Being this the blog of VerifyPDF, a fraud detection software company, you probably are thinking: “Well, they are going to say that AI fraud detection is the best and it outperforms any human”. Good guess, but that is not true! As fraudsters become increasingly sophisticated, who is better equipped to catch fake documents? Seasoned human experts or cutting-edge AI fraud detection systems? Let’s dive into this, the final answer may not be what you expect.
Humans: Strengths and weaknesses
Human experts bring a wealth of experience and intuition to the table when it comes to document verification. After years of training, fraud detection specialists pick up on subtle inconsistencies and apply contextual knowledge that is hard to match. However, the so-called “manual checks” come with its own set of challenges.
Personal biases and gut feelings
One of the most significant drawbacks of human verification is the inevitability of personal biases. These can manifest in various ways:
- Confirmation bias: An expert might be more likely to flag documents from certain demographics based on past experiences.
- Overconfidence: Seasoned professionals might overlook red flags, trusting their “gut feeling” over evidence.
- Fatigue-induced errors: As humans get tired, their attention to detail can go down and things can begin to slip.
Inconsistency across teams
In large organizations, document verification is often performed by teams of experts. This can lead to inconsistencies in fraud detection as different individuals may have varying levels of experience, attention to detail or personal biases.
The rise of AI fraud detection
Artificial Intelligence and automated document forensics analysis has transformed the way document review pipelines are conducted. Automated systems like VerifyPDF offer several advantages:
- Consistency: AI fraud detection systems apply the same rigorous checks to every document, regardless of time of day or workload.
- Speed: Automated systems can process thousands of documents in the time it takes a human to verify a handful. VerifyPDF checks a document in less than 5 seconds and our API can process thousands of requests.
- Learning capability: AI fraud detection systems continuously improve by learning from new fraud patterns. The more we process, the more effective we become and the wider document coverage we get.
- Objectivity: Unlike humans, AI fraud detection systems don’t have personal biases or “gut feelings” that can cloud judgment.
The best of both worlds: A hybrid approach
While the debate of human vs AI is interesting, the reality is that the most effective document verification systems leverage both. Here is how a consumer loan provider might use a hybrid approach with VerifyPDF:
- Initial screening: All incoming loan applications and supporting documents are first processed through VerifyPDF.
- Risk scoring: The AI fraud detection system assigns a risk score to each application based on various factors, including document authenticity, consistency across documents and comparison with known fraud patterns. VerifyPDF rates documents based on “Trusted”, “Low risk”, “Needs attention” and “High risk”.
- Prioritization: Applications are then sorted based on their risk scores. “High risk” documents are flagged for immediate human review.
- Human expert review: Human experts focus their attention on the flagged “High risk” documents, applying their experience and contextual knowledge to make final decisions. In some cases, “Needs attention” documents can also be manually reviewed in the absence of other lower risk documentation.
Real-world example in consumer lending
Let’s consider a consumer loan provider using VerifyPDF to see how this hybrid approach works in practice. For confidentiality reasons, we will call this company “SmartLoan”.
SmartLoan receives 100 loan applications daily. Before implementing VerifyPDF, their team of 2 document verification experts struggled to keep up, often working overtime and still missing fraudulent applications.
After integrating AI fraud detection with VerifyPDF:
- The key documents of all 100 applications are automatically screened by VerifyPDF. Key documents are mainly proof of income documents such as payslips.
- VerifyPDF flags 5 applications as “High risk” based on document inconsistencies, unusual patterns or potential forgeries.
- The human experts now focus solely on these 5 high-risk applications, applying their skills where they’re most needed.
- The remaining 95 applications with lower risk scores are processed automatically, with only random spot-checks by humans.
The results:
- Processing time was reduced by 30%
- Staff overtime decreased by 80%
- NPS score improved by 15 points, from 10 to 25, mainly due to faster processing times for legitimate loan applications
The future of document verification
As AI fraud detection systems continue to evolve, we can expect even more sophisticated fraud detection capabilities. However, the human element will remain crucial, especially in complex cases that require nuanced judgment. Some situations cannot be handled automatically. For example, a loan application from an expat working remotely for an overseas company whose income cannot be verified with a simple payslip will likely require a “human touch”.
The winning strategy in document verification is not about choosing between humans and AI – it’s about leveraging the strengths of both. AI fraud detection services like VerifyPDF do not aim to replace human experts; instead, we supercharge human teams by:
- Eliminating repetitive tasks
- Highlighting the most suspicious cases
- Continuously learning and adapting to new fraud techniques
Conclusion: Empowering human experts with AI
In the end, the question is not “Who wins at detecting fake documents?” but rather “How can we create the most effective verification process?”. Likely, the answer is in combining the analytical power and consistency of AI with the intuition and contextual understanding of human experts.
By implementing systems like VerifyPDF, organizations can create a formidable defense against document fraud. This hybrid approach not only improves fraud detection rates but also allows human experts to work more efficiently and focus their skills where they’re most valuable. As we move forward, the synergy between human expertise and AI will continue to evolve, creating ever more sophisticated and effective document verification processes. Everybody wins… except the fraudsters.
