Digital Guardian of Finance: The Role of Artificial Intelligence (AI) in Banking and Fraud Detection
Keywords:
artificial intelligence, AI, banking, financial fraud, fraud detection and risk managementAbstract
The rapid growth of digital transactions and the increasing complexity of financial fraud have intensified the need for advanced detection and prevention mechanisms in modern banking. Artificial intelligence (AI) has become a key transformative force, reshaping traditional control, auditing, and risk management systems by enabling real‑time processing of large and complex datasets. This paper examines the role of AI in the banking sector, with a particular focus on its application in fraud detection and prevention. It analyzes the most commonly used AI techniques—machine learning models, anomaly detection systems, and predictive analytics—and evaluates their contribution to improving the accuracy, speed, and overall effectiveness of risk management processes. The paper also explores the integration of AI into banking operations, highlighting both practical benefits and implementation challenges, including algorithmic transparency, data quality, cybersecurity risks, regulatory compliance, and the growing reliance on automated decision‑support tools. The findings indicate that AI significantly enhances the ability of financial institutions to identify suspicious activities at an early stage, reducing potential losses and strengthening system resilience. However, the full potential of AI can be realized only through a balanced approach that combines technological innovation with robust regulatory oversight and continuous human supervision.
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