THE ROLE OF AI IN FRAUD DETECTION IN DIGITAL BANKING

Abstract

The rapid digitization of financial services has led to a significant increase in fraudulent activities in digital banking. Traditional fraud detection methods are often insufficient to keep up with the evolving tactics used by cybercriminals. Artificial Intelligence (AI) has emerged as a powerful tool to combat this challenge by enabling real-time monitoring, predictive analytics, and automated decision-making processes. This paper explores the role of AI in enhancing fraud detection mechanisms within digital banking platforms. It examines how machine learning algorithms, natural language processing, and neural networks are applied to identify suspicious patterns, reduce false positives, and improve customer trust. The study also discusses the ethical implications, limitations, and future prospects of AI-based fraud detection systems in the financial sector.