This AI-Powered Platform Is Taking On Rising Check Fraud in Banking Sector

Reported instances of check fraud in 2022 surpassed 680,000, doubling the previous year's filings, according to the Financial Crimes Enforcement Network (FinCEN). Scammers employ various methods to obtain checks, including stealing them during routine transactions, pilfering check payments from mail, and exploiting phishing scams to acquire customer credentials and access check images online, facilitating the creation of counterfeit copies.

"The battle against check fraud is a race against evolving criminal tactics," said Datos Insights strategic adviser Becki LaPorte. "Fraudsters use this to their advantage and wield sophisticated tools. Community financial institutions must adopt innovative technology solutions that protect customer funds without impacting the customer experience," she added.

In response to fraudulent tactics, Abrigo has introduced an AI-powered scam detection system for financial institutions. This system "fights fire with fire," leveraging advanced technology to combat sophisticated fraud techniques. Abrigo, a leading provider of financial crime prevention and risk management solutions, currently assists over 2,400 financial institutions with its software and services.

Abrigo's AI platform uses step-up authentication to pinpoint altered items, forgeries, and scams. The company also said that it is using the new tool to automate processes and streamline workflows that increase efficiency and prioritize higher-risk activities, as per Fox Business.

"Community financial institutions have been dealing with tight margins since mid-2022," Abrigo CEO Jay Blandford told the publication. "Fraud adds to this margin pressure and negatively impacts reputation and customer experience. Despite rising fraud losses, financial institutions have indicated in Abrigo polls that they have limited ability to dedicate staff and resources to prioritize check fraud defenses."

In the first-ever program that was conducted last year, Abrigo Fraud Detection successfully corrected 93% of a regional bank's total fraudulent check value, which amounted to more than $330,000 in potential fraud loss. "This platform is a game changer for fraud detection," said Abrigo CTO Ravi Nemalikanti.

"It leverages the power of AI and machine learning to deliver unparalleled results for our customers, who have so far shared overwhelmingly positive feedback on its performance and ease of use," he remarked. The AI-powered detection system was officially launched last week and the company has plans to expand this feature across all transaction methods, including wire and the Federal Reserve's FedNow.

"Banks and credit unions of every size need transformational tools to fight financial crime amid radically powerful, pervasive, and diverse new threats," said Blandford. "Abrigo Fraud Detection offers our 2,400 existing customers, and new customers, enhanced fraud detection accuracy and efficiency. Our mission is to help financial institutions and their communities thrive, and our new platform does that by detecting sophisticated fraud patterns fast and combating financial crimes that cost millions and impact reputation."

Furthermore, Abrigo has collaborated with Mitek, a renowned global leader in mobile deposit and fraud prevention. Leveraging Mitek’s Check Fraud Defender, which taps into a national consortium of check fraud data, the company utilizes powerful artificial intelligence (AI) and machine learning (ML) image analysis technology.

"Our approach blends AI and rules-based detection, ensuring our customers are equipped with transparency and a robust and adaptable fraud prevention system, safeguarding their assets and maintaining customer trust in an increasingly digital world," stated Nemalikanti.