The world of financial crime has totally changed and financial institutions are losing money at unprecedented rates even though they seemingly have the tools and resources to protect themselves. But cyber solutions using intuitive AI can be highly effective in fighting 21st-century financial crime, ThetaRay CEO Mark Gazit says
Financial institutions should adopt intuitive artificial intelligence (AI) for their cyber security because they are dealing with a completely different world of financial crime, and the threats are coming from where it is not expected, a senior executive says.
Mark Gazit, CEO of ThetaRay, said it takes those institutions several months to develop a cyber defense model, but malicious actors create a new level of cyberattack every four minutes or even four seconds. "It's like fighting with horses against tanks," he said in a speech at the Cybertech Global 2020 conference.
ThetaRay uses AI to help large organizations deal with potentially devastating attacks.
Banks are losing money at unprecedented rates, cyber crime and money laundering are flourishing, fraud losses continued to rise to over $25 billion in 2018, and regulatory anti-money laundering fines have spiked over 6 times, according to data provided by ThetaRay.
"The question is how can it be that those banks, those financial institutions, those organizations, they have all the technology needed, they have the money to protect themselves, and they have the regulatory support to make sure that they are well protected. And the answer is the world of financial crime has totally changed," Gazit said.
He gave the example of 21st century bank robbery. "You just put the server in some remote country, the server runs some sort of very primitive AI, steals 25 cents from a bank account, but does it automatically hundreds of millions of times."
"And then the system runs for a month or two, these bad guys have 20 or 30 million dollars, they disconnect the link, disappear, and if you would you would like to indict somebody in some remote country, in Eastern Europe, be my guest," Gazit said.
Today's world of financial crime involves money laundering, cryptocurrency, ATM fraud, and online fraud among others. The IMF estimates that the total money laundered is between 2 to 4 trillion dollars, between 3% and 5% of world GDP, Gazit said. "Today money laundering is not just tax evasion. It's human trafficking, it's financing terrorist organizations, sex slavery, narco trafficking, and it's all done today by the means of cyber."
The existing systems that banks and other institutions have don't solve the problem, the CEO said. "Most of the systems that were developed in the last 20 years are still based on rules, thresholds, signatures, models, basically understanding how the attacker is working and trying to catch the attacker. Trying to learn from the past experience. The problem is the real threat is coming from where you don't expect it to come."
According to Gazit, his company solved the problem based on algorithms, developed by top professors, that allow us to mimic human intuition. The software analyzes not only network traffic and classic cyber traffic but also financial transactions and customer information to identify an issue very fast and then present it in an intuitive way to customers, said the CEO.
"We see that now organizations are using more advanced artificial intelligence, intuitive AI or artificial intuition. Not only do they identify 3 to 6 times more issues than they historically could identify, but they do it with a level of efficiency and false alarms that is way lower than existing systems. And because the system is teaching itself, it's actually always up to date," he said.
Gazit pointed out that some people ask whether it is dangerous to give machines such power. "Every new technology scared people. Technology also brings amazing opportunities for us human beings."
"The bad guys are using AI anyway, so I believe that we as human beings have to nurture AI," he said.
