Mastercard, a global leader in payment solutions, has unveiled a revolutionary generative artificial intelligence (AI) model aimed at bolstering fraud detection capabilities across its extensive network of banks. The newly launched “Decision Intelligence Pro” feature is poised to redefine the way financial institutions assess and combat suspicious transactions in real-time, potentially leading to a significant reduction in fraudulent activities.
A proprietary AI model built in-house
Mastercard’s Decision Intelligence Pro is powered by a proprietary recurrent neural network, a fundamental component of generative AI, developed entirely in-house. This proprietary AI solution has been meticulously crafted by Mastercard’s cybersecurity and anti-fraud teams, harnessing the transformative potential of generative AI through transformer models. While open-source technologies are occasionally utilized, the majority of the AI model is homegrown.
To create this cutting-edge AI model, Mastercard has leveraged its extensive transaction data, processing around 125 billion transactions annually. Unlike traditional large language models, which focus on textual inputs, Mastercard’s algorithm relies on the history of a cardholder’s merchant visits as prompts. It uses this information to determine whether a transaction involves a business the customer is likely to frequent.
Real-time fraud detection in milliseconds
Mastercard’s AI model then employs a unique approach, generating pathways through its network akin to heat-sensing radar to arrive at a conclusive score. A higher score aligns with expected cardholder behavior, while a lower score indicates deviation from the norm. Remarkably, this entire process unfolds in just 50 milliseconds, making it exceptionally efficient for real-time fraud detection.
Ajay Bhalla, President of Mastercard’s Cyber and Intelligence Business Unit, highlighted the remarkable potential of the new AI model. On average, financial institutions can expect a 20% improvement in fraud detection rates, thanks to Mastercard’s transaction decisioning technology. In certain cases, this model has demonstrated an astounding 300% increase in the effectiveness of fraud detection.
A $7 Billion investment in cybersecurity and AI
Mastercard’s commitment to cybersecurity and AI technologies is evident in its substantial investment of over $7 billion in the past five years. This significant financial dedication includes strategic acquisitions, such as the acquisition of Swedish cybersecurity firm Baffin Bay Networks in March 2023.
Mastercard’s rival, Visa, is also making significant strides in AI development. Visa recently established a $100 million venture fund for generative AI startups in October 2023. While the competition in the AI arena is fierce, Mastercard’s proprietary AI model positions it as a frontrunner in the fight against fraudulent transactions.
Potential cost savings for banks
One of the most promising aspects of Mastercard’s AI model is its potential to yield substantial cost savings for banks. By streamlining the assessment of illegitimate transactions, financial institutions can reduce operational expenses significantly. Mastercard anticipates that this innovative technology could enable banks to save up to 20% of their typical costs associated with fraud assessment.
Mastercard’s AI model’s true potential extends beyond immediate gains in fraud detection. It has the capability to identify fraudulent patterns and trends, even those not currently known within the payments ecosystem. By analyzing data from customers worldwide and transactions on a global scale, Mastercard aims to stay ahead of emerging fraud threats.
A transformative era in payments
Mastercard’s introduction of this advanced generative AI model aligns with a broader industry trend. Companies in the payments and digital banking sectors are increasingly turning to AI to drive major changes in their products and services. Just last week, PayPal announced new AI-based products and introduced a one-click checkout feature, signaling the pivotal role of AI in shaping the future of payments.
Mastercard’s Decision Intelligence Pro represents a groundbreaking leap in fraud detection technology. With its proprietary AI model and real-time capabilities, it promises to enhance security, reduce costs, and stay ahead of evolving fraud threats. As the financial industry continues to evolve, Mastercard’s commitment to innovation positions it at the forefront of the fight against fraudulent transactions.
Source: https://www.cryptopolitan.com/mastercard-unveils-ai-for-fraud-detection/