AI Strategies for Transforming the Banking Industry Through Enhanced Fraud Detection, Credit Crisis Management and Risk Mitigation

This research investigates the transformational role of AI strategies in the banking industry. The potential of machine learning models, such as Support Vector Machines (SVM), Artificial N eural Networks (ANN), Decision Trees (DT), and Recurrent Neural Networks (RNN) is validated via fraud detection, credit crisis management, and risk mitigation. To estimate the performance of models, a detailed dataset containing information on financial transactions, customers, and credit card usage is employed. The results reveal that SVMs have the highest accuracy in the process of deceiving transactions, as their testing accuracy was 98,76%. Second comes the Artificial Neural Networks model, which produced a credible accuracy rate of 95.5%. DTs performed quite well in this case as well, as it achieved 92.12% of accuracy. Finally, RNNs showed slightly worse performance rates, with the accuracy of 88.98%. These findings positively underpin that machine learning models, as well as AI strategies, can efficiently aid in fraud detection and, thus, managing a credit crisis in banking. The results suggest that more advanced machine learning techniques should be used by banking institutions for the purpose of effective financial risk mitigation and decision-making. Practices such as optimization of model parameters and preprocessing techniques can significantly enhance their capacity to operate in the banking sector, revolutionizing its capacity towards more streamlined and efficient operations.