Generative artificial intelligence has changed the pace and scale of financial fraud. What was once a slow, reactive contest between banks and cybercriminals has become a real-time arms race — one where speed, adaptability and innovation determine who stays ahead.
Banks confront real-time fraud race
The new frontier of fraud is defined by deepfakes, synthetic identities and AI-generated phishing campaigns that can be created in minutes and deployed at scale.
As Jenna Kaye-Kauderer, Managing Vice President and Head of AirKey at Capital One, put it in a recent podcast, “With gen AI, there are new threats and new fraud vectors we hadn’t seen historically. And we’re seeing those today.”
For financial institutions, the implication is clear: static defences no longer suffice.
Authentication can no longer be treated as a one-off product or process, but must evolve into a continuous, adaptive discipline.
Kaye-Kauderer argues that the ability to “react dynamically as new fraud vectors appear” is now central to resilience. This philosophy underpins Capital One’s strategy — and its AirKey technology.
AirKey transforms physical credit and debit cards into hardware authenticators. When a user taps their card against their phone, they prove possession and verify their identity instantly.
Behind the simplicity of this gesture lies a significant security innovation: it eliminates reliance on SMS one-time pins, a long-time weak point frequently exploited through SIM-swapping and phishing attacks.
Balancing Friction and Risk
The growing sophistication of fraudsters forces banks to make a delicate trade-off between friction and convenience. Customers want seamless, near-invisible security — but they also expect protection.
Capital One’s solution is what it calls risk sloping: adjusting the authentication intensity to match the risk profile of each transaction.
“For higher-risk actions, we can match stronger tools that may involve a bit more friction,” says Kaye-Kauderer. “For low-risk actions, we prioritise convenience because we already have confidence in the customer’s identity.”
Flexibility and user choice are integral to this model.
Not every customer wants to authenticate in the same way, and allowing alternatives — from AirKey to app-based verification to government ID checks — can improve both completion rates and satisfaction.
Engineering for Constant Change
The true challenge, however, lies in making innovation itself sustainable. Fraudsters innovate endlessly; banks must do the same.
Capital One’s authentication platform is built as a modular system designed for constant evolution — new tools, data streams and policies can be integrated and scaled rapidly.
“Innovation isn’t always linear,” Kaye-Kauderer notes. “It takes time to bake and to grow. But fraud is an area where we as financial institutions need to work together.”
That collaborative mindset may be the most powerful weapon of all.
The future of fraud prevention will not be defined by static rules or isolated tools, but by ecosystems engineered for perpetual motion — adaptive, intelligent and built to learn as fast as the threats evolve.
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