Bank Fraud Detection System
using Machine Learning
Introduction
Theproject focuses on developing a bank
fraud detection system for Bank XYZ using
machine learning techniques to enhance
financial security, reduce fraud-related
losses, and build customer trust.
Motivation
Significance:Fraud costs financial institutions
millions of dollars annually.
Impact:Fraud can erode customer trust and
result in substantial financial losses.
Real-WorldExample:In 2023, global fraud
losses reached $32 billion. An AI-powered
system can help reduce this number.
Literature Review
Study on Banking Frauds Scenario in India:
The Reserve Bank of India (RBI) reported a 28%
increase in fraud cases by volume and a 159% rise in
the associated financial losses between 2018-2020
Advances frauds accounted for 53% of total fraud
cases in 2019-2020, with the amount involved rising
significantly.
RBI introduced new frameworks for fraud detection
and reporting to combat these challenges.
Literature Review
Analysis and Preventive Measures of Banking
Frauds:
Thestudy highlighted that private sector banks
experienced the highest percentage of frauds .
Advances and internet frauds were the most
common, accounting for 41.45% and 40.03% of
cases, respectively.
Implementing AI and forensic auditing is
suggested to enhance fraud detection.
Proposed Solution
Approach:
Use machine learning algorithms (e.g., Random Forest, SVM) for dynamic fraud
detection, utilizing past transaction data to identify suspicious activities in real
time.
Key Features:
Real-time transaction monitoring, anomaly detection, and automated fraud
alerts.
Technologies Used:
Machine Learning Tools: Scikit-learn, TensorFlow
Languages/Tools: Python (pandas, numpy), Matplotlib/Seaborn for
visualizationHardware
Requirements: A high-performance system with 16GB RAM and GPU support for
fast model training.
Expected Outcomes / Deliverables
• Deliverables:
• A functional bank fraud detection system using machine
learning.
• Models capable of real-time fraud detection.
• A detailed report and documentation of the system.
• Input:
• Transaction data (e.g., amount, location, time).
• Output:
• Fraud detection alerts with real-time notifications to the user
and analysts.
References
Baxi, M.K., & Swadia, B.U. (2021). Study on Banking Frauds Scenario
in India. Journal of the Maharaja Sayajirao University of Baroda, 55(1),
56-60. Retrieved from ResearchGate.
Thunga, S.R., Lavanya, P.B., & Chinni, N. (2023). Analysis and
Preventive Measures of Banking Frauds with Reference to Indian
Banking Sector. Proceedings of the 3rd International Conference on
Reinventing Business Practices, Advances in Economics, Business
