Due to its surge in popularity, and fast transaction cycles, online lending is a prime target for cybercriminals. Though financial institutions may have always had customer security in mind, the industry has felt the backlash in recent years. 70% of lenders regularly put sensitive financial data at risk by prioritizing customer convenience over security. With the growth in technology, cybersecurity threats are also on the rise. Hackers are employing more sophisticated techniques to commit crimes in the cyberworld. As a result of this growing threat, there is a significant need for firms to recognize cyber threats and craft preventive measures.
Digital lenders are more vulnerable
Today’s lending industry sits in the eye of a perfect storm, driven by three key components:
- Traditional lenders are all going digital. Enabling disruptive business models such as mobile banking catching the attention of hackers.
- Massive data breaches are throwing enormous amounts of personal financial data out on the dark web
- Instant-decision software systems, often supported by third-party vendors, create a variety of vulnerabilities that cybercriminals are ready to exploit
Online lenders are under increasing pressure to adopt smarter authentication methods that leverage real-time, behavior-based intelligence to accelerate genuine loans and prevent fraud.
Role of AI in cybersecurity
In this scenario of increased cyberattack, AI mechanisms are emerging as the means to strengthen cybersecurity and thwart attacks. Here’s how AI comes to the rescue of online lenders.
1.Real-time fraud identification: AI helps data scientists efficiently determine which transactions are most likely to be fraudulent, while significantly reducing false positives. The techniques are extremely effective in fraud prevention and detection, as they allow for the automated discovery of patterns across large volumes of streaming transactions.
2.Predict and counter new-age fraud: Enable organizations to stay one step ahead of fraudsters. Predict and tag any suspicious behavior that might lead to a new type of fraud. Here are some guidelines for best practices:
- Build a solid foundation
- Detect fraudulent loan applications
- Prevent account takeovers
- Identify cross-device use
- Deploy a cloud-based lending platform
3.Enhance underwriting: AI can have far-reaching benefits for underwriting performance. Increasingly accurate loss predictions enable underwriting teams to spot good and bad risks, grow a profitable portfolio, and automate processes to streamline their workflow.
4.Risk factor detection: AI can match business owners with the right lender. AI analyses and authenticates users’ transactional data, and income verification and spend analysis helps highlight risk factors used for a richer credit scoring experience. This will reduce the risk of default and increase borrowers’ financial profiling.
5.Authentication Process: AI quickly detects any suspicious behavior. It can analyze hundreds of thousands of visitors and categorize them based on their behavior and threat level in seconds. It can improve the authentication process to a much accurate degree.
Is AI the answer to all cybersecurity issues?
AI is equipped to deal with large volumes of data from numerous sources and capable of spotting abnormal patterns and links that humans are not able to identify. Fraud detection methods today are evolving from being rules-based towards pattern recognition. Here ML can easily recognize patterns and un-usual consumer behaviors. It also protects companies from insider fraud as it can study data access from within the organization and identify any anomalies in individuals deviating from their day-to-day jobs or exposing data to outsiders.
While AI is doing wonders for cybersecurity, it is also making its way into the employ of hackers for malicious purposes. In the wrong hands, it can do exponential damage and become an even stronger threat to cybersecurity.
At Insight Consultants, we help our clients providing actionable advice to begin an AI initiative with the right approach and perspective. We can help you in developing Intelligent self-learning software that can see patterns and help lending business eliminate security threats. If you are you looking for ways to harness the power of machine learning and AI to protect your business against cyber threats, or would just like to know more, contact us.
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