Software that its developers claim flags up fraudulent transactions has been launched by UK company Bank Clarity.

The Bank Clarity Personal software, which is also used by businesses, has been designed to learn about the user's spending patterns and automatically alert the user to unusual transactions.

When a user logs onto their online bank account, the software automatically downloads all bank and credit card statements to give a history of a person's income and outgoings.

Initially the user 'teaches' the software about their finances by allocating each transaction to the right folder; for example,'Sainsburys' or 'Hairdresser' or 'Salary'.

Then every time they log onto their bank account and the software sees a transaction it recognises, say a purchase in Sainsburys, it will allocate it to the right folder automatically.

Then the user sets up safety parameters. For example, they may say they never spend more than £75 at any one time at Sainsbury's or buys from this supermarket more than four times a month; if the software finds this has been breached it automatically warns the user.

Another example could be that a direct debit is inadvertently collected twice in a month, which the user may not spot on their bank statement.

The parameters can be adjusted when needed; for example, because of a bonus or for one-off expenses such as car repairs.

Because it can analyse income and expenditure this can help a person stay within their budget. The developers boast it can even forecast budgets years ahead based on what it learns about the user's spending habits.

Security is not an issue consumers need to worry about, Bank Clarity said, despite the fact that banks will often say in their terms and conditions that use of such third-party technology can leave the consumer liable for any costs if fraud occurs.

The company claims there is no way that a cyber criminal - even a very clever one - could gain access to these accounts even if the PC is infected by spyware or other malware. The information that it takes from bank and credit card accounts is retained on the user's PC and encrypted so it is of little use to a hacker.

"They couldn't even somehow steal the files and use them on another version of BankClarity Personal as they only work with the version that downloaded them.

"The connection with the online bank downloads the information in 'packets' which are encrypted then the originals securely deleted. Even if anyone could get hold of one of these packets (which they can't!) in isolation it would be meaningless," the company told us.

BankClarity goes so far as to say the software actually helps banks combat fraud. It explained that fraudsters often initially only take a series of small amounts from an account. This means they slip under the bank's and consumers' radar.

"The banks only notice when the amount becomes something considerable, at which time they email you," the company said.

Each time a Bank Clarity Personal user logs on to their online banking account, it chunters gently away in the background, checking statements for updates, potential fraud and mistakes. It will automatically alert the user to any transaction it doesn't recognise.

This means it picks up even the smallest payment anomaly so can help stop major fraud; the company said one major UK bank is finalising discussions with the company to implement this technology.

Helpfully all the information about any suspect transaction is logged onto one easy-to-understand page that can be printed out and presented to the user's bank as evidence.

The software, which can be downloaded at the Bank Clarity website, costs £29.95 for a year or £59.90 for a three-year subscription.