Swift has announced the launch of two artificial intelligence (AI) pilots in collaboration with major international banks to enhance fraud detection in cross-border payments. The initiative aims to leverage AI technology to save the industry billions in fraud-related costs and improve the efficiency of the cross-border payments ecosystem.

Swift Launches AI Pilots with Global Banks to Combat Cross-Border Payments Fraud

The first pilot will focus on enhancing Swift's existing Payment Controls service, which helps financial institutions identify potential fraud by detecting anomalies in payment patterns. By integrating an AI model, Swift aims to create a more precise system for identifying fraudulent activity based on historical data from the Swift network. The pilot will involve Payment Controls customers refining the AI-enhanced service using their live traffic data to ensure real-world applicability.

In a separate action, Swift has brought together ten leading financial institutions, including BNY Mellon, Deutsche Bank, DNB, HSBC, Intesa Sanpaolo, and Standard Bank, to explore the use of advanced AI technology for analyzing anonymously-shared data from various sources.

The goal is to strengthen the global financial ecosystem by enabling secure data collaboration and federated learning technologies. This approach will allow financial institutions to exchange relevant information while maintaining strong privacy controls, enabling Swift's AI anomaly detection model to identify potential fraud patterns from a more comprehensive dataset.

“AI has great potential to significantly reduce fraud in the financial industry,” Tom Zschach, Chief Innovation Officer at Swift, said. “That’s an incredibly exciting prospect, but one that will require strong collaboration.”

Fraud cost the financial industry an estimated $485 billion in 2023 alone, and AI is seen as a powerful tool in reducing these costs.

“Combatting fraud successfully will require industry collaboration, collective action, and strong leadership from operators like Swift,” Isabel Schmidt, Executive Platform Owner, Payments Enablement at BNY Mellon Treasury Services, said. “We’re excited to help lead the first wave of innovation in this space and look forward to seeing even more banks join the initiative.”

AI is proving to be a double-edged sword in financial markets. On one hand, it assists regulators and companies in combating fraud. On the other hand, it enables fraudsters to devise increasingly sophisticated schemes, including deepfakes that impersonate well-known personalities to entice investments.

Swift's Latest Developments

Swift, a cooperative that operates a widely used financial messaging service, recently introduced white-labeled tracking services for cross-border payments to its member banks. The Belgium-based organization has also standardized its entire payment chain with the ISO 20022 standard.

In April, Veritran and Swift announced a collaboration to enhance cross-border payments for financial institutions and their clients. This partnership, facilitated through Veritran's participation in the Swift Partner Program, aims to improve the experience for users conducting international transactions.

Additionally, Swift and Wise have formed a partnership to expand cross-border payment options for financial institutions and their customers. This strategic alliance will enable secure payments sent through the Swift network to integrate seamlessly with Wise, ensuring end-to-end transparency throughout the process.