Living in the age of convenience, speed and accessibility, businesses and consumers look for tools that save time while offering better results. Online payments and AI chatbots are two such tools. And with this comes the topic of fraud prevention.
Chatbots have improved the overall customer service experience. For banking and financial institutes, it has not only saved operational costs (an average of $0.60 on every chatbot interaction), it has also enhanced fraud detection using AI.
But how can AI chatbots help in detecting fraud? Before we understand that, let us look at the main reasons why online payment and conversational AI chatbots are more prevalent today.
Reasons why consumers prefer online payment
A report by Business Wire suggests that mobile payments are projected to cross $12,407.5 billion by the end of 2025, and the CAGR between 2020-2025 is expected to be at 23.8%.
The quick access to a mobile app, integrated UPI platforms and various payment facilities have increased the demand for online payment systems. Still, the increasing risk of fraud has demanded the need to apply chatbots for fraud prevention.
The main reasons why consumers prefer online payment today are:
- Eliminate the limitation of geographical boundaries.
- Access to the online platform is convenient and quick.
- Transact with a business without waiting in queues, which saves time.
- The highly encrypted and advanced technologies used by banks for safe transactions.
- Contactless payments are a lifesaver in times of uncertainty like a pandemic.
- Voice payments are quick and easy. Around 28% in the USA are using voice payments, suggests Capgemini.
- The application of biometric authentication has endured the dual security check.
- For the flexible shopping experience, mPOS (mobile point of sale) is a boon with an expected growth of a CAGR of 19% from 2020-26.
Benefits of conversational AI chatbots in banking
Conversational AI in banking is soon becoming a preferred method of communication.
The fraud detection using conversational chatbots is quick. The system can analyze malpractices or deviations and warn the customer in time. Using the conversational AI-based chatbots in the banking industry offers multifold benefits such as:
1. Quick and seamless conversation
The chatbots are available 24*7 and trained to interact in multiple languages, which reduces the burden on the customer support staff while improving customer loyalty.
2. Ease of payment acceptance
AI chatbots can share the authenticated number or email links for seamless and quick payments that improve the transaction quality.
3. Reliable and secure
Fraud detection using AI is reliable. Being trained on past data, the AI can ensure a higher degree of privacy and security by encrypting and checking the transaction.
4. Omnichannel experience
Using the integrated AI-based chatbots, customers can have an omnichannel experience that improves customer satisfaction as it carries forward context from one channel to another.
Suggested Reading: Top 10 Conversational AI Use Cases in Banking
Why focus on fraud prevention?
The banking industry involves the use of financial transactions. It is one of the primary and sensitive industries; a single fraud incident can cause huge losses. The monetary loss aspect is there, but it also involves the impact on goodwill and reputation.
75 per cent of businesses have stated that security is a priority for them (as it should). Banks and financial services can increase their security easily by using chatbots.
How to use AI chatbots to fight fraud
Per statistics, around 61% of fraud losses in banks and financial services are due to identity fraud. So, it is essential to know how can AI can help in detecting fraud? Here are the most prominent ways of fraud detection using AI:
1. Setting up the alerts
The automated system powered by AI can detect the hacking of cards or accounts and help with fraud detection. A quick verification message shared by the chatbot in such a situation can be handy and save loss.
2. Analysing the trends
AI can analyse the details and pattern of transactions in an account. While doing so, it can confirm any similarity to the factors that point out towards the fraud. It is where one can use AI chatbots for fraud prevention to communicate to customers for transaction confirmation.
Let’s understand this with an example. Someone has hacked a user’s account and have their log in details. They start conversations with this detail but later in the conversation, they encounter question verification or two-factor authentication to which they don’t have answers. Further, AI can detect a deviation in the writing profile or the usual IP address of the user. With this info, AI can detect frauds.
3. Resolution at the earliest
Conversational chatbots provide quick help. The time a customer needs to wait on the chatbot to file a fraud-related complaint is negligible. Also, the quicker the query is listed, the better and faster the resolution.
4. Real-time support and analysis
The fraud detection using AI chatbots works 24*7. It means that if there is any suspicious activity in the account or card, the system is trained to block the same temporarily and alert the user.
5. Secure and personalised experience
The most crucial part is that chatbots offer a personalised experience. The chatbots for fraud prevention move a step ahead to provide the services to the customer based on their transaction history, creating a secure and personalised experience.
6. Biometric authentication
AI-powered chatbots with voice and facial recognition technology add another layer of protection. When a user uses the voice feature, the chatbot can compare it with the user’s voiceprint from previous notes. If it doesn’t match, it can alert the user and the bank. And all this happens in real-time.
Chatbots: revolutionising the financial industry
The integration of AI chatbots in the financial sector is expected to save around $2.3 billion by 2023, suggests Juniper Research. Changing the service industry and offering a smooth base for financial transactions, we will see an exponential use of chatbots in the financial sector.
Fraud detection using chatbots is one great aspect of the technology revolution in the financial industry. 63% of financial institutes are already using a combination of rules and ML embedded in their technology to facilitate fraud detection. What technology are you using? Let us know in the comments.
Verloop.io takes security seriously. We’ve built a platform that can help to design chatbots for fraud prevention. If you’d like to see how you can detect frauds using AI-powered chatbots, talk to our team.