Fraud remains a constant and costly threat for both consumers and their banks.
According to the recent data from the US Federal Trade Commission (FTC), consumers reported losing $10 billion to fraud, a 14% increase over 2022. Traditional fraud detection methods may offer a sense of security, but the reality is that banks are struggling to keep pace with the increasingly sophisticated tactics employed by modern fraudsters. This growing disparity necessitates continuous innovation in detection and prevention strategies, especially as banks navigate the ever-evolving digital landscape.
Three prevalent fraud schemes pose significant challenges to banks:
Check fraud
While checks are considered outdated to many, they pose a modern vulnerability and are the payment method most susceptible to fraud, with losses persistently on the rise. The 2023 AFP Payments Fraud and Control Survey revealed that in 2022, 63% of companies encountered check fraud, underscoring the persistent danger presented by sophisticated counterfeiting methods
Account takeover (ATO)
Stealthy attackers are targeting login credentials, resulting in compromised accounts and financial distress for those affected. Sift’s Q3 2023 Digital Trust & Safety Index revealed that 73% of consumers hold brands accountable for ATO attacks and expect them to safeguard their account credentials.
Synthetic account fraud
This growing threat involves creating fake identities using stolen information to open fraudulent accounts and obtain credit. According to TransUnion, US lender exposure to synthetic identities is nearly $3 billion.
The financial impact of these schemes is only part of the equation. Banks also face the potential for reputational damage and erosion of customer trust. In today’s digital age, where security is paramount, failing to adapt to evolving fraud tactics can have significant consequences.
The imperative is clear: banks must adopt proactive, adaptive, and technologically advanced strategies to stay ahead of the curve. This necessitates embracing innovative solutions that leverage the power of data analytics, artificial intelligence (AI), and machine learning (ML) to identify and prevent fraud in real-time, across all channels – digital, branch, and support center.
By proactively addressing these critical issues, banks can safeguard their financial well-being, protect their customers, and build stronger, more