MBA Journals Peer-reviewed management research from Consortium e-Learning Network

NOLEGEIN Journal of Leadership and Strategic Management

The Intelligent Frontier: Orchestrating AI and Machine Learning for Advanced Financial Fraud Detection

  1. Shipra Aggarwal

Abstract

Traditional rule-based systems cannot match that scale. They are too slow, too rigid, and too reactive. This paper examines how AI and ML are reshaping fraud detection. It evaluates LSTMs, GNNs, and Transformers as detection tools. Mastercard reported a 20% uplift in fraud detection rates. The paper also maps two emerging frontiers: Agentic AI and Quantum Graph Neural Networks. Strategic guidance is offered throughout CFOs and finance leaders. Global financial crime reached $4.4 trillion in 2025. Fraud networks now deploy AI against the very systems designed to stop them. Static detection methods are no longer adequate. This paper provides a structured evaluation of AI and machine learning architectures for financial fraud detection. Supervised models, including Random Forest and Logistic Regression, form the operational baseline. Deep learning architecture extends this capability significantly. Long Short-Term Memory networks capture sequential transaction patterns. Graph Neural Networks expose hidden criminal networks across accounts. Transformers apply self-attention to behavioural context across full transaction histories. Generative Adversarial Networks address the persistent class imbalance problem in training data. The paper introduces the DLSG framework as a governance blueprint. It integrates deep learning performance with sector-specific compliance requirements. GDPR and CCPA obligations are embedded at the design level. Case studies from Mastercard and Visa demonstrate real-world impact. Mastercard achieved a 20% uplift in detection rates. Visa processes risk scores in under one second per transaction. Ethical risks, including algorithmic bias and explainability gaps, are examined. SHAP-based tools and federated learning are presented as mitigations. Two frontier technologies conclude the analysis: Agentic AI and Quantum Graph Neural Networks. Both will redefine fraud defence within the decade. Strategic recommendations guide CFOs and management accountants toward governance-first AI adoption.

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