Anomaly detection in market data for fraud and risk monitoring

Ogunruku, Oyindamola Omolara and Samuel, Isaiah Chukwudi (2025) Anomaly detection in market data for fraud and risk monitoring. International Journal of Science and Research Archive, 15 (3). pp. 1647-1656. ISSN 2582-8185

The financial services industry faces unprecedented challenges in detecting fraudulent activities and managing risks within increasingly complex and high-velocity market environments. Anomaly detection techniques have emerged as critical tools for identifying suspicious patterns, fraudulent transactions, and emerging risks in real-time market data streams. This comprehensive review examines the transformative potential of advanced anomaly detection methodologies in revolutionizing fraud prevention and risk monitoring through systematic analysis of existing literature, implementation frameworks, and case studies. Our investigation reveals that modern anomaly detection systems demonstrate significant potential for reducing false positive rates, improving fraud detection accuracy, and decreasing risk exposure through advanced predictive modeling capabilities. The research synthesizes evidence from multiple domains, demonstrating anomaly detection's capacity to address critical challenges in contemporary financial risk management. By exploring emerging trends, implementation mechanisms, and critical challenges, this review provides a balanced perspective on the opportunities and limitations of anomaly detection technologies. The findings suggest that while anomaly detection presents promising solutions for market data monitoring, successful implementation requires careful consideration of algorithmic complexity, data quality requirements, and regulatory compliance frameworks.