fintech companies use Alloy’s global identity decisioning platform to meet compliance requirements and reduce fraud. The company allows FIs to connect to more than 170 data sources that allow them to automate their decisions for onboarding, transaction monitoring, and credit underwriting. 

Provenir’s AI-powered decisioning platform helps fintechs deliver value to their clients by quickly integrating third party data such as KYC, origination, credit risk, financial inclusion and fraud and fully automating decisioning with real-time business insights.

At Visa, we’ve been using risk-scoring AI for nearly 30 years. In less than a millisecond, in-flight transaction analysis harnesses VisaNet’s global data to evaluate more than 500 attributes, analyzing each transaction to help predict the likelihood of fraud. A score for each attempt is then delivered to the issuer to help differentiate between good and bad transactions. 

As the world becomes increasingly digital, fraud patterns and tactics will continue to evolve. It’s important that fintechs are prepared for whatever may come—including the potential for fraudsters to find weak links within their systems to attack in any macroeconomic climate.

* Recommendations are provided “AS IS” and intended for informational purposes only and should not be relied upon for operational, marketing, legal, technical, tax, financial or other advice. This material and any recommendations contained herein should be independently evaluated in light of your specific business needs and any applicable laws and regulations. Visa is not responsible for your use of the marketing materials, best practice recommendations, or other information contained in this document.