AI vs AI: Effectiv’s Battle Against Fraud in Credit Unions

effectiv ai security and compliance for credit unions

You can’t fight fire with fire, or so the saying goes. But in reality, there are niche cases where that is the exact prescription. As West Coasters, CU 2.0 is more than aware of that…

But this isn’t about BCP or disaster recovery! This is about risk, fraud, and artificial intelligence (AI).

Read on to learn more about the rise of fraud, the rise of AI, and how Effectiv helps credit unions adapt quicker than ever.

The Rise in Fraud at Credit Unions

Fraud is a growing threat to the financial industry, and particularly for credit unions. The pandemic and the accelerating shift to digital banking services opened new doors for potential fraud.

Now, identity theft, transactional fraud, and credit card scams, continues to grow at an alarming rate. Call centers are also hit hard, and social engineering fraud is increasingly common. This digital frontier presents a particular challenge for credit unions, which often operate with the trust and intimacy of a tight-knit community.

Case in point: credit union fraud rates rose by more than 70% in 2022 alone.

That’s a year-over-year figure, which already accounted for the significant yearly increases in fraud throughout the pandemic. AI-powered fraud, such as voice cloning and password cracking, may add a new layer of complication to this growing problem.

AI in Credit Union Fraud Detection

Despite the rising tide of digital threats, AI has emerged as a promising bulwark against fraud. AI systems, capable of quickly analyzing vast quantities of data and identifying unusual patterns, offer a line of defense that is fast, efficient, and adaptable.

Furthermore, AI adapts quickly, allowing credit unions to stay protected against emerging threats as well as established ones. AI thus moves fraud and risk management closer to “proactive” than “reactive.”

In this evolving landscape, it’s clear that combating fraud—and particularly AI-based fraud—requires AI-based protection. AI’s ability to analyze, learn, and continually adapt and improve makes it an indispensable tool.

AI-based fraud detection, prevention, and compliance are a growing necessity as incidents of fraud rises. Thus begins our natural segue to Effectiv.

Effectiv’s AI-Powered Fraud and Compliance Platform

Effectiv is an AI-driven fraud and risk automation platform for credit unions. We know—most credit unions are wary of the term “platform.” Fortunately, Effectiv embraces the description “all-in-one.” Game on!

Effectiv’s goal is to reduce (or eliminate) the growing risk of fraud at credit unions. Their platform accomplishes that with a few key features:

  1. Real-time transaction monitoring and fraud detection: Effectiv monitors transactions and behavior in real-time across cards, ACH and wire, FedNow, Zelle, and RDC.
  2. AI-assisted case management: Effectiv improves case lifecycle management with an 80% decrease in manual case review. It may not replace operations jobs, but it will make them easier by automating manual steps using AI and helping file regulatory reports (like SARs and CTRs) with one click.
  3. New member onboarding: You want a good member experience, but you also want to reduce risk in your credit union. Credit unions can use Effectiv to automate onboardings, including KYC/KYB, compliance, and fraud checks for both ease and security.

That last one is especially interesting, because Effectiv uses AI to check for liveness in account verification. In a world where AI deepfakes exist, it’s safer to rely on algorithms than untrained eyes.

And, for better or for worse, that speaks to a larger concern:

It’s just not reasonable for humans to be the first line of defense against fraud. It’s not even reasonable for generic, human-powered, rules-based systems to detect fraud. With the current speed of AI and fraud progress, only AI will be able to keep up with AI.

So, it’s back to fighting fire with fire. Or in Effectiv’s case, fighting AI with AI. You can learn (a lot) more about Effectiv here:

Additional Resources

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