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The Managing Director/ Chief Executive of the Nigeria Deposit Insurance Corporation (NDIC), Mr. Bello Hassan, on Thursday, said that Artificial Intelligence (AI) has the potential to revolutionise financial fraud detection and regulation in the country’s financial institutions.
The NDIC boss stated this in his key note address at the 2024 Financial Institutions Training Centre (FITC) Risk Management Roundtable, held in Lagos.
Hassan, who was represented by the Director, Enterprise Risk Management Department at the NDIC, Amal Haruna, noted that the theme of this year’s edition of the hybrid event, “Financial System Stability: Leveraging AI for Financial Fraud Detection and Regulation,” was both, “timely and appropriate considering the need for financial institutions’ operators, regulators and supervisors to safeguard the stability of the financial system, amidst the rapidly evolving financial landscape.”
He said that with traditional methods of investigating financial fraud which rely on manual verification and human analysis of historical data, becoming increasingly ineffective against advanced threats, it has become imperative for stakeholders to explore adaptive solutions, especially the transformative potential of AI.
“AI and its components: Machine Learning (ML), Natural Language Processing (NLP) and Anomaly Detection can serve as powerful tools to revolutionize financial fraud detection and investigations,” he added.
Specifically, he said: “AI can process vast amounts of data in real-time; identify unusual and suspicious patterns, activities, behaviors and emerging threats, long before they cause significant harm to financial institutions.
“For example, if a large withdrawal is made on an account in a new geographic location, AI can flag this as an irregularity and immediately flag or freeze the account or alert the customer and relevant approving officers; by analysing huge datasets and considering multiple factors simultaneously, AI can assist with minimising false positives i.e. legitimate transactions that are incorrectly flagged as fraudulent, allowing financial institutions to focus on true threats.
“AI can also track and analyse transactions across different jurisdictions, currencies, and systems, identifying patterns of cross-border fraud that may otherwise go undetected and assess user behavior, such as typing patterns, mouse movements, and device usage, to distinguish between legitimate users and fraudsters.
This type of behavioral analysis is becoming an increasingly powerful tool in preventing account takeovers and identity theft.” Furthermore, he said that AI can improve regulators’ capacity to flag suspicious transactions making it easier to detect and investigate potential illegal activity as well as improving both the speed and accuracy of reporting.
AI-powered predictive analytics can help regulators anticipate future risks and emerging threats in financial institutions based on historical data and trends. By identifying these vulnerabilities before they are exploited, regulators can take preemptive action to safeguard financial systems;
AI can also streamline the regulatory process, enabling financial institutions and regulators to allocate resources more effectively and by prioritizing high-risk transactions to focus their efforts on the most pressing threats,” Hassan stated.
Earlier, while welcoming attendees to the event, the Managing Director/Chief Executive Officer of FITC, Mrs. Chizor Malize, said their presence underscored a shared commitment to safeguarding the integrity and resilience of the Nigerian financial service centre and beyond.
The event featured a panel session which saw experts such as the MD/CEO of Pattison Consulting Limited, Mr. Pattison Boleigha, the Chief Information Security Officer, Access Bank, Dr. Favour Femi- Oyewole, the Founder/CEO, Shreem Growth Partners, Ms. Aarti Samani and the Founder/CEO Securiti Limited, Ms. Samira Nwaturuocha, offering insightful perspectives on the how AI can be used to tackle financial fraud.
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