AI-powered security and financial risk management

Whether your customers’ funds are at rest in a deposit account, moving through the global economy as a payment or hard at work in one of your investment offerings, it’s your job to keep them safe.

That’s why you’ve invested in encryption and multifactor authentication. It’s why you’ve installed firewalls, antivirus protection and anti-phishing precautions. It’s the reason you perform regular software updates. Still, cyberthreats, fraud and compliance missteps continue to drain the bottom lines of financial institutions worldwide.

The high cost of crime

According to recent research by FIS® and Oxford Economics*, based on a survey of over 500 C-suite executives and fintech decision-makers across the U.S, the U.K. and Singapore, the average organization is losing a whopping $98.5M per year due to a host of tension points – financial crime, compliance issues, operational inefficiencies, payments and processing friction, illiquidity and more. For large financial institutions (>$20B+), that figure may be closer to $124M, while smaller institutions (<$10b) may suffer losses "only" in the $25m range; but whatever the size of your bank, the loss is unacceptable.

This is especially true when you delve deeper into the numbers. Entitled “The Harmony Gap,”* the research reveals that more than half (54%) of the losses are due to cyberthreats and fraud at 32% and 22%, respectively. Closely related to financial crime, regulatory compliance issues represent another 16% of the overall losses.

The increasing role of AI in managing risk

A primary factor contributing to the proliferation of financial wrongdoing is persistent reliance on legacy systems that are no longer up to the task. Often referred to as technical debt, banks pay a heavy price by putting off their cloud migration, instead clinging to outdated, on-premises computing that can’t accommodate AI-driven cybersecurity, fraud prevention and compliance technologies.

Most respondents in “The Harmony Gap” survey realize there are no shortcuts, that you must continuously invest in your infrastructure and the evolving AI-fueled tools designed to protect your organization and its customers. To that end, nearly two-thirds (64%) of the research participants have taken measures to strengthen their cybersecurity posture, and the good news is that a solid majority (80%) report that they have experienced enhanced fraud detection and risk management through their AI investments.

Multiple layers of defense

As your journey begins in the pursuit of AI-powered loss prevention, step one is to make a top-down determination of your risk level to help you identify problem areas that could benefit from a more sophisticated approach. Like most institutions, you may start with routine back-office tasks that easily yield to automation. Wherever each task lies on the risk spectrum, you’ll need to build in a parallel path during which humans not only train the model, but also monitor it for accuracy, built-in biases and any unintended consequences.

Depending on your risk tolerance, you can then begin adding more complicated undertakings that are traditionally handled by higher-level managers. As each low- to high-level task is added, your AI investments run in the background 24/7, constantly monitoring activity to identify threat patterns and generate alerts as needed. Over time, you’re creating multiple layers of protection that form an always-on, real-time barricade that’s increasingly difficult for bad actors to penetrate. When they do slip past, you’re better equipped to detect the intrusion quickly, respond to the attack and make a faster recovery.

As you layer in these precautionary solutions, it’s essential that compliance measures are embedded into the underlying design of your cybersecurity and fraud barriers. In this way, you ward off intrusion while meeting regulatory standards, all without interfering with your ability to innovate. Meanwhile, your staff can move on to more strategic missions that elevate customer service , accelerate growth and set you apart in the markets you serve.

Customer acceptance and trust

As recently as 10 years ago, your customer was protected by a simple password, often one that was hard to remember, or worse, easy to guess by an unauthorized user with bad intent. As precautionary measures intensified, multifactor authentication was added, requiring customers to enter their password, receive a code by text or email, and enter it to gain access to their accounts.

Today, however, AI has kicked customer authentication into overdrive. Biometrics such as voice and facial recognition have become mainstream, asking the accountholder to simply speak or look at their mobile device to prove their identity. These seamless innovations are not only faster and less frustrating for the customer, but they also build loyalty by reassuring them that you’re watching out for their safety in a financial environment that too often feels threatening.

Establishing a unified front

According to results from “The Harmony Gap” research, financial institutions lead the way over other industries in their overall preparedness to address disharmony in the money lifecycle. After all, the stakes are high when you’re responsible for people’s money when it’s at rest, in motion or at work. This leadership stance is evidenced by the fact that banks spend the most on risk-related technologies – an annual average of $29M to combat cyberattacks, $24M to impede fraud and $21M to strengthen compliance.

The technology investment, however, is just part of the answer. It’s important to recognize that you can’t stand alone in battling cyberthreats, fraud and compliance risk. Financial technology is a complex ecosystem with the interests of many partners intertwined. It’s important to maintain a transparent and collaborative relationship with all participants, from end to end. This includes your peers and competitors, payment service providers, fintech partners, nonfinancial players that represent embedded finance opportunities and, yes, even the regulators.

By combining forces, the resulting synergies give all parties insight into emerging threats so you can take mitigating action and avert losses.

*FIS, The Harmony Gap: Finding the Financial Upside in Uncertainty (with Oxford Economics), May 2025