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Can alert models for fraud protect the elderly clients of a financial institution?

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Listed:
  • Gaurav Kumar
  • Cal B. Muckley
  • Linh Pham
  • Darragh Ryan

Abstract

Using account-level transaction data at a major financial institution, we predict the incidence of suspicious activity that can be related to the external financial fraud of its elderly clients. The data consists of over 5 million accounts of clients aged 70 years and older, and over 250 million transactions extending from January 2015 to August 2016. Our main focus is to improve the detection of alerts within a proprietorial transaction monitoring system. Using logistic regression, random forest and support vector machine learning techniques, together with corrections for imbalanced alert samples, we provide a new alert model for the protection of elderly clients at a financial institution, with out-of-sample predictive accuracy. Our findings show the relative influence of client traits and account activity in our select external fraud alert models.

Suggested Citation

  • Gaurav Kumar & Cal B. Muckley & Linh Pham & Darragh Ryan, 2019. "Can alert models for fraud protect the elderly clients of a financial institution?," The European Journal of Finance, Taylor & Francis Journals, vol. 25(17), pages 1683-1707, November.
    • Handle: RePEc:taf:eurjfi:v:25:y:2019:i:17:p:1683-1707
    DOI: 10.1080/1351847X.2018.1552603
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    Cited by:

    1. Salman Bahoo & Marco Cucculelli & Xhoana Goga & Jasmine Mondolo, 2024. "Artificial intelligence in Finance: a comprehensive review through bibliometric and content analysis," SN Business & Economics, Springer, vol. 4(2), pages 1-46, February.
    2. Conlon, Thomas & Huan, Xing & Muckley, Cal B., 2024. "Does national culture influence malfeasance in banks around the world?," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 90(C).
    3. Königstorfer, Florian & Thalmann, Stefan, 2020. "Applications of Artificial Intelligence in commercial banks – A research agenda for behavioral finance," Journal of Behavioral and Experimental Finance, Elsevier, vol. 27(C).

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