Author: Vivekananda J

Fraud has evolved into an intelligent, industrialized operation. Mule networks, synthetic identities, deepfakes, and real-time attacks are now the norm. Institutions have responded with analytics, AI, and automation — yet losses continue to rise.

The issue isn’t a lack of innovation. It’s a lack of execution at scale.

Most fraud solutions are constrained by fragmented systems and infrastructure that weren’t built for today’s speed, complexity, or scale. To stay ahead, financial institutions need more than smarter ideas — they need the right foundation to bring them to life.

Fraud prevention is one of the most urgent and complex challenges in digital banking and payments. Banking, Cards, and Payments Card Losses reached US$533 billion in 2024. Celent estimates that a significant 70% of banking, cards, and payments transactions globally run on IBM Z mainframes. If advanced AI inferencing were applied to all banking and payments transactions running on IBM Z, it could result in as much as US$190 billion globally in additional captured fraud. (Celent Report 2025: Mitigating Fraud in The AI Age: Understanding the Challenge)

Where Strategy Meets Infrastructure

At Clari5, we believe effective fraud defense must move beyond isolated tools and toward orchestrated, real-time intelligence across the customer lifecycle.

Delivering on that requires infrastructure that can:

• Score millions of transactions per second
• Run inferencing in milliseconds, within the transaction
• Securely integrate behavioral, device, and external signals
• Remain compliant across jurisdictions — without latency

IBM z17 and Clari5: The power of mitigating Fraud in the AI age

As financial crime becomes more reputational than operational, fraud management is no longer a backend process. It’s a strategic imperative. Together, IBM Z and Clari5 focus not just on detection, but on enabling our clients to execute their fraud strategy — intelligently, instantly, and at scale. With the right ideas and the right infrastructure that are purpose-built for mission-critical outcomes.

Clari5 Enterprise Fraud Risk Management (EFM) solution on IBM z17 enables banks and financial institutions with real-time inferencing during transactions, allowing businesses to detect fraud within milliseconds, and make AI decisions at the point of data generation. Clari5’s AI/ML models leverage IBM’s Telum II processor to process huge volumes of data to reduce false positives and help in customer onboarding. ML models grow better with growing data elements, and the specialized Telum processor will provide for the much-needed processing power for decisioning in real-time.

In today’s hyper-connected financial ecosystem, fraudsters are faster, smarter, and more tech-enabled than ever—leveraging digital channels, social engineering, automation, and deepfakes to breach even the most fortified systems.

Every second, financial institutions lose millions to evolving fraud tactics. Traditional frameworks, designed for linear, siloed threats, are simply no match for today’s dynamic threatscape.

To stay ahead, financial institutions must embrace a next-generation fraud risk management approach—one that is real-time, intelligent, adaptive, and end-to-end.

Here are 25 key tenets that define the architecture of a future-ready fraud defense.

 

I. Comprehensive Coverage Across the Banking Landscape

1. Cover the Full Fraud Spectrum: Internal & External
Detect both internal threats (e.g., employee collusion) and external attacks (e.g., cybercriminals, fraud rings).

2. Secure All Channels: Physical & Digital
From branches and ATMs to mobile apps and call centers, fraud risk spans all touchpoints.

3. Watch Over Assets & Liabilities
Fraud impacts everything—credit, deposits, loans, and insurance. The monitoring net must cover the entire banking book.

4. Scale Across Segments: Retail & Corporate
Retail and corporate customers present different risks. Systems must adapt to both high-volume and high-value environments.

5. Monitor Beyond Transactions
Profile changes, device registrations, and login attempts often precede fraud. Monitor every interaction.

6. Understand the Nuance: Fraud vs Scam
Fraud is unauthorized; scams are deceptive. Systems must detect both scenarios distinctly.

7. Identify Victims & Villains
Distinguish between innocent victims and customers complicit in fraud (e.g., mule accounts).

