Home » The face of fraud is changing, are businesses ready?

The face of fraud is changing, are businesses ready?

by Paul Ellis, UK Director, Medius
5th Sep 23 2:03 pm

Artificial intelligence is everywhere, making waves in every industry from entertainment, to journalism to travel, and is showing no signs of slowing down. It’s the word on everyone’s lips, and businesses are currently navigating AI’s risks and benefits when it comes to operational systems and the workplace.

A key area where AI is evolving is within financial fraud, where AI-enabled cyber attacks are already increasing in frequency and becoming harder to distinguish from authentic communications. There’s no doubt that a case of corporate fraud is difficult for a business, but when the UK is experiencing the highest level of insolvencies since 2008, financial loss triggered by fraud could cause the collapse of a business.

With the help of Gen-AI, the face of fraud is changing. A 135% increase in phishing emails coincided with the creation of ChatGPT. This is no coincidence. As artificial intelligence systems develop, AI is being manipulated into a powerful tool for fraudsters, leaving businesses more vulnerable.

It’s undeniable that AI is bringing benefits for businesses, from increasing productivity, to saving time on administrative tasks, and encouraging creative problem solving work for employees improving motivation. But organizations are cautious, with Medius research finding that 48% of respondents worry about how AI, and reduced human involvement will impact fraud issues in the future.

The FCA recently called for more investment by businesses in better fraud prevention and resilience in response to AI triggering a rise in fraud, and supporting businesses’ wariness of AI as evidence shows cyber criminals are beginning to use these systems to plan for attacks. AI systems such as ‘FraudGPT’, are being sold on the dark web to help fraudsters with writing phishing emails, and producing the code needed for cyber attacks at scale.

But despite an awareness of the risk of AI enabled fraud, businesses are still lacking the practical solutions they need to protect their businesses.

With around 50,000 businesses suffering an instance of cyber related fraud in the past year, businesses need to be using software systems that mitigate fraud, making their operations secure. Accounts Payable is one important, but often overlooked vulnerability within businesses when it comes to cyber attacks – but it can also be part of the solution when it comes to operational security. With Accounts Payable software, dependable systems are in place to prevent irregular transactions and automate business payment processes, ensuring financial controls are secure.

Reducing the risk of manual errors with automation, Accounts Payable software can also help identify errors, so accountants handling large volumes of invoices and financial information can be notified to correct issues quickly, and importantly, before the fraud has taken place.

This issue is even more important as many businesses are operating on out-of-date software even when their attackers aren’t. Medius’ recent Financial Professional Census report found that 62% of 2,750 senior finance executives believe the technology they currently use is outdated. With legacy systems being more vulnerable to cyber-attacks, wider digital transformation initiatives can also make a business less susceptible to fraud.

To make sure businesses are protected against the risks of financial fraud, both the risks and benefits of artificial intelligence systems need to be balanced. Embracing AI’s positives must come alongside increased regulation to minimize the potential risks of AI. And implementing solutions such as Accounts Payable software to protect against the rise in AI enabled fraud needs to be a key priority for businesses, who cannot risk financial losses.

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