Financial Crime World

Croatia’s Banking Sector Gets a Boost with Novel Fraud Detection System

NEXI Croatia, one of Europe’s leading PayTech companies, has recently incorporated a cutting-edge fraud detection system to stay ahead of the evolving landscape of financial fraud.

Improving Fraud Detection Capabilities

This innovative solution, designed in collaboration with CROZ, leverages machine learning techniques and large amounts of historical data to significantly improve fraud detection capabilities. The new LightGBM model boasts improved prediction quality across all metrics compared to the previously used Logistic Regression model.

Addressing the Growing Threat of Credit Card Fraud

The need for such a solution is underscored by the alarming rise of credit card fraud worldwide. In 2018 alone, over 130,000 credit card fraud reports were recorded in the US, with the global value of all fraudulent transactions reaching nearly $25 billion.

Modernizing the System

NEXI Croatia’s previous rule-based fraud management system, although interpretable, lacked flexibility and adaptability. The company recognized the importance of incorporating machine learning techniques to stay ahead of evolving fraud patterns. CROZ played a crucial role in modernizing NEXI Croatia’s system by automating tasks and addressing four key challenges:

  • Large Amounts of Data: The team helped improve the processing time for feature calculation, from days to hours.
  • Unsuitable Environment: Simplified code maintenance was achieved through automated task automation.
  • Gradual Decline in Model Performance: The team addressed this challenge by transitioning to a more effective LightGBM model.
  • Lack of Near Real-Time ML Solutions: CROZ helped NEXI Croatia develop a system that can process large amounts of data quickly and accurately.

Key Features and Benefits

The outcome is a comprehensive fraud detection system that boasts:

  • Increased Dataset Quality: With more transactions and features (approximately 400)
  • Larger Historical Scope: Extending from several days to several months
  • Speeded-Up Feature Creation: Reducing processing times significantly
  • Simplified and Maintained Feature Creation Code
  • Enhanced ML Model Capacity: Transitioning from Logistic Regression to LightGBM

Results and Future Outlook

The results are striking, with the new system showing significant improvements in fraud detection while minimizing false positives. NEXI Croatia’s commitment to innovation and collaboration has enabled it to maintain its position as a leading PayTech company, providing secure payment solutions to individuals, businesses, and financial institutions across 25 countries.

As the financial landscape continues to evolve, NEXI Croatia’s novel fraud detection system serves as a testament to the importance of embracing cutting-edge technology and collaborating with experts to stay ahead of emerging threats.