Application of Artificial Intelligence for Fraudulent Banking Operations Recognition

Abstract

This study considers the task of applying artificial intelligence to recognize bank fraud. In recent years, due to the COVID-19 pandemic, bank fraud has become even more common due to the massive transition of many operations to online platforms and the creation of many charitable funds that criminals can use to deceive users. The present work focuses on machine learning algorithms as a tool well suited for analyzing and recognizing online banking transactions. The study’s scientific novelty is the development of machine learning models for identifying fraudulent banking transactions and techniques for preprocessing bank data for further comparison and selection of the best results. This paper also details various methods for improving detection accuracy, i.e., handling highly imbalanced datasets, feature transformation, and feature engineering. The proposed model, which is based on an artificial neural network, effectively improves the accuracy of fraudulent transaction detection. The results of the different algorithms are visualized, and the logistic regression algorithm performs the best, with an output AUC value of approximately 0.946. The stacked generalization shows a better AUC of 0.954. The recognition of banking fraud using artificial intelligence algorithms is a topical issue in our digital society.

Keywords

• artificial intelligence
• fraudulent banking operations
• machine learning
• recognition of fraudulent operations