London Daily

Focus on the big picture.
Wednesday, Jul 30, 2025

Online lenders enlist AI-driven behavioural analysis in the fight against fraud

Online lenders enlist AI-driven behavioural analysis in the fight against fraud

A survey conducted by PwC found that in 2018, 49 per cent of respondents said their companies were victims of fraud, up from 36 per cent in 2016
An online buyer picks the most expensive product in the catalogue without doing a price comparison, carries out the transaction very early in the morning, and hesitates when typing in personal details.

This type of behaviour would raise a red flag among those tracking online fraud, and while this work has been done manually by specialist staff, financial institutions are increasingly turning to AI to help.

“Behavioural data analysis by artificial-intelligence tools is more efficient to detect fraud than manually-based approaches,” said Shi Hongzhe, technology head of the US-listed consumer finance platform Lexin, which launched an AI-driven risk management platform aiming at detecting and preventing loan fraud.

“Many fraud cases cannot be identified by man-made rules,” he said.

Loans used to be approved largely based on the amount requested and the standing of the borrower, but the increasing rate of online fraud has forced the finance industry to look beyond its traditional methods of determining the reliability of a borrower. A survey conducted by PwC found that in 2018, 49 per cent of respondents said their companies were victims of fraud, up from 36 per cent in 2016.

The application of AI, specifically predictive machine learning algorithms, can help detect and stop fraudsters by analysing their mobile online interactions, including the speed in which they type in personal data and the time of day they visit websites.

Teradata, a San Diego-based data analytics company, offers AI-driven fraud detection solutions to banks. One of its clients, Denmark’s Danske Bank, employed AI software to cut the number of false positives generated by human-written rules engines by 60 per cent, and increase detection of real fraud by 50 per cent.

Lexin’s self-developed Hawkeye platform, which every day can detect more than 500 potential fraudsters involving 3 million yuan (US$426,000), is an example of how the broader financial-services industry is using machine learning to detect patterns that could signal criminal behaviour.

Algorithms can detect an illicit loan application by scanning for anomalies in certain behaviours and analysing digital information ranging from a device’s geolocation to biometric authentication. For example, the AI platform would send an alert if multiple loan applications pop up from the same device at an unusual time of day, such as dawn, when legitimate customers would not normally apply for loans, said Shi.

Some instalment payment applications could also be flagged as potential fraud if the buyer does not do any price comparisons online, and instead purchases the most expensive one.

In addition, as most online fraud involves identity theft, it can often be detected if the applicant does not fill in personal identification data smoothly, indicating they have not memorised the stolen ID.

Lexin’s other business, an e-commerce platform that offers instalment loans for product purchases, is also the target of scammers. In one new scam, a fraudster gains the confidence of target by convincing them to make small purchases from the Lexin platform on their behalf, offering to pay more money in return. Then the scammer does the same with a more expensive product, like an iPhone or iPad, and does not repay. The targeted “buyer” is left with the responsibility of paying off the rest of the loan.

If multiple similar cases like this are reported over a concentrated period of time, Lexin will push out warnings to its customers through its app.

“As fraudsters adopt new ways for online fraud, new scenarios are added to our system and the platform can issue a warning if similar behaviour appears,” said Shi.

In recent years, financial institutions have started using machine learning to prevent fraud, with some banks deploying the technology in direct response to the rise of more sophisticated cybercrimes.

“Nevertheless, the rate of AI and machine learning deployment as a fraud management measure remains relatively low,” Chris Holmes, senior vice-president of marketing consultancy KAE, said in a report. “We expect that this will not be the case for long, and that deployment in this area will rise significantly in the next two to three years.”

In October, Mastercard introduced its Threat Scan service which can identify vulnerabilities in merchants’ authorisation systems by applying an array of test scenarios that simulate fraudulent attacks.

Rival Visa is rolling out a platform that uses AI algorithms to help detect and prevent credit-card fraud.

“Financial firms detect online fraud by analysing behaviours,” said Shi, regardless of whether the approach used is low tech or high tech. “In the future when AI is more deeply employed, fraud may be detected by analysing facial emotions or voices. We will have a more natural interaction with the AI machines in the finance industry.”

