In 2024, artificial intelligence (AI) stood at the forefront of the battle against fraud, reshaping the strategies used to combat illicit activities. Yet, as AI has revolutionised fraud detection, it has also empowered criminals, amplifying their reach and sophistication. Such a paradox highlights both the promise and perils of this transformative technology. Here are the key milestones from a pivotal year.
1. AI as the core of fraud detection
This year, AI-powered solutions proved indispensable in fighting fraud, enabling faster and more precise detection of fraudulent activity. A striking 75% of financial firms are already using AI, with a further 10% planning to implement it over the next three years, according to the Bank of England, leveraging AI’s ability to analyse massive datasets in real time. At bigspark, we created predictive models at a large UK retail bank to anticipate and prevent fraud by detecting anomalies and stopping scams while in progress.
2. Real-time payments: AI shields the system
As digital transactions soared, especially in real-time payments, so did the risks of fraud. Financial institutions turned to AI for immediate fraud detection, enabling suspicious transactions to be flagged within milliseconds. At bigspark, we trialled real-time streaming solutions like Flink, which will support defence systems, ensuring legitimate payments remained uninterrupted.
3. Cross-bank collaboration leads the charge
This year highlighted the critical role of cross-bank collaboration in addressing APP (Authorised Push Payment) fraud, particularly with the UK’s new mandatory reimbursement rules introduced by the Payment Systems Regulator (PSR) in October. UK Payment Service Providers (PSPs) are now required to reimburse victims promptly, up to the amount of £85,000. bigspark contributed to these efforts through its work on real-time beneficiary profiling, enabling PSPs to identify suspicious recipients more effectively and comply with the PSR’s requirements.
4. Economic pressures amplify fraud risks
Economic uncertainty in 2024 fuelled a rise in financial crimes, including loan fraud and facility takeovers, as people faced mounting financial pressures. Cifas, a not-for-profit fraud protection alliance in the UK, reported spikes in facility misuse and identity theft, illustrating how fraudsters capitalised on widespread economic vulnerability. In response, businesses enhanced fraud detection systems while extending support to victims, underscoring the need for both prevention and mitigation efforts.
5. The surge of synthetic identity fraud
Synthetic identity fraud surged in 2024, with 64% of UK fraud cases linked to identity theft, according to Cifas’ Fraudscape Report. Criminals increasingly used AI to craft convincing fake identities by blending real and fabricated information, and even participate in voice cloning. Coupled with advanced social engineering tactics, these methods exposed gaps in existing identity verification systems. The rise of this fraud highlights the urgent need for AI-driven solutions to spot fake profiles and detect account takeovers early. While AI has delivered groundbreaking advances in fraud prevention, its potential as a tool for fraudsters continues to grow. Businesses must remain vigilant, investing in innovation and fostering collaboration to counteract increasingly sophisticated threats. By leveraging advanced technology, sharing insights across industries, and prioritising proactive defences, organisations can maintain the advantage. As 2024 concludes, it’s clear that AI is not just a tool but a necessity in the battle against fraud. The milestones achieved this year lay the foundation for a more resilient and adaptive defence against the ever-evolving landscape of financial crime.
