AI Has Track Record in Fraud Prevention for Credit Card Issuers


By John P. Desmond, AI Trends Editor
The financial services industry has compiled a track record in the use of AI for fraud detection, with AI applications at Visa and Experian being two notable examples.
The multinational Visa reports saving an estimated $25 billion annually from use of AI applications for fraud detection, according to Melissa McSherry, a senior VP and global head of data for Visa, according to an account in VentureBeat . The path to AI Visa chose may have lessons for other companies thinking about how to launch their automation projects.
“We have definitely taken a use case approach to AI,” McSherry stated. “We don’t deploy AI for the sake of AI. We deploy it because it’s the most effective way to solve a problem.”
Melissa McSherry, Senior VP and Global Head of Data, Visa The Visa Advanced Authorization (VAA) platform scores every transaction that goes across the network, rating each one based on the likelihood it is fraudulent. This allows more transactions to be approved quickly. “With 3.5 billion cards and 210 billion transactions a year, it is really worth it to everyone to make those cards work better and for more transactions to go through,” McSherry stated.
First deployed in 1993, today the VAA has evolved to use of recurrent neural networks with gradient boosted trees. Having the defined use case of fraud detection, has helped Visa to focus on how AI and machine learning can improve its services.
“It helps that we started with the first use case a long time ago,” McSherry said. “There’s no substitute for experience, and I think we have a fair amount of experience at this point on how to build and deploy these models. And so the first lesson is just at a certain point, you have to pick a use case and you just have to start.”
Visa has seen a 20-30% improvement in model performance when advanced AI techniques are applied versus more traditional machine learning technicals such as gradient boosted trees, she noted. In some cases, the improvement has been more than 100%, which speeds the development of new product services. “We are able to put better products in front of consumers faster,” she stated.
Steve Platt of Experian, the global information and credit services provider, also has experience with AI and fraud detection across more than one generation of systems. Now the head of Global Software at Experience, Platt’s first exposure to AI and fraud detection date to January of 2001, when he joined the Hecht-Nielsen Neurocomputer Corp. (HNC) in San Diego to help commercialize software the founder Robert Hecht-Nielsen had originated.
Steve Platt, Group President, Global Business Information Services, Experian Hecht-Nielsen was a neuroscientist and entrepreneur who had been teaching at the University of California, according to an account in Forbes . He had worked with a small group of academics and researchers on neural...

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