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15 March 2024
Reseach Article

Ensemble-based Predictive Model for Financial Fraud Detection

by V.O. Olaleye, O.A. Odeniyi, B.K. Alese
International Journal of Applied Information Systems
Foundation of Computer Science (FCS), NY, USA
Volume 12 - Number 42
Year of Publication: 2024
Authors: V.O. Olaleye, O.A. Odeniyi, B.K. Alese
10.5120/ijais2024451961

V.O. Olaleye, O.A. Odeniyi, B.K. Alese . Ensemble-based Predictive Model for Financial Fraud Detection. International Journal of Applied Information Systems. 12, 42 ( Jan 2024), 54-62. DOI=10.5120/ijais2024451961

@article{ 10.5120/ijais2024451961,
author = { V.O. Olaleye, O.A. Odeniyi, B.K. Alese },
title = { Ensemble-based Predictive Model for Financial Fraud Detection },
journal = { International Journal of Applied Information Systems },
issue_date = { Jan 2024 },
volume = { 12 },
number = { 42 },
month = { Jan },
year = { 2024 },
issn = { 2249-0868 },
pages = { 54-62 },
numpages = {9},
url = { https://www.ijais.org/archives/volume12/number42/ensemble-based-predictive-model-for-financial-fraud-detection/ },
doi = { 10.5120/ijais2024451961 },
publisher = {Foundation of Computer Science (FCS), NY, USA},
address = {New York, USA}
}
%0 Journal Article
%1 2024-01-27T22:32:21.391180+05:30
%A V.O. Olaleye
%A O.A. Odeniyi
%A B.K. Alese
%T Ensemble-based Predictive Model for Financial Fraud Detection
%J International Journal of Applied Information Systems
%@ 2249-0868
%V 12
%N 42
%P 54-62
%D 2024
%I Foundation of Computer Science (FCS), NY, USA
Abstract

The financial industry remains a persistent target for fraudulent activities. Challenges to research in this area are due to data privacy concerns and the scarcity of publicly available datasets that contain instances of fraud. Researchers and practitioners have proposed various fraud detection techniques, applying diverse algorithms to uncover fraudulent patterns. To further address this, the study introduces a synthetic fraud-related dataset featuring five distinct fraud scenarios having about 2.5 million transactions. The primary objective is to analyze the intricacies of account transaction behaviour in a financial dataset. The authors propose an ensemble of three gradient boosting algorithms: CatBoost, Extreme Gradient Boosting (XGBoost), and LightGBM; The models developed demonstrate promising results, with several achieving an average Area Under the Curve (AUC) exceeding 0.9 and the ensemble having a predictive accuracy of 98.60%. Further evaluation through an application programming interface indicates a time complexity of less than 300 milliseconds and efficient memory usage, making this approach promising for practical usage in real-world scenarios.

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Index Terms

Computer Science
Information Sciences
Data mining
Fraud Detection
Financial Industry

Keywords

Machine Learning Synthetic Data Financial Fraud Ensemble Learning Gradient Boosting