ARTIFICIAL INTELLIGENCE-BASED FINANCIAL FRAUD DETECTION SYSTEMS

Abstract

The rapid digitalization of financial services has significantly increased the volume of electronic transactions worldwide. Along with these developments, financial fraud has become one of the major challenges faced by banks, payment systems, insurance companies, and e-commerce platforms. Traditional fraud detection methods often fail to identify sophisticated cybercriminal activities due to their dependence on predefined rules and manual monitoring. Artificial Intelligence (AI), particularly Machine Learning and Deep Learning algorithms, provides innovative solutions for detecting fraudulent transactions by analyzing large volumes of financial data in real time. This paper examines the application of AI-based fraud detection systems, their advantages over conventional approaches, current challenges, and future prospects. Furthermore, international practices and the opportunities for implementing AI-driven financial security solutions in developing digital economies are discussed.