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Shadow mode

As explained in Financial AI in Practice

Shadow mode is a deployment approach in which a model processes live inputs without controlling decisions, allowing its outputs to be evaluated safely.

Shadow mode runs a fraud model on live transactions while withholding its outputs from decisions. For an autoencoder, this allows suspicious transactions flagged by reconstruction error to be validated and thresholds tuned without directly affecting customers. section 8.4.6

Use shadow results to:

  • Set alert thresholds against investigation capacity and acceptable customer friction. section 8.4.6
  • Monitor alert volume, useful findings, and score distributions; recalibrate as data and fraud patterns change. section 8.4.6

Before a real-time model goes live, validate it on live traffic in shadow mode for at least two weeks. Pair this check with monitoring, A/B testing readiness, and a tested rollback plan. section 8.4.7

How Financial AI in Practice covers it

How deep it goes
Details threshold calibration, monitoring, and a two-week validation check, without specifying shadow-mode implementation.
Examples
Uses a 100-alert daily investigation capacity, a 0.1% legitimate-transaction friction target, and two weeks of live validation.
What it assumes
Assumes model scores or reconstruction errors can be assessed alongside review capacity and customer-friction tolerance.
What you can do after
Evaluate and tune fraud thresholds on live traffic without changing decisions, then monitor alerts and recalibrate as conditions shift.
How it connects
Connects anomaly detection, autoencoders, reconstruction error, threshold setting, and real-time fraud scoring.

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This explainer was generated by Manning's knowledge graph from the text of Financial AI in Practice. The section links point to the parts of the book it draws on.