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AI, What Have You DoneFor Me Today?
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Finance: Fraud Detection

In our series: AI, What Have You Done for Me Today? we explore how the rise of artificial intelligence tools and software is dramatically changing the ways in which institutions can defend against financial deceptions.

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​While many are familiar with Artificial Intelligence (AI) through chatbots and virtual assistants, the impact of AI extends far beyond these familiar applications. In fact, AI has become an intrinsic part of our daily lives, often in ways not immediately visible to the public. Today, in industries as diverse as agriculture, transportation, energy, and healthcare, AI is often behind the scenes, quietly revolutionizing business processes, and enhancing efficiencies and accuracy.​​ Detailed image showing a robotic security gaurd​​

AI & Fraud Detection

In today’s digital age, financial fraud has become a multibillion-dollar enterprise. Instead of old-fashioned bank robberies and pickpocketing, we now encounter identity theft, credit card fraud, and phishing scams. However, the rise of artificial intelligence tools and software is dramatically changing the ways in which institutions can defend against such financial deceptions.
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Fortunately, your financial institution now has an advanced AI fraud detection system in place to shield you from such situations. This AI system works like an ultra-sharp-minded security guard, constantly monitoring transactions to detect unusual activity. For example, if your credit card is used in another country or for high-value purchases that deviate from your typical spending habits, the AI system immediately notices and recognizes that something is amiss. ​ ​

Here’s how these AI systems help:
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  • Pattern Recognition: AI programs can examine millions of transactions a second, identifying patterns and anomalies that traditional methods might miss.
  • Real-Time Alerts: As soon as the AI program detects suspicious activity, it sends alerts to both you and your financial institution, creating an opportunity to immediately freeze your card and prevent further unauthorized transactions.
  • ​ Proactive Protection: AI enhances identity verification for know-your-customer (KYC) and anti-money laundering (AML) processes. Using deep learning, graph neural networks (GNNs), and natural language processing (NLP), AI programs analyze photo IDs and verify their authenticity, reducing the risk of fraudulent records.

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JPMorgan Chase’s (JPM) OmniAI system is a comprehensive AI platform designed to enhance various aspects of their financial operations such as customer service automation, risk management and private banking. OmniAI’s powerful fraud detection program continuously monitors customer transactions in real-time to identify and prevent fraudulent activities.
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​ Today, the enhancements being implemented at many institutions can ensure that even in stressful situations like having your wallet stolen, advanced AI systems are diligently working to protect your financial well-being while reducing undue anxiety.
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​The views expressed are the views of Fred Alger Management, LLC (“FAM”) and its affiliates as of August ​2024. These views are subject to change at any time and may not represent the views of all portfolio management teams. These views should not be interpreted as a guarantee of the future performance of the markets, any security or any funds managed by FAM. These views are not meant to provide investment advice and should not be considered a recommendation to purchase or sell securities.
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​​​Risk Disclosures:
Investing in the stock market involves risks, including the potential loss of principal. Growth stocks may be more volatile than other stocks as their prices tend to be higher in relation to their companies’ earnings and may be more sensitive to market, political, and economic developments. Local, regional or global events such as environmental or natural disasters, war, terrorism, pandemics, outbreaks of infectious diseases and similar public health threats, recessions, or other events could have a significant impact on investments. Investing in innovation is not without risk and there is no guarantee that investments in research and development will result in a company gaining market share or achieving enhanced revenue. Also, developing technologies to displace older technologies or create new markets may not in fact do so, and there may be sector specific risks as well. As is the case with any industry, there will be winners and losers that emerge, and investors therefore need to conduct a significant amount of due diligence on individual companies to assess these risks and opportunities. Companies involved in, or exposed to, AI-related businesses may have limited product lines, markets, financial resources, or personnel as they face intense competition and potentially rapid product obsolescence. These companies may be substantially exposed to the market and business risks of other industries or sectors and may be adversely affected by negative developments impacting those companies, industries, or sectors, as well as by loss or impairment of intellectual property rights or misappropriation of their technology. Companies that utilize AI could face reputational harm, competitive harm, and legal liability, and/or an adverse effect on business operations as content, analyses, or recommendations that AI applications produce may be deficient, inaccurate, biased, misleading or incomplete, may lead to errors, and may be used in negligent or criminal ways. Companies exploring new technologies may face regulatory, political or legal challenges that may adversely impact their competitive positioning and financial prospects.

