The Future of Bank Fraud: How Scammers Use AI to Commit Cybercrime

Cybercriminals are making use of artificial intelligence (AI) to target both businesses and consumers in many industries, including financial services. Luckily, banks are fighting back. "Financial institutions and regulatory bodies are working to combat the rising tide of fraud," says Abigail Reuger at Fortune. "Banks are investing heavily in AI and other technologies to detect and prevent fraudulent activities. However, the rapid evolution of scam tactics presents an ongoing challenge."¹

There are many ways that scammers are using AI to enhance their tactics. For example, deep fake fraud and identity theft are real problems. AI-driven deepfake technology enables fraudsters to create realistic audio and video, which can then be used to impersonate executives, financial advisors, or even clients. Scammers can even authorize fraudulent transactions by generating fake video calls.

AI has also increased the sophistication of phishing attacks. Fraudsters can use AI to craft hyper-personalized emails, text messages, and fake websites that look as though they come from legitimate financial institutions.

AI is also used for investment scams, which utilize advanced algorithms to manipulate investors into making poor financial decisions. Scammers can create AI-generated fake trading bots and deceptive investment platforms and spread misinformation about stocks and cryptocurrencies.

Scam artists are even using AI to run disinformation campaigns about banks themselves. They alarm consumers by spreading fake news on social media. Recently, false stories about deposits not being safe and ongoing security issues at local banks have caused some consumers to pull their money out of the financial institutions in question. Some are worried that the spread of disinformation could cause the failure of financial institutions, similar to what happened to Silicon Valley Bank several years ago², when depositors withdrew $42 billion within 24 hours. It's important for bank clients to be aware of these types of malicious campaigns to prevent such occurrences. It is, however, up to banks to protect their customers, and they are doing just that.

A 2024 report from the U.S. Department of the Treasury said, "Like other critical infrastructure sectors, the financial services sector is increasingly subject to costly cybersecurity threats and cyber-enabled fraud. As access to advanced AI tools becomes more widespread, it is likely that, at least initially, cyberthreat actors utilizing emerging AI tools will have the advantage by outpacing and outnumbering their targets. At the same time, many industry experts believe that most cyber risks exposed by AI tools or cyber threats related to AI tools can be managed like other IT systems. To counter the threat actors’ initial advantage, financial institutions should expand and strengthen their risk management and cybersecurity practices to account for AI systems’ advanced and novel capabilities, consider greater integration of AI solutions into their cybersecurity practices, and enhance collaboration, particularly threat information sharing."³

At American Bank, we prioritize technology and risk management to protect our clients and their money and data from all types of cyber threats, including those utilizing artificial intelligence. Remember, fraud is ever evolving and it’s crucial to stay vigilant. Never trust what you see or hear without verification. When in doubt, contact us directly. We’re here to help.