It starts with a single, unusual transaction. Imagine a dormant account, rarely used for more than small purchases. Suddenly, it tries to send thousands of dollars to an unfamiliar recipient. Within seconds, this anomaly triggers an alert in the fraud detection system at Interac. The transaction is flagged, reviewed, and ultimately blocked by the financial institution before any money is lost.
Behind the scenes, artificial intelligence (AI) has done what no individual human could, sifting through millions of transactions in real time, identifying a suspicious pattern, and raising the alarm. All at lightning speed.
Fraud isn’t new, but it’s evolving rapidly. As cyber criminals adopt advanced tactics, Interac is leveraging AI to help to stay ahead. By combining AI with human expertise, Interac is enhancing its ability to detect and prevent fraudulent activity while maintaining the trust that has made it a cornerstone of Canada’s financial ecosystem. “
AI allows us to process and analyze data at a scale that would be impossible manually,” explains Fahad Shaikh, Leader, Data & Analytics Strategy and Advisory at Interac. “We can detect patterns as they emerge, allowing us to act quickly and effectively.”
Detecting patterns hidden in plain sight
At its core, fraud detection is about recognizing patterns — something AI excels at. The advanced AI models Interac uses can analyze vast amounts of transactional data in real time. (A model is a software program that applies algorithms to data to recognize patterns and make predictions or decisions.) These systems look for markers that may indicate fraudulent behaviour, such as sudden spikes in transaction amounts, unusual account activity, or known scam tactics, such as romance cons or job hoaxes.
For example, if an account that typically sends small amounts via Interac e-Transfer suddenly initiates a large, unexpected transaction, the AI system flags it for review. Similarly, recurring small payments to unfamiliar accounts might signal a scam. Once identified, these insights are shared with financial institutions, which can take steps to block transactions or contact customers directly. This proactive approach is critical in today’s fast-paced digital economy, where every second counts in preventing fraud.
A bird’s-eye view: the Interac advantage in fraud detection
The position that Interac holds within Canada’s financial landscape gives it a distinct advantage in helping to combatfraud. Acting as a hub between financial institutions, businesses and consumers, Interac has visibility into payment flows across the network — a bird’s-eye-view perspective that individual banks don’t have.
“Financial institutions can see payments coming in or going out, but we see payments moving across the entire system,” explains Fahad. “This broader view allows us to identify patterns and anomalies that might otherwise go unnoticed.”
This unique vantage point enables Interac to act as a “connective tissue” within the financial ecosystem, providing insights that help financial institutions strengthen their own fraud prevention measures. This provides a higher vantage point across the ecosystem. Using AI to maximize the effectiveness of fraud detection efforts at Interac can result in a ripple effect of greater detection across other entities as well.
The human-technology partnership
While AI plays a central role in fraud detection, it doesn’t operate in isolation. Interac emphasizes the importance of human oversight to keep its systems accurate, ethical, and effective. Fraud analysts work alongside AI-generated insights to validate findings, investigate complex cases and refine detection models. This human-tech partnership is essential. AI models handle the immense task of sifting through millions of transactions in real-time to flag suspicious patterns, but human specialists provide the crucial next steps, especially for nuanced scenarios. They are the ones who investigate complex cases, design new models, and analyze patterns to develop the next wave of tactics for combating fraud.
“You need two to tango,” says Palash Thakur, Head of Data Analytics and Fraud at Interac. “We’re developing models to look at past behaviours, fraud patterns, transactions, device types — a lot of parameters go into them. But there’s always a human in the loop making decisions at some point.” The human element also helps ensure fairness and transparency. Regular reviews of AI models aim to eliminate biases and align them with industry best practices. Good governance by design helps make the models Interac uses both effective and responsible.
When privacy and trust are paramount
As the technology develops, Interac takes issues of privacy and data security seriously. The company employs a multi-layered approach to safeguard personal information, including secure data processing, needs-based access controls, and continuous monitoring.
“At Interac, privacy is at the core of our corporate strategy,” says Rebecca Ma, Head, Deputy General Counsel and Chief Compliance and Privacy Officer at Interac in a conversation with former Information and Privacy Commissioner of Ontario Ann Cavoukian. “I truly believe that consumer trust can be built and reinforced through experiences that assure Canadians that their data is safe and being used in ways they approve of. ”
The company has been named the most reputable financial services brand in Canada by an independent study and its commitment to privacy extends to its AI initiatives. Models are designed with privacy-by-design principles, meaning that security and confidentiality are embedded in them from the outset. Anonymized and aggregated data is used wherever possible, and all systems are regularly audited to ensure compliance with strict governance standards.
Evolving at the speed of threats
Fraudsters are constantly adapting, which means fraud prevention must evolve just as quickly.
Interac continuously monitors and updates its AI models to keep pace with emerging threats. Advances in generative AI and deep learning techniques are particularly promising, enabling more sophisticated pattern recognition and faster response times.
“Our goal is to reduce the time it takes to identify and respond to fraud,” says Fahad.
AI has already made a huge contribution to fraud-fighting efforts at Interac. In its first year, our newly implemented AI fraud detection program increased the number of fraudulent transactions found by an estimated 300 percent over the previous year.
Building a safer digital economy
Looking forward, Interac will help ensure Canadians benefit from advances in real-time fraud detection. Instead of a one-size-fits-all approach, the company is being intentional, choosing to focus efforts on areas where new technology can move fast and add the most value for Canadians, while managing risk responsibly.
The goal is to keep fraud prevention one active step ahead. Faster, more sophisticated identification of suspicious activity could allow for more proactive interventions, such as notifying customers before a fraudulent transaction is completed.
“The future of fraud prevention is about being proactive rather than reactive,” says Fahad. “It’s about stopping fraud before it happens.”
By connecting advanced AI capabilities, human expertise, and a dedication to Canadians’ financial safety, Interac is on a mission to make fraud prevention seamless — something that works so effectively in the background that customers hardly have to think about it.
Fraud can take many forms. Are you ready to spot it?