Important Information for US ​Investors: This material must be accompanied by the most recent fund fact sheet(s) if used in connection with the sale of mutual fund and ETF shares. Fred Alger & Company, LLC serves as distributor of the Alger mutual funds.

Important Information for UK and EU Investors: This material is directed at investment professionals and qualified investors (as defined by MiFID/FCA regulations). It is for information purposes only and has been prepared and is made available for the benefit investors. This material does not constitute an offer or solicitation to any person in any jurisdiction in which it is not authorized or permitted, or to anyone who would be an unlawful recipient, and is only intended for use by original recipients and addressees. The original recipient is solely responsible for any actions in further distributing this material and should be satisfied in doing so that there is no breach of local legislation or regulation.

Certain products may be subject to restrictions with regard to certain persons or in certain countries under national regulations applicable to such persons or countries.

Alger Management, Ltd. (85 Gresham Street, Suite 308, London EC2V 7NQ, UK) is authorized and regulated by the Financial Conduct Authority, for the distribution of regulated financial products and services. FAM and/or Weatherbie Capital, LLC, U.S. registered investment advisors, serve as sub-portfolio manager to financial products distributed by Alger Management, Ltd.

Alger Group Holdings, LLC (parent company of FAM and Alger Management, Ltd.), FAM, and Fred Alger & Company, LLC are not authorized persons for the purposes of the Financial Services and Markets Act 2000 of the United Kingdom (“FSMA”) and this material has not been approved by an authorized person for the purposes of Section 21(2)(b) of the FSMA.

Important information for Investors in Israel:
Fred Alger Management, LLC is neither licensed nor insured under the Israeli Regulation of Investment Advice, of Investment Marketing, and of Portfolio Management Law, 1995 (the “Investment Advice Law”). This document is for information purposes only and should not be construed as an offering of Investment Advisory, Investment Marketing or Portfolio Management services (As defined in the Investment Advice Law). Services regulated under the Investment Advice Law are only available to investors that fall within the First Schedule of Investment Advice Law (“Qualified Clients”). It is hereby noted that with respect to Qualified Clients, Fred Alger Management, LLC is not obliged to comply with the following requirements of the Investment Advice Law: (1) ensuring the compatibility of service to the needs of client; (2) engaging in a written agreement with the client, the content of which is as described in section 13 of the Investment Advice Law; (3) providing the client with appropriate disclosure regarding all matters that are material to a proposed transaction or to the advice given; (4) a prohibition on preferring certain Securities or other Financial Assets; (5) providing disclosure about “extraordinary risks” entailed in a transaction (and obtaining the client’s approval of such transactions, if applicable); (6) a prohibition on making Portfolio Management fees conditional upon profits or number of transactions; (7) maintaining records of advisory/discretionary actions. This document is directed at and intended for Qualified Clients only.

The following represents the noted percentages of firmwide assets under management as of May 31, 2024: JPMorgan Chase, Inc., 0.10%, LVMH Moet Hennessy Louis Vuitton SE, ​0.2%.

Fred Alger & Company, LLC 100 Pearl Street, New York, NY 10004 / 212-806-8800 / www.alger.com

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ETF Investors

This ETF is different from traditional ETFs.

Traditional ETFs tell the public what assets they hold each day. This ETF will not. This may create additional risks for your investment. Specifically:

You may have to pay more money to trade the ETF’s shares. This ETF will provide less information to traders, who tend to charge more for trades when they have less information.

The price you pay to buy ETF shares on an exchange may not match the value of the ETF’s portfolio. The same is true when you sell shares. These price differences may be greater for this ETF compared to other ETFs because it provides less information to traders.

These additional risks may be even greater in bad or uncertain market conditions.

The differences between this ETF and other ETFs may also have advantages. By keeping certain information about the ETF confidential, this ETF may face less risk that other traders can predict or copy its investment strategy. This may improve the ETF’s performance. If other traders are able to copy or predict the ETF’s investment strategy, however, this may hurt the ETF’s performance. For additional information regarding the unique attributes and risks of this ETF, please refer to the prospectus.

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