Ping An Insurance, China’s second largest insurer by premiums, is already using face and voice recognition systems to protect its policyholders from fraud.
Newsletter

Related Articles

0:00
0:00
Close
Former Judge Charged After Drunk Driving Crash Kills Comedian in Brazil
Jeff Bezos hasn’t paid a dollar in taxes for decades. He makes billions and pays $0 in taxes, LEGALLY
China Increases Use of Exit Bans Amid Rising U.S. Tensions
IMF Upgrades Global Growth Forecast as Weaker Dollar Supports Outlook
Procter & Gamble to Raise U.S. Prices to Offset One‑Billion‑Dollar Tariff Cost
House Republicans Move to Defund OECD Over Global Tax Dispute
Botswana Seeks Controlling Stake in De Beers as Anglo American Prepares Exit
Trump Administration Proposes Repeal of Obama‑Era Endangerment Finding, Dismantling Regulatory Basis for CO₂ Emissions Limits
France Opens Criminal Investigation into X Over Algorithm Manipulation Allegations
A family has been arrested in the UK for displaying the British flag
Mel Gibson refuses to work with Robert De Niro, saying, "Keep that woke clown away from me."
Trump Steamrolls EU in Landmark Trade Win: US–EU Trade Deal Imposes 15% Tariff on European Imports
ChatGPT CEO Sam Altman says people share personal info with ChatGPT but don’t know chats can be used as court evidence in legal cases.
The British propaganda channel BBC News lies again.
Deputy attorney general's second day of meeting with Ghislaine Maxwell has concluded
Controversial March in Switzerland Features Men Dressed in Nazi Uniforms
Politics is a good business: Barack Obama’s Reported Net Worth Growth, 1990–2025
Thai Civilian Death Toll Rises to 12 in Cambodian Cross-Border Attacks
TSUNAMI: Trump Just Crossed the Rubicon—And There’s No Turning Back
Over 120 Criminal Cases Dismissed in Boston Amid Public Defender Shortage
UN's Top Court Declares Environmental Protection a Legal Obligation Under International Law
"Crazy Thing": OpenAI's Sam Altman Warns Of AI Voice Fraud Crisis In Banking
The Podcaster Who Accidentally Revealed He Earns Over $10 Million a Year
Trump Announces $550 Billion Japanese Investment and New Trade Agreements with Indonesia and the Philippines
US Treasury Secretary Calls for Institutional Review of Federal Reserve Amid AI‑Driven Growth Expectations
UK Government Considers Dropping Demand for Apple Encryption Backdoor
Severe Flooding in South Korea Claims Lives Amid Ongoing Rescue Operations
Japanese Man Discovers Family Connection Through DNA Testing After Decades of Separation
Russia Signals Openness to Ukraine Peace Talks Amid Escalating Drone Warfare
Switzerland Implements Ban on Mammography Screening
Japanese Prime Minister Vows to Stay After Coalition Loses Upper House Majority
Pogacar Extends Dominance with Stage Fifteen Triumph at Tour de France
CEO Resigns Amid Controversy Over Relationship with HR Executive
Man Dies After Being Pulled Into MRI Machine Due to Metal Chain in New York Clinic
NVIDIA Achieves $4 Trillion Valuation Amid AI Demand
US Revokes Visas of Brazilian Corrupted Judges Amid Fake Bolsonaro Investigation
U.S. Congress Approves Rescissions Act Cutting Federal Funding for NPR and PBS
North Korea Restricts Foreign Tourist Access to New Seaside Resort
Brazil's Supreme Court Imposes Radical Restrictions on Former President Bolsonaro
Centrist Criticism of von der Leyen Resurfaces as she Survives EU Confidence Vote
Judge Criticizes DOJ Over Secrecy in Dropping Charges Against Gang Leader
Apple Closes $16.5 Billion Tax Dispute With Ireland
Von der Leyen Faces Setback Over €2 Trillion EU Budget Proposal
UK and Germany Collaborate on Global Military Equipment Sales
Trump Plans Over 10% Tariffs on African and Caribbean Nations
Flying Taxi CEO Reclaims Billionaire Status After Stock Surge
Epstein Files Deepen Republican Party Divide
Zuckerberg Faces $8 Billion Privacy Lawsuit From Meta Shareholders
FIFA Pressured to Rethink World Cup Calendar Due to Climate Change
SpaceX Nears $400 Billion Valuation With New Share Sale
×