QFNN-FFD: Quantum Federated Neural Network for Financial Fraud Detection

Abstract

This work introduces a Quantum Federated Neural Network for Financial Fraud Detection (QFNNFFD), an advanced framework merging Quantum Machine Learning (QML) and quantum computing with Federated Learning (FL) for financial fraud detection. Using quantum technologies' computational power and the robust data privacy protections offered by FL, QFNN-FFD emerges as a secure and efficient method for identifying fraudulent transactions within the financial sector. Implementing a dual-phase training model across distributed clients enhances data integrity and enables superior performance metrics, achieving precision rates consistently above 95%. Additionally, QFNN-FFD demonstrates exceptional resilience by maintaining an impressive 80% accuracy, highlighting its robustness and readiness for real-world applications. This combination of high performance, security, and robustness against noise positions QFNN-FFD as a transformative advancement in financial technology solutions and establishes it as a new approach for privacy-focused fraud detection systems. This framework facilitates the broader adoption of secure, quantum-enhanced financial services and inspires future innovations that could use QML to tackle complex challenges in other areas requiring high confidentiality and accuracy.