Banks to use AI & Machine learning to safeguard customers from financial frauds

NEW DELHI: In a significant move to address the growing menace of digital financial frauds, the Department of Financial Services (DFS) has directed banks to adopt advanced technologies, including Artificial Intelligence (AI) and Machine Learning (ML), to safeguard customers from fraudsters.

The decision was taken during a high-level meeting chaired by the Secretary of DFS with representatives from the Reserve Bank of India (RBI), public sector banks, private banks, and payment banks. The meeting focused on tackling digital frauds, especially the increasing number of mule accounts used to facilitate illegal transactions.

The Department of Financial Services in a social media post, stated, “Banks were directed to adopt advanced technologies, including AI/ML solutions, for real-time detection of mule accounts, training & upskilling bank staff on fraud detection & prevention, greater advocacy & awareness for common citizen for not to fall prey to the fraudsters”

The Secretary of Department of Financial Services, emphasized the need for proactive measures to protect citizens’ hard-earned money and highlighted the importance of leveraging cutting-edge tools and practices to combat these challenges effectively.

Secretary, DFS, chaired a crucial meeting with #I4C, @RBI, @NABARDOnline, PSBs, Pvt & Payment Banks to address the growing challenge caused by digital financial frauds, especially mule accounts. (1/6)@FinMinIndia @PIB_India @DDNewslive @airnewsalerts pic.twitter.com/49i6UDMVIU

— DFS (@DFS_India) December 6, 2024

Notably, they were encouraged to explore MuleHunter.AI, an AI/ML-driven solution developed by the RBI, which offers enhanced capabilities in detecting fraudulent activities and tracking suspicious accounts. In addition to deploying advanced technologies, banks were instructed to prioritize the training and upskilling of their staff in fraud detection and prevention.

The Secretary also emphasized the importance of spreading awareness among customers about common fraud tactics, urging citizens to stay vigilant and not fall prey to fraudsters.

The meeting underscored the importance of inter-bank collaboration and sharing of good practices to ensure a unified approach to curbing digital financial frauds. Banks were encouraged to foster partnerships and exchange ideas to strengthen the overall security framework of the financial system.

This directive comes as part of the government’s broader commitment to safeguarding the financial ecosystem and ensuring citizens’ trust in digital banking channels. By integrating advanced technologies and fostering collective efforts, the banking sector aims to build a robust defense mechanism against evolving financial frauds. (ANI)