Enhancing Financial Fraud Detection with Human-in-the-Loop Feedback and Feedback Propagation

Human-in-the-loop (HITL) feedback mechanisms can significantly enhance machine learning models, particularly in financial fraud detection, where fraud patterns change rapidly, and fraudulent nodes are sparse. Even small amounts of feedback from Subject Matter Experts (SMEs) can notably boost model performance. This paper examines the impact of HITL feedback on both traditional and advanced techniques using proprietary and publicly available datasets. Our results show that HITL feedback improves model accuracy, with graph-based techniques benefiting the most. We also introduce a novel feedback propagation method that extends feedback across the dataset, further enhancing detection accuracy. By leveraging human expertise, this approach addresses challenges related to evolving fraud patterns, data sparsity, and model interpretability, ultimately improving model robustness and streamlining the annotation process.

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Publication Details

Published
2024-12-18
DOI
https://doi.org/10.1109/icmla61862.2024.00185
Primary Topic
Imbalanced Data Classification Techniques
Type
article
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article

Enhancing Financial Fraud Detection with Human-in-the-Loop Feedback and Feedback Propagation

Prashank Kadam
1 links
Imbalanced Data Classification Techniques
article

Enhancing Financial Fraud Detection with Human-in-the-Loop Feedback and Feedback Propagation

Prashank Kadam
article en

Abstract

Human-in-the-loop (HITL) feedback mechanisms can significantly enhance machine learning models, particularly in financial fraud detection, where fraud patterns change rapidly, and fraudulent nodes are sparse. Even small amounts of feedback from Subject Matter Experts (SMEs) can notably boost model performance. This paper examines the impact of HITL feedback on both traditional and advanced techniques using proprietary and publicly available datasets. Our results show that HITL feedback improves model accuracy, with graph-based techniques benefiting the most. We also introduce a novel feedback propagation method that extends feedback across the dataset, further enhancing detection accuracy. By leveraging human expertise, this approach addresses challenges related to evolving fraud patterns, data sparsity, and model interpretability, ultimately improving model robustness and streamlining the annotation process.

Vesta Sciences (United States) (US)
Peace, Justice and strong institutions
Openalex Percentile: Top 75%
Imbalanced Data Classification Techniques
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