Payments giant Visa has launched a new digital tool to help financial institutions in the US tackle new account fraud.

Dubbed Advanced Identity Score (AIS), the new tool uses artificial intelligence (AI) and machine learning (ML) capabilities to identify risks related to credit and loan applications.

The tool inspects data points related to the frequency of applications, fraud and suspicious activities, and bankruptcy data.

It combines this data with the data from consumers, government, 3rd parties, and law enforcement agencies.

The company claims that this combination will help financial institutions in better handling risk and fraud.

The tool generates a two-digit FCRA-compliant identity fraud score for all new account applications to help mitigate fraud in advance and cut operational costs incurred due to reparations.

AIS helps financial institutions protect consumers against synthetic IDs or account takeover fraud and lessen the number of new fake accounts opened.

Visa global head of data, security and identity products and solutions Melissa McSherry said: “As consumers, financial institutions and merchants focus on controlling expenses during uncertain times, the cost of new account fraud in terms of money and time lost can be significant.

“Advanced Identity Score offers financial institutions a powerful tool to use on top of existing systems and processes to prevent identity-related fraud.”

Visa noted that the new account fraud is estimated to cost companies as much as $10bn every year.