Adaptable fraud prevention strategies in FinTech: Leveraging machine learning for risk mitigation and customer retention in a downturn economy

Nayak, Saugat (2025) Adaptable fraud prevention strategies in FinTech: Leveraging machine learning for risk mitigation and customer retention in a downturn economy. International Journal of Science and Research Archive, 15 (2). pp. 1142-1156. ISSN 2582-8185

Economic recession is a real test for financial institutions because, during such times, fraudulent activity increases due to financial pressure put on organizations and individuals. The outright conventional model of fraud control provides poor returns due to the rigidity of rules and weaker adaptation abilities, even in highly dynamic environments, leading to unnecessarily high operational costs and missed genuine customer business. This paper aims to discuss the flexible fraud prevention techniques using ML and AI in an effort to boost risk management while embracing the customers. Some of the ML techniques highlighted are supervised learning algorithms, anomaly detection, real-time monitoring, and the use of deep learning models, which gives them extended capability in handling large data and estimating the probability of fraud with improved precision. The need for both robust fraud prevention and great customer experience is highlighted, with tools like individualized risk profiling, adaptable risk valuation, and decision-making systems brought into review. Furthermore, the paper describes advanced topics in the modern context like the trends of partnerships in data sharing and the focus on customer-oriented fraud prevention solutions. It touches upon issues of data privacy and security, pointing out that data protection laws such as GDPR and CCPA have to be followed and raises the issue of interpretability of the models in order to gain trust. Through these adaptive strategies, the financial institutions we are looking into can bolster their fraud-fighting measures and maintain customer confidence and operational stability during an economic crisis. This research seeks to map out the best ways of adopting better, more flexible, and customer-oriented methods of fighting fraud in financial services.