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09

Preventive

mechanisms

can help Video Interview Transcription

banks Q. What are the major trends in frauds in banking repeatable, make that with artificial intelligence built-in and
that customary wisdom become a science. When that
and nancial system are you seeing this year?
As the banking industry is moving and opening up more and happens, you will have the ability to look at billions of
identify more channels, you will see that the ability is good as more customers and you will have an ability to spot that
repeatedly and it's on the backbone of the latest disruptive
people are getting into the banking system. But at the same
time, it opens up more avenues for fraud. So the fraud is technology, artificial intelligence, predictive analytics and how
wilful coming in all forms. It's not just from a cybersecurity do you leverage that to get that synthesised.
perspective. It's getting harder to stop fraud. Whereas when
defaulters you went to the branch and submitted a document then the Q. When the banks or nancial institutions adopt
such solutions, how accurate the ndings are? And
earlier person would be able to judge you and do things. It
was easier to stop the transaction from happening at that what is the biggest nding so far?
level, whereas now with the online transactions when We can actually tell you with 86.2% probability. For
Why don’t banks manage to something is on the move, you cannot stop it. So if the instance, this person is indeed diverting funds so that ability
identify wilful defaulters and assets get more open and faster, the probability of fraud is to take out that gap feel out of it into science is something
avoid the potential defaults? also on the rise. This is why you need systems in place as that the system rigs in. So you match make traditional data
which is your repayment history, your ability your... And
Why are there rising defaults in you open more channels, get more and more blocks....to things like that which normally people look at internal credit
the banking system and what different avenues of fraud. rating and marry that with big data and infrastructure data.
are major trends? What are the Q.In many cases, most of the banks realise only So when we say big data elements you can spot if a
lessons banks learnt from IIFL after the fraud has reported. Why don't Banks spot particular sector is going to be affected.
and DHFL crisis? Jaya frauds before it happens?
Vaidyanathan, CEO, BCT We call it as a native intelligence or something that is biased Q. What are your observations? Are the
or a judgment call, like when you walk into the branch and I people/borrowers diverting funds or it's their
Digital, Bahwan CyberTek knew you were doing something most people would say it's inability to pay?
Group, explains the story customary wisdom. The ability to take this wisdom and It's based on the Pareto principle of 20 and 80. From the
behind the banking frauds synthesise that into repeated processes that's what the perspective of the largest transaction, the Bigger they get the
systems do. It's not just the hard data which is the historical more the kind of ability to move things around. So there are
data which talks about the repayment history etc about the two sides to the coin. One is what bankers must do and
customer but blending that with elements of softer data that one is what customers of the bank must do. There is a
gives you resilience and the ability to predict whether a greater incidence that is reported because some of the
April 27 2020 fraud is coming. So that comes from the ability to use all the larger ones that are too big to fail have failed. And that pulls
big data elements, whether you were using the money for the entire industry and the fundamental economy down. So
Jaya Vaidhyanathan the wrong reasons, were you subjected to frequent the frauds are getting bigger and reported more as well and
CEO, BCT Digital management audit, so a lot of soft data that exists in the they are more in media. Earlier also frauds were happening
system, how can you synthesise that and make that but these is where systems come into play. The more you

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