Latest news with #ProjectHertha
Yahoo
5 days ago
- Business
- Yahoo
BIS, BoE test AI to detect fraud in retail payments
The Bank for International Settlements (BIS) Innovation Hub, in collaboration with the Bank of England, has carried out a study known as Project Hertha, testing AI techniques to identify fraud within payment system data. It studies the potential of transaction analytics in detecting financial crime within real-time retail payment systems. The project leverages AI to pinpoint 'complex' criminal networks that operate across multiple financial institutions. Project Hertha's findings suggest that payment system analytics can aid banks and payment service providers in spotting illicit activities and the use of these analytics resulted in a 12% increase in the identification of illegal accounts. Moreover, the system proved detecting new patterns of financial crime, with a 26% improvement in recognising previously unknown behaviours. The research was conducted using a synthetic transaction dataset, representing 1.8 million bank accounts and 308 million transactions. This dataset was generated by an AI model designed to simulate realistic transaction patterns, ensuring that no real customer data was involved. The results also indicate that the application of system analytics has its limitations and is not a solution. The introduction of such analytics would involve 'practical, legal, and regulatory' considerations, which were not explored within the project's scope. The project also highlights the importance of access to labelled training data, a feedback loop for the AI model, and the need for algorithms that can be explained to 'maximise' the effectiveness of such systems. Project Hertha draws its name from the British scientist Hertha Ayrton, known for her work in the physical sciences and her historic presentation to the Royal Society in 1904. "BIS, BoE test AI to detect fraud in retail payments " was originally created and published by Electronic Payments International, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Finextra
06-06-2025
- Business
- Finextra
Bank of England tests AI to spot real-time payment fraud
A project by the Bank of England and the London BIS Innovation Hub to use AI to spot unfolding and novel financial crime patterns in real-time retail payment systems showed promise but threw up a number of limitations to its efficacy. 0 To evade detection, criminals operate in complex networks which include many accounts across multiple financial institutions. Electronic payment systems process transactions across many participants, which gives them a network-wide view. The bank of England's Project Hertha tested the application of modern artificial intelligence (AI) techniques to help spot complex and coordinated criminal activity in payment system data. The experiments were conducted using a state-of-the-art simulated synthetic transaction dataset, developed as part of the project. It includes data for 1.8 million bank accounts and 308 million transactions. The dataset was built by using an advanced AI model trained to simulate realistic transaction patterns. It found that payment system analytics could be a valuable "supplementary tool" to help banks and payment service providers (PSPs) spot suspicious activity. Banks and PSPs participating in the project uncovered 12% more illicit accounts than they would otherwise have found. The experiment also proved particularly valuable for spotting novel financial crime patterns. When trying to spot previously unseen behaviours, it helped achieve a 26% improvement. "The results demonstrate promise but also show there are limits to the application and effectiveness of system analytics," states the BofE. "It is just one piece of the puzzle. The introduction of a similar solution would also raise complex practical, legal and regulatory issues. Analysing these was beyond the scope of Project Hertha." The central bank says the results also highlight the importance of labelled training data, robust model feedback loop and explainable AI algorithms to maximise effectiveness.
