Can alert models for fraud protect the elderly clients of a financial institution?. Issue 17 (22nd November 2019)

• Record Type: Journal Article
• Authors: Kumar, Gaurav; Muckley, Cal B.; Pham, Linh; Ryan, Darragh
• Is Part Of: European journal of finance. Volume 25:Issue 17(2019)
• Page Start: 1683
• Page End: 1707
• Publication Date: 2019-11-22
• Subjects: Alert models -- fraud -- elderly clients -- financial institutions -- machine learning; G21 -- G17 -- D12 -- C55; Finance -- Periodicals; Finance -- Europe -- Periodicals; International finance -- Periodicals; 332.094
• DOI: 10.1080/1351847X.2018.1552603
• Languages: English
• ISSNs: 1351-847X

Abstract

ABSTRACT: Using account-level transaction data at a major financial institution, we predict the incidence of suspicious activity that can be related to the external financial fraud of its elderly clients. The data consists of over 5 million accounts of clients aged 70 years and older, and over 250 million transactions extending from January 2015 to August 2016. Our main focus is to improve the detection of alerts within a proprietorial transaction monitoring system. Using logistic regression, random forest and support vector machine learning techniques, together with corrections for imbalanced alert samples, we provide a new alert model for the protection of elderly clients at a financial institution, with out-of-sample predictive accuracy. Our findings show the relative influence of client traits and account activity in our select external fraud alert models.