8. Monitor Inbound & Outbound Flows
Unusual credits and debits—both directions matter. Inflows can signal mule activity or layering schemes.

 

II. Real-Time, Intelligence-Driven Defense

9. Combine Real-Time Monitoring with Prevention
Don’t just detect—prevent. Systems must intervene before fraud succeeds.

10. Blend Automation with Human Oversight
Automated holds and alerts must support—not replace—fraud analyst judgment.

11. Protect Onboarding & Transactions
Fraud starts at account creation. Secure onboarding is as critical as monitoring transactions.

12. Evaluate Entity & Transaction Risk Together
Who is acting and what they’re doing—context matters for better risk decisions.

13. Mix Known Patterns with ML Insights
Blend rule-based logic with machine learning to catch both familiar and novel fraud scenarios.

14. Use Gen AI for Investigations and Strategy
Accelerate decisions with Gen AI—summarize histories, suggest next steps, and design new detection paths.

15. Make Real-Time Decisions at Scale
Next-gen systems must handle 10,000+ TPS and deliver sub-second decisions—critical for real-time payments.

 

III. Infrastructure, Intelligence & Operational Agility

16. Ensure Compliance & Collaborate
Stay compliant and work with regulators, fintechs, and peer banks to share intelligence and reduce ecosystem risk.

17. Be Cloud-Ready (and Hybrid-Capable)
Deploy on-prem or in cloud—systems must be scalable, resilient, and flexible to support hybrid environments.

18. Leverage Internal & External Intelligence
Fuse in-house data with external watchlists and fraud consortiums for 360° risk views.

19. Analyze Both Data & Documents
Fraud hides in invoices, IDs, and contracts. Use OCR, NLP, and image analytics to surface threats.

20. Use Both Brains: Fast & Deep Thinking
Right brain: Act instantly using available real-time data.
Left brain: Apply historical analytics to uncover slow-building threats.

21. Empower Analysts with No-Code Interfaces
Let fraud teams write and test rules without coding—speed matters in evolving threat landscapes.

22. Enable Fast Integrations Across Systems
Support real-time and batch data ingestion from all banking systems for complete visibility.

23. Unify Fraud & AML Risk Views
Fraud and money laundering are often interconnected. A shared platform helps detect the full spectrum.

24. Continuously Optimize to Reduce False Positives
High false positives = customer frustration. Use feedback loops, tuning, and adaptive models to improve accuracy.

25. Adopt Identity-Centric Risk Assessment
Assess risk not just at transaction level—but at the identity level. Use behavioral biometrics, device fingerprinting, and digital identity linkage to flag fraud before it happens.

 

The Road Ahead

Fraud risk management is no longer a back-office function—it’s central to customer trust, regulatory standing, and business resilience.

Financial institutions that embed these 25 tenets will go beyond detection—they will build proactive, intelligent, and future-ready fraud defenses.

They’ll not only stop fraud but win trust, loyalty, and leadership in an increasingly high-risk world.

As we celebrate Independence Day, it’s essential to reflect on the evolution of Indian banking—a journey closely tied to the nation’s pursuit of independence and financial stability. While the sector has progressed significantly, its future growth depends on addressing a critical challenge: the threat of fraud. For India to sustain its financial success, robust fraud prevention measures are crucial.

Early Banking in India
Indian banking began in 1683 with the Madras Bank, the country’s first formal banking institution. Initially driven by British colonial interests, early banking was centered on trade in cities like Calcutta and Bombay. The Bank of Hindustan, founded in 1770 in Calcutta, was an early attempt at formal banking but closed in 1832 due to challenges. Other early banks, like the Bank of Bombay (1720) and the General Bank of India (1786), laid the groundwork for modern banking in India.
The Union Bank of Calcutta, established in 1829, was another key institution, though it eventually faded. However, the Bank of Calcutta, founded in 1806, survived and evolved into the State Bank of India, the country’s oldest and largest bank.

