FinovateSpring 2024: GenAI and future fraud strategies in focus on day one
Leading figures from the fintech sector gathered at the Marriott Marquis in San Francisco for the opening day of FinovateSpring 2024 this week.
Panellists discuss GenAI at FinovateSpring 2024
The conference kicked off with a series of innovative tech demos, keynote addresses, and fireside chats addressing critical topics, including next-generation fraud strategies, applications of generative AI (GenAI) in financial services, and the potential impact of geopolitical developments on the global economic outlook.
The future of fraud prevention
“$70 and I can become you.”
That was the grim reality presented by Bryan Lewis, president and CEO of New York-headquartered identity validation platform Intellicheck, during his keynote speech on the next generation of fraud strategies.
Financial criminals are becoming increasingly adept at obtaining and selling consumers’ login details, as well as their identity and payment information.
Lewis identifies two key inadequate fraud strategies currently being employed by players in the industry: the practice of “treating your customers like criminals”, which involves burdening customers with multiple authentication steps, and the reliance on knowledge-based authentication, essentially confirming data that fraudsters may already possess.
“You’ve got to do more than just confirm data,” he says.
In an attempt to address this, Lewis suggests leveraging authoritative data sources that incorporate hidden encoded security features to verify the ownership of presented documents as an effective way to combat fraudsters.
“Most people don’t know that in North America, there are 250 different versions of licenses out there. They all have different barcodes on the back, they all have different hidden encoded security features, everything from digital signatures to sub-directories that you need to unlock. The bad guys don’t know about that.”
Furthermore, Lewis argues that proxy detection, which involves analysing the geolocation and IP addresses of suspicious activities, as well as building “data consortiums” across large financial institutions, are effective next-gen fraud prevention strategies.
Finally, Lewis presents the case for behavioural analytics as a tool to catch financial criminals.
“If we are typing our social security number, we are going to do it very quickly. If I don’t know the number, and I am reading it off something, it’s going to come in a very different pattern.”
The benefits of deploying effective fraud prevention measures are not just limited to “stopping the bad guys”, he says. If done correctly, Lewis anticipates that fintechs can also boost customer loyalty, lower onboarding abandonment, and increase conversion rates.
Geopolitical landscape
Manas Chawla, CEO of London Politica, had the unenviable task of covering the key geopolitical events that could shape the global economic outlook in 2024 in just 15 minutes.
Chawla identifies four key geopolitical developments he believes will be most influential in determining the global economic trajectory.
He says the upcoming US presidential election looks set to destabilise the global economy no matter which side wins.
Due to the extreme partisan nature of US politics, Chawla predicts that whoever loses will not accept the result. The potential consequences of this could “permanently tarnish American institutions” and “could very well lead the world into geopolitical and economic recession”.
Moreover, the war in Ukraine shows no signs of slowing down as it becomes a war of attrition, with the world continuing to be increasingly hampered by the negative economic repercussions.
However, encouragingly, Chawla points to a more stable US-China relationship and the growth of emerging markets, especially India, as “real sources of optimism”.
Generative AI: hot or not?
The day concluded with a debate over GenAI and its use cases in financial services.
As part of the talk, the panel of experts discussed the applications for generative AI programmes, such as ChatGPT, that focus not just on efficiency but on revenue generation as well.
Arvind Ayyala, a partner at investment firm Geodesic Capital, put forward the notion that we could see AI leveraged to “underwrite the risk of a particular transaction,” such as buying a house, which could help open up new revenue streams by tapping into a section of the population that has been “circumvented” to date.
Meanwhile, Alenka Grealish, who co-leads generative AI research at Celent, predicts that in “five to ten years” banks may roll out AI-powered financial assistants for small and medium-sized enterprises (SMEs).
The discussion ended on a sombre note with a question posed about the greatest fear regarding the future of GenAI. In response, Charles Elkan, an affiliate professor at the University of California, stated, “The nightmare scenario is that artificial intelligence in general really does lead to the end of democracy and then ultimately leads to war.”
Looking ahead at the conference, there’s much to anticipate, including more demos, panels, and even a keynote address on what banks and fintechs need to know about the “Gen Z worldview”.
