Financial Crime World

Financial Fraud Prevention Strategies Gain Momentum in Switzerland

As Artificial Intelligence (AI) technology emerges as the ultimate weapon against fraudulent activity, financial institutions worldwide are racing to develop anti-fraud technologies. In this battle against financial fraud, Swiss start-up NetGuardians is at the forefront of using AI-powered solutions to detect and prevent fraudulent activities.

The Impact of Fraudulent Activity

According to PwC’s Global Economic Crime and Fraud Survey 2020, nearly half of the 5,000 companies polled reported suffering from fraud over the past two years, resulting in losses totaling over $42 billion. Moreover, only a small proportion of these losses are ever recovered.

The Weakness in Traditional Security Measures

While traditional security measures such as application firewalls and two-factor authentication systems provide a solid first line of defense against fraud, the human link remains the weakest point in the system. “A single phone call can trick even the most vigilant individual or company, resulting in massive losses,” explains Joël Winteregg, CEO and co-founder of NetGuardians.

NetGuardians’ AI Proprietary Technology

NetGuardians has developed an AI proprietary technology that analyzes financial transactions in three steps:

  • Anomaly Detection: Identifying unusual patterns or behaviors in transaction data
  • Fraud Recognition: Detecting fraudulent activity based on the identified anomalies
  • Adaptive Feedback: Continuously updating and refining the algorithm to improve accuracy

The software is capable of detecting fraudulent payments immediately, even among billions of legitimate transactions processed by clients every year.

The global data protection market is booming, with an estimated value of $15 billion in 2020 expected to grow at an annual rate of over 30 percent between 2020 and 2027. While large players dominate the market in terms of revenue, smaller actors specializing in fraud detection services are gaining traction.

Switzerland’s Competitive Advantage

Switzerland’s dense network of banks provides access to large volumes of real data that can be used for AI-powered fraud prevention solutions. This collective sharing of non-confidential client information between banks has the potential to revolutionize the way financial institutions approach fraud detection and prevention.

“To combat fraud, you need access to real data, not test data,” underlines Winteregg. “The algorithm needs to be able to detect genuine accounts and payments.” By sharing genuine payment behavior anonymously, NetGuardians’ technology can avoid false alarms and provide a more effective means of detecting fraudulent activity.

Future Plans

In the coming months, NetGuardians plans to move forward with its collective AI data-sharing initiative, which will benefit the entire Swiss banking sector and ultimately lead to enhanced protection against fraud for Swiss banks, benefiting all honest individuals and companies.