What factor inhibits banks from using more advanced AI-based fraud detection systems?

The most relevant factor inhibiting banks from using more advanced AI-based fraud detection systems is often regulatory compliance issues. Banks operate in a heavily regulated environment, and implementing advanced AI systems may pose challenges in ensuring adherence to existing laws and regulations that govern data protection, privacy, and consumer rights.

Regulatory compliance can include strict guidelines about how customer data is collected, stored, and utilized, especially with personal information that could be sensitive. Banks must ensure that any new technology or system they employ complies with these regulations to avoid legal repercussions and maintain customer trust.

While having easy access to development capital might suggest that banks could afford to invest in advanced technologies, it does not address the critical hurdles posed by compliance requirements. Access to funds alone does not solve the complex challenge of navigating the regulatory landscape that governs financial transactions and customer data usage. Therefore, the main hindrance remains the intricate regulations that must be considered when adopting sophisticated AI solutions in fraud detection.