System and method for verification of financial transactions
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Solution Overview
Problem
Existing financial transaction verification methods are inefficient, costly, and prone to false positives due to individualistic approaches by financial institutions, leading to delayed detection of fraudulent transactions and increased labor and infrastructure requirements, especially with the rise of digital services like cryptocurrencies.
Innovation Solution
A verification tool that sends trigger notifications to multiple financial institutions for automated verification, compares their responses, and provides outcome notifications, using non-client identifying metadata to determine verified or unverified transactions, reducing manual verification and sharing confidential data.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If manual verification is performed at each financial institution independently, then each institution can verify transactions using its own internal rules and data, but the verification process becomes slow, costly, and prone to false positives
Solution Approach 1:
The patent combines verification efforts across multiple financial institutions by having them collectively verify a single transaction. When a transaction is flagged by one institution, other institutions participate in the verification process using their internal rules and data, merging their verification capabilities to reach a consensus decision. This resolves the contradiction by improving reliability through collective verification while reducing time losses compared to independent manual verification at each institution.
Solution Approach 2:
The patent introduces a coordination mechanism that acts as an intermediary to manage the collective verification process. This intermediary coordinates between multiple financial institutions, facilitates information sharing about verification status, and aggregates verification results. This mediator enables institutions to benefit from collective verification expertise without requiring direct complex interactions, thus improving reliability while managing verification time efficiently.
2Reliability
If each financial institution performs independent transaction monitoring, then each institution maintains data security and confidentiality, but the overall detection capability is reduced and false positives increase
Solution Approach 1:
The patent merges the detection capabilities of multiple financial institutions by having them collectively evaluate transactions using their respective internal rules, transaction history, and KYC information. This combination of diverse verification perspectives improves overall fraud detection capability while maintaining each institution's data confidentiality, as each institution applies its own internal criteria without sharing sensitive client data. The collective decision-making process reduces false positives by cross-validating suspicions across multiple independent assessments.
3Reliability
If manual verification is used for all potentially fraudulent transactions, then thorough verification can be performed, but labor costs and infrastructure requirements increase significantly
Solution Approach 1:
The patent applies partial verification action by having multiple financial institutions participate in verifying only those transactions that are flagged as potentially fraudulent, rather than requiring all institutions to manually verify every transaction. This selective approach maintains thorough verification for suspicious cases while significantly reducing overall labor costs and infrastructure requirements. The system performs exhaustive verification only when necessary, based on risk indicators from participating institutions.
4Reliability
If financial institutions do not share client data, then data security and competition are maintained, but the ability to verify the complete transaction chain is limited
Solution Approach 1:
The patent uses an intermediary coordination mechanism that enables transaction chain verification without direct data sharing between institutions. The intermediary facilitates the exchange of verification status and coordination of collective verification efforts while maintaining each institution's data confidentiality. This allows the system to verify the complete transaction chain by aggregating verification results from multiple institutions without requiring them to share sensitive client information directly.
Solution Approach 2:
The patent segments the verification process into independent institutional assessments that are later aggregated. Each financial institution performs verification using its own internal rules and data segments, maintaining data security while contributing to the overall transaction chain verification. The segmented verification results are combined by the coordination mechanism to form a comprehensive view of the transaction chain, enabling thorough verification without information sharing.
Data Source
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AI summary
A method and system for verifying financial transactions is disclosed. A verification tool sends a trigger notification to each of a first and a second financial institution. The trigger notification triggers an automated verification of a first financial transaction involving the first and the second financial institutions. The verification tool receives a verification notification from each of the first and the second financial institutions. The verification notification indicates, based on the automated verification, whether the first financial transaction is a verified transaction or an unverified transaction. The verification tool compares the received verification notifications to determine whether the first financial transaction is a verified transaction or an unverified transaction. The verification tool sends an outcome notification to each of the first and the second financial institutions indicating, based on the comparing, whether the first financial transaction is a verified transaction or an unverified transaction.