Interbank Fraud Alert Network for Real-Time Payment Validation
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Solution Overview
Problem
Current banking systems lack efficient and secure mechanisms for exchanging information to validate transactions, leading to manual processes that are slow, opaque, and costly, with no single bank able to facilitate global transfers due to the need for multiple intermediaries.
Innovation Solution
An Interbank Information Network (IIN) utilizing a blockchain-based platform for secure and decentralized information sharing, enabling direct communication between bank nodes for real-time fraud detection, compliance monitoring, and payment validation, leveraging a permissioned shared ledger and private database to exchange transactional and customer data.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If manual payment validation processes are used with multiple intermediaries, then transaction security can be maintained through human review, but processing time increases to several days and operational costs increase
Solution Approach 1:
The patent replaces manual mechanical review processes with automated blockchain-based smart contracts and algorithms. The system automatically validates transactions, screens for sanctions and fraud, and executes payments without human intervention, eliminating the need for operators to manually review each transaction while maintaining security through cryptographic verification and predefined compliance rules.
Solution Approach 2:
The patent introduces a blockchain network as an intermediary layer between banks. This decentralized ledger technology enables direct peer-to-peer transaction validation and information sharing between participating banks without requiring traditional correspondent bank intermediaries. The blockchain acts as a trusted mediator that facilitates secure data exchange and automated compliance checking across the network.
2Reliability
If multiple intermediary banks are used for global transfers, then transaction security and compliance can be maintained, but the number of participants increases and process opacity increases
Solution Approach 1:
The patent extracts the intermediary function from traditional correspondent banks and consolidates it into a decentralized blockchain network. Instead of routing transactions through multiple hierarchical intermediary banks, the system allows direct peer-to-peer transactions between participating banks on the blockchain, eliminating unnecessary intermediaries while maintaining compliance through automated smart contract enforcement.
Solution Approach 2:
The patent replaces the mechanical hierarchy of intermediary banks with an automated blockchain-based compliance system. Smart contracts automatically enforce sanctions screening, anti-money laundering checks, and other compliance requirements without requiring manual review by intermediary bank personnel. This substitution reduces the number of human participants needed while maintaining or improving compliance effectiveness.
3Reliability
If centralized information exchange systems are used, then data security can be controlled through central authority, but system complexity and operational costs increase
Solution Approach 1:
The patent segments the centralized information exchange system into distributed autonomous nodes on a blockchain network. Each bank operates its own node with local control over its data, eliminating the need for a centralized authority. The system maintains security through cryptographic protocols and consensus mechanisms rather than centralized control, reducing both system complexity and operational costs associated with centralized management.
Solution Approach 2:
The patent enables each bank node to autonomously manage its own data security and compliance requirements through self-service capabilities. Nodes independently validate transactions, screen against sanctions lists, and enforce compliance rules using locally deployed smart contracts. This eliminates the need for centralized data management and security oversight, reducing system complexity while maintaining robust security through distributed verification.
4Reliability
If real-time fraud detection is implemented across all banks, then fraud prevention effectiveness increases, but information sharing infrastructure complexity and costs increase
Solution Approach 1:
The patent creates a universal blockchain-based information sharing infrastructure that serves multiple functions simultaneously: fraud detection, sanctions screening, anti-money laundering monitoring, and transaction validation. This single multi-functional platform replaces the need for separate specialized systems at each bank, reducing overall infrastructure complexity while enabling real-time fraud prevention across the entire network through shared intelligence.
Data Source
AI summary
A method may include receiving, at a first bank system, a report of a fraud event involving an account; receiving, by the first bank system, confirmation of the evidence of fraud; incorporating, by the first bank system, the information to first bank internal fraud controls; and publishing, by the first bank system, an alert to first bank node for the first bank on an information network. A plurality of second bank nodes for a plurality of second banks on the information network receive the alert, a second bank system for each of the plurality of second banks receives confirmation of the evidence of fraud and adds the information to second bank internal fraud controls.