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Prediction of Bank Transaction Fraud Using TabNet—an Adaptive Deep Learning Architecture
Journal article   Open access   Peer reviewed

Prediction of Bank Transaction Fraud Using TabNet—an Adaptive Deep Learning Architecture

B.S. Prashanth, Manoj Kumar, Ariful Hoque, Nasser Al Muraqab, Immanuel Azaad Moonesar, Udo Christian Braendle and Ananth Rao
International review of economics & finance, Vol.106, 104916
2026
DOI: https://doi.org/10.1016/j.iref.2026.104916
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Published5.46 MBDownloadView
CC BY-NC-ND V4.0,  Open Access

Abstract

Alternative deep neural networks (DNNs) Decision support systems Digital banking fraud Explainable artificial intelligence (XAI) FinTech Sustainable Development Goals 8 and 16 TabNet
The development of online banking has brought about an increase in fraudulent operations, which is a major problem for banks. This study delves into the urgent requirement for interpretable, scalable, and top-notch fraud detection systems by using TabNet, an adaptable deep learning framework, on a Kaggle dataset consisting of actual bank transactions in India. Maximizing operational risk management by improving the accuracy of transaction anomaly detection and ensuring regulatory compliance through transparent models is the goal. We utilize a supervised learning pipeline that incorporates the Synthetic Minority Over-sampling Technique (SMOTE) to ensure that classes are balanced. Subsequently, we conduct thorough exploratory data analysis (EDA) to identify patterns of fraud, both during specific times and across behaviors. On this dataset, five different deep learning architectures are tested: DNN, GRU, LSTM, CNN1D, and TabNet. Assessment of predictive performance was carried out using a 3-fold cross-validation framework. With a ROC-AUC of 0.9739 and an accuracy of 97.39%, TabNet considerably outperformed the competition. The method of sparse feature selection used improved interpretability, generalized better on tabular data, and produced fewer false positives and negatives. Critical insights for operational fraud detection systems and a contribution to the broader literature on explainable AI (XAI) in financial decision-making are offered by the findings. Goals 8 and 16 of the Sustainable Development Agenda are supported by this study, which promotes inclusive economic growth and institutional transparency. Supporting strong, policy-compliant, and interpretable decision-support systems, it also offers practical use for real-time implementation in banking infrastructure.

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