Swift Turns to AI to Battle Cross-Border Payment Fraud

Swift is partnering with a group of banking giants to combat cross-border payment fraud.

The global messaging service announced in a news release Thursday (May 30) that it is launching a pair of artificial intelligence-based experiments to help its member banks recognize fraud.

“Fraud cost the financial industry $485 billion in 2023 alone,” Swift said. “AI has a strong role to play in reducing these costs and, at the same time, tackling the issue will significantly help the industry achieve the G20’s goal of increasing the speed of cross-border payments.

Swift added in the release that it is “uniquely placed” to lead industry efforts to battle fraud because of its role as “a trusted entity at the heart of the financial ecosystem,” as well as “the breadth and reach of the data” transmitted via its network.

The first pilot will see Swift enhance its Payment Controls service, which helps financial institutions spot anomalies that could suggest fraud, the release said. Swift will use an AI model that will develop a “more nuanced and accurate picture of potential fraud” using historical activity patterns on the Swift network.

In the second experiment, Swift and 10 of the world’s top banks will test how it can use advanced AI technology to “analyze anonymously-shared data from different sources in a way that will strengthen the global financial ecosystem,” per the release.

The financial institutions involved include BNY Mellon, Deutsche Bank, DNB, HSBC, Intesa Sanpaolo and Standard Bank, the release said.

“AI has great potential to significantly reduce fraud in the financial industry,” said Swift Chief Innovation Officer Tom Zschach. “That’s an incredibly exciting prospect, but one that will require strong collaboration. Swift has a unique ability to bring financial organizations together to harness the benefits of AI in the interests of the industry, and we’re excited by the potential of both of these pilots to help further strengthen the cross-border payments ecosystem.”

That ecosystem is riddled with challenges for companies hoping to transact across borders.

“There are two big things businesses want,” Boost Payment Solutions founder and CEO Dean M. Leavitt told PYMNTS in an interview last month. “The first is cross-border payments mechanisms that are cost-effective and efficient in paying their suppliers abroad. That’s a clear desire on the enterprise B2B level. And the other thing is just broadly digitizing the ways in which businesses pay and get paid.”

According to the PYMNTS Intelligence report “Cross-Border Sales and the Challenge of Failed Payments,” faulty cross-border payments cost U.S. merchants at least $3.8 billion in sales in 2023. And 70% of U.S. firms saw higher rates of failed payments in cross-border sales compared to domestic sales.