Swift has partnered with a consortium of major banks to combat fraud in cross-border payments. In a press release issued on Thursday (May 30), the global messaging service announced the launch of two artificial intelligence (AI)-based experiments aimed at helping its member banks detect and prevent fraudulent activities. According to Swift, the financial industry incurred a staggering $485 billion in fraud costs in 2023 alone. The organization believes that AI can play a key role in reducing these costs and simultaneously address the objective set by the G20 to expedite cross-border payments. The press release emphasized Swift's unique position as a trusted entity at the core of the financial ecosystem, along with the extensive reach and breadth of data transmitted through its network. Leveraging these advantages, Swift intends to spearhead industry-wide efforts in combating fraud. The first pilot focuses on enhancing Swift's Payment Controls service, which assists financial institutions in identifying suspicious activities indicative of potential fraud. By employing an AI model, Swift plans to develop a more sophisticated and accurate understanding of potential fraudulent patterns using historical data from the Swift network. In the second experiment, Swift will collaborate with ten leading global banks to explore the utilization of advanced AI technology.

This involves analyzing anonymously-shared data from various sources to fortify the global financial ecosystem. The participating financial institutions include BNY Mellon, Deutsche Bank, DNB, HSBC, Intesa Sanpaolo, and Standard Bank. Tom Zschach, the Chief Innovation Officer at Swift, expressed enthusiasm about the potential of AI to significantly reduce fraud in the financial industry. He highlighted the need for strong collaboration and emphasized Swift's ability to bring financial organizations together to harness the benefits of AI, benefiting the cross-border payment ecosystem. The challenges faced by companies in conducting cross-border transactions were also flagged. Businesses are seeking cost-effective and efficient mechanisms for cross-border payments to suppliers abroad. Digitizing payment processes is another pressing concern. According to a report by PYMNTS Intelligence, failed cross-border payments resulted in a loss of at least $3. 8 billion in sales for US merchants in 2023. Additionally, around 70% of US firms experienced higher rates of failed payments in cross-border sales compared to domestic transactions.