Post-Independence Growth and Modern Banking
After independence in 1947, India’s banking sector transformed significantly. The government nationalized major banks in the late 1960s to align them with national goals, extending banking services to rural areas.
Today, the Indian banking sector includes public and private banks, alongside regional rural banks. As of July 2024, 12 public sector banks and 21 private sector banks serve over 800 million customers. Digital banking has revolutionized the sector, reducing reliance on physical branches and boosting efficiency. Initiatives like UPI (Unified Payments Interface) have accelerated this growth.

The Urgency of Fraud Prevention
However, with growth comes the increased risk of fraud. One of the earliest large-scale banking frauds in India occurred in the 1950s, when a prominent business tycoon was found guilty of embezzling funds. This highlighted vulnerabilities within the system—a problem that has persisted as fraud continues to evolve alongside the financial sector.
These challenges underscore the urgent need for strong fraud prevention measures. The Reserve Bank of India (RBI) recently issued a master directive on fraud to all regulated entities, emphasizing the importance of protecting the banking system. For the sector to grow and thrive, we must take the threat of fraud seriously. Effective fraud prevention is the foundation for the future success of Indian banking.

Clari5: Pioneering Fraud Prevention
In today’s banking environment, fraud management is more critical than ever. Clari5 leads in providing real-time, enterprise-level fraud management solutions that help banks protect their operations and customers. Leveraging advanced analytics, machine learning, and artificial intelligence, Clari5’s platform detects and prevents fraudulent activities in real time.
With over 10 billion transactions processed and 1 billion accounts managed across 26 countries, Clari5 plays a key role in securing the future of banking. Its innovative solutions ensure that banks can grow securely, safeguarding their financial independence.

Conclusion
As we celebrate Independence Day, we recognize the strides India has made in achieving financial independence. However, the future of Indian banking relies on confronting the threat of fraud head-on. The RBI’s recent directive highlights the urgency of this issue.
Clari5’s advanced solutions are crucial in enabling banks to grow securely and confidently. As we look ahead, Clari5 remains at the forefront of protecting the financial independence of banks in India and beyond.

Singapore has established itself as a dominant force in Southeast Asia. Its cultural tapestry is as rich as its economic opportunities, attracting a global talent pool. As a leading financial center, Singapore boasts a bustling port that rivals industry giants and houses some of the world’s most prominent banks. However, even the most advanced societies face challenges, and Singapore is no exception.

A Singapore Police Force reports reveals a significant rise in scam cases, with a staggering 46.8% increase in 2023 compared to the previous year. This translates to a financial loss exceeding $651.8 million for victims. The number of reported scams jumped from 31,728 in 2022 to a concerning 46,563 in 2023.

The most prevalent scams involve deceitful tactics in employment opportunities (job scams), online marketplaces (e-commerce scams), impersonation of acquaintances (fake friend call scams), fraudulent attempts to steal personal information (phishing scams), and deceptive investment schemes (investment scams). These five categories constitute a worrying 85.5% of the top ten reported scams, and a substantial 78.4% of all scam cases.

Furthermore, the report highlights a concerning shift in scammer tactics. Over half (55.6%) of the reported cases involved losses of $2,000 or less. This suggests a calculated strategy by scammers to target smaller amounts across a wider range of victims, maximizing their gains.

This rise in fraud necessitates a robust response. Traditional methods with delayed analysis are no longer sufficient. Clari5 offers a powerful Big Data solution that provides real-time actionable insights. By continuously monitoring for suspicious activity, Clari5 empowers swift and decisive action, preventing potential losses before they occur.

Join us at the IBM Financial Services Roundtable to delve deeper into how digital transformation can be leveraged to combat financial crime. This event will explore the integration of digital technologies and strategies to optimize banking operations and elevate customer experiences. In today’s digital age, prioritizing real-time security, personalized experiences, and transparency is no longer a luxury, but a critical necessity.

Register here – https://ibm.biz/FinancialServicesRDT_SG