Transparency and Privacy: The Role of Explainable AI and Federated Learning in Financial Fraud Detection

Fraudulent transactions and how to detect them remain a significant problem for financial institutions around the world. The need for advanced fraud detection systems to safeguard assets and maintain customer trust is paramount for financial institutions, but some factors make the development of effective and efficient fraud detection systems a challenge. One of such factors is the fact that fraudulent transactions are rare and that many transaction datasets are imbalanced; that is, there are fewer significant samples of fraudulent transactions than legitimate ones. This data imbalance can affect the performance or reliability of the fraud detection model. Moreover, due to the data privacy laws that all financial institutions are subject to follow, sharing customer data to facilitate a higher-performing centralized model is impossible. Furthermore, the fraud detection technique should be transparent so that it does not affect the user experience. Hence, this research introduces a novel approach using Federated Learning (FL) and Explainable AI (XAI) to address these challenges. FL enables financial institutions to collaboratively train a model to detect fraudulent transactions without directly sharing customer data, thereby preserving data privacy and confidentiality. Meanwhile, the integration of XAI ensures that the predictions made by the model can be understood and interpreted by human experts, adding a layer of transparency and trust to the system. Experimental results, based on realistic transaction datasets, reveal that the FL-based fraud detection system consistently demonstrates high performance metrics. This study grounds FL's potential as an effective and privacy-preserving tool in the fight against fraud.

Histopathological Image Classification and Vulnerability Analysis using Federated Learning

Healthcare is one of the foremost applications of machine learning (ML). Traditionally, ML models are trained by central servers, which aggregate data from various distributed devices to forecast the results for newly generated data. This is a major concern as models can access sensitive user information, which raises privacy concerns. A federated learning (FL) approach can help address this issue: A global model sends its copy to all clients who train these copies, and the clients send the updates (weights) back to it. Over time, the global model improves and becomes more accurate. Data privacy is protected during training, as it is conducted locally on the clients' devices. However, the global model is susceptible to data poisoning. We develop a privacy-preserving FL technique for a skin cancer dataset and show that the model is prone to data poisoning attacks. Ten clients train the model, but one of them intentionally introduces flipped labels as an attack. This reduces the accuracy of the global model. As the percentage of label flipping increases, there is a noticeable decrease in accuracy. We use a stochastic gradient descent optimization algorithm to find the most optimal accuracy for the model. Although FL can protect user privacy for healthcare diagnostics, it is also vulnerable to data poisoning, which must be addressed.

Give and Take: Federated Transfer Learning for Industrial IoT Network Intrusion Detection

The rapid growth in Internet of Things (IoT) technology has become an integral part of today's industries forming the Industrial IoT (IIoT) initiative, where industries are leveraging IoT to improve communication and connectivity via emerging solutions like data analytics and cloud computing. Unfortunately, the rapid use of IoT has made it an attractive target for cybercriminals. Therefore, protecting these systems is of utmost importance. In this paper, we propose a federated transfer learning (FTL) approach to perform IIoT network intrusion detection. As part of the research, we also propose a combinational neural network as the centerpiece for performing FTL. The proposed technique splits IoT data between the client and server devices to generate corresponding models, and the weights of the client models are combined to update the server model. Results showcase high performance for the FTL setup between iterations on both the IIoT clients and the server. Additionally, the proposed FTL setup achieves better overall performance than contemporary machine learning algorithms at performing network intrusion detection.

Analyzing the Impact of Adversarial Examples on Explainable Machine Learning

Adversarial attacks are a type of attack on machine learning models where an attacker deliberately modifies the inputs to cause the model to make incorrect predictions. Adversarial attacks can have serious consequences, particularly in applications such as autonomous vehicles, medical diagnosis, and security systems. Work on the vulnerability of deep learning models to adversarial attacks has shown that it is very easy to make samples that make a model predict things that it doesn't want to. In this work, we analyze the impact of model interpretability due to adversarial attacks on text classification problems. We develop an ML-based classification model for text data. Then, we introduce the adversarial perturbations on the text data to understand the classification performance after the attack. Subsequently, we analyze and interpret the model's explainability before and after the attack

Analyzing the vulnerabilities in SplitFed Learning: Assessing the robustness against Data Poisoning Attacks

Distributed Collaborative Machine Learning (DCML) is a potential alternative to address the privacy concerns associated with centralized machine learning. The Split learning (SL) and Federated Learning (FL) are the two effective learning approaches in DCML. Recently there have been an increased interest on the hybrid of FL and SL known as the SplitFed Learning (SFL). This research is the earliest attempt to study, analyze and present the impact of data poisoning attacks in SFL. We propose three kinds of novel attack strategies namely untargeted, targeted and distance-based attacks for SFL. All the attacks strategies aim to degrade the performance of the DCML-based classifier. We test the proposed attack strategies for two different case studies on Electrocardiogram signal classification and automatic handwritten digit recognition. A series of attack experiments were conducted by varying the percentage of malicious clients and the choice of the model split layer between the clients and the server. The results after the comprehensive analysis of attack strategies clearly convey that untargeted and distance-based poisoning attacks have greater impacts in evading the classifier outcomes compared to targeted attacks in SFL

A Deep Learning-based Compression and Classification Technique for Whole Slide Histopathology Images

This paper presents an autoencoder-based neural network architecture to compress histopathological images while retaining the denser and more meaningful representation of the original images. Current research into improving compression algorithms is focused on methods allowing lower compression rates for Regions of Interest (ROI-based approaches). Neural networks are great at extracting meaningful semantic representations from images, therefore are able to select the regions to be considered of interest for the compression process. In this work, we focus on the compression of whole slide histopathology images. The objective is to build an ensemble of neural networks that enables a compressive autoencoder in a supervised fashion to retain a denser and more meaningful representation of the input histology images. Our proposed system is a simple and novel method to supervise compressive neural networks. We test the compressed images using transfer learning-based classifiers and show that they provide promising accuracy and classification performance.