Artificial Intelligence and Cyber Fraud Prevention in Digital Banking: A Comparative Legal Analysis of India, the United Kingdom and the United States
Year: 2026
Type: article
Abstract: The increasing use of artificial intelligence (AI) in digital banking has transformed the detection and prevention of financial fraud. Machine-learning algorithms, behavioural analytics, biometric authentication and automated transaction-monitoring systems enable financial institutions to identify suspicious activities at a scale that conventional rule-based systems may not achieve. However, the same technological developments have created new legal challenges, including algorithmic opacity, discriminatory outcomes, privacy risks, false-positive transaction blocking, and uncertainty concerning responsibility for AI-assisted decisions. Simultaneously, cybercriminals increasingly exploit AI to facilitate impersonation, phishing, synthetic identities and fraudulent payment instructions. This paper examines the legal and regulatory implications of AI-based cyber-fraud prevention in digital banking, with particular reference to India, the United Kingdom and the United States. It adopts a doctrinal and comparative legal methodology to analyse relevant cybercrime legislation, data-protection requirements, financial-sector regulation and institutional accountability. The paper argues that effective AI-based fraud prevention requires more than technological accuracy: financial institutions must also demonstrate lawful data processing, proportionate monitoring, appropriate human oversight, explainable decisions and accessible consumer remedies. It proposes a governance-oriented approach in which the deployment of AI is accompanied by documented risk assessments, independent validation, continuous monitoring and clear responsibility for adverse outcomes.
Authors: Shreya Sinha, Dr. Shradha Pandey
Language: English
Subfield: Law
Field: Social Sciences
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W7225329086