We worry about our safety. We worry about our money. We
worry about the safety of our money, and of our identity.
And there are good reasons for this.
According to the advisory firm Aite-Novarica Group, 47% of
the American population experienced some form of financial identity theft in
2020. CNBC recently reported that $5.8 billion was lost to fraud in 2021 — a
70% jump from 2020. And it’s not just an American issue — nearly half of the
respondents in a Canadian study claimed to have been victims of financial fraud
at some point in their life.
Luckily, technology is advancing in diverse, effective ways,
allowing banks, credit card companies and other financial institutions to
better protect our funds and our identities.
Here’s a look at a few types of technological advances being
implemented for security purposes in the finance industry.
Artificial intelligence and financial security: your
credit card’s personal bodyguard
Credit card companies are using AI to help detect cases of
fraud. Hackers and fraudsters target credit cards on a regular basis — it’s one
of the most commonly targeted areas for cybercriminals — but implementing AI
enables the card companies and card users to receive immediate alerts at the
slightest sign of unusual activity.
As an example, in 2019 Visa used AI to identify fraudulent
activity by examining more than 500 transaction attributes — in real-time.
About $25 billion worth of fraudulent transactions were identified that year,
thanks to these tools.
American Express has been using AI technology since 2010,
going so far as to turn all of its risk management systems over to AI in 2015 —
much earlier than most others. Amex’s VP for risk management has said that
their digital resolution rate for fraud has improved by 100% since they
implemented their AI-based fraud solutions in 2014.
The faster we and the credit card companies are alerted to
any signs of fraud, the quicker we can block the criminals responsible and work
to set things straight. Plus, the more information we add to the AI algorithms,
the better equipped we are to detect fraud in the future. AI is the weapon we
need to fight this fight.
As time goes on, the better the algorithms become — with
every passing day — you and your family can feel safer in the dangerous world
of financial fraud.
Biometrics isn’t futuristic, it’s here and now
Yes, biometrics is a form of AI, but it deserves individual
attention here.
Biometrics is an area that uses our biological measurements,
physical characteristics and physical traits for purposes of identification.
Examples of how this is used in security include:
voice recognition,
fingerprint scans,
facial recognition,
iris recognition,
vein pattern authentication, and
heart rate sensors.
There are many sectors, companies and products that use
biometric security, including the banking and credit card industries. These
methods are especially helpful for ensuring identification and fighting fraud
in the financial industry when:
opening accounts,
making ATM transactions,
mobile banking, and
online banking.
TD Bank is encouraging its customers to register for its
speech recognition technology, TD VoicePrint, which will enable software to
identify the speaker who calls to chat with a customer service representative.
The technology works in the background as the customer and service rep
converse.
Wells Fargo uses something similar.
In 2015, The Royal Bank of Scotland ditched the passwords
and launched a service that uses fingerprint scans to log customers into their
accounts. And there’s a British bank that trialed a technology that used
customers’ unique heartbeat rates for identification (at the time of writing,
no evidence could be found that this trial was permanently adopted).
It’ll be interesting to see where the advances in this field
will take us, but it’s safe to say biometrics will continue to be an important
tool for financial security.
Transparency and security with blockchain
A lot of the information above sounds rather futuristic and
sci-fi-ish, but blockchain technology has them all beat.
Blockchain technology is (in part) a database where
information is stored in a digital format. You’ve likely heard of it in
relation to cryptocurrency systems — crypto transactions are secure and differ
from the highly centralized, bureaucratic systems that the big banks operate
in.
Unlike traditional banks that aren’t likely to ever show
their records to the public, blockchain is a transparent, secure process. To
put it simply, blockchain is a digital ledger of transactions that is publicly
accessible and very difficult to alter. Each transaction is recorded and set in
stone across every participant’s ledger and is viewable at any time.
And even though these transactions are transparent, those
making them can still remain anonymous.
Virtual credit cards are real
Virtual credit cards are already a thing – these unique
credit card numbers can be used online or in-person through your digital
wallet. And you don’t even have to apply for a new credit card in order to use
this technology. Oftentimes, you can just add your current credit or debit card
to your digital wallet and it will automatically be transformed into a virtual
card.
Some card companies offer the ability to generate a
one-time-use virtual credit card, so you can trash the information once you’ve
made a purchase. This adds a whole new level of security to online
transactions.
Based on this information alone, it’s easy to understand why
many financial experts predict that we’ll all be using cryptocurrency in the
not-too-distant future.
Optimism in the future of financial security
This is only a small sample of the mind-boggling
technological advances being used for security purposes in the finance
industry. As time goes on, financial security technologies will continue to
grow and expand, with new knowledge and systems being put in place to make your
finances and future more secure.
There is always a bit of worry when it comes to the safety
of our money, but as each year goes by, we move exponentially quickly in
discovering something new.
If we progressed so far in AI, virtual currency and
biometrics in the past 20 years, just imagine where we will be 20 years down
the road. We can now realistically imagine a world where we are financially
secure and a world where our children and their children worry very little about
fraud. It might be time to imagine a world without any fraud at all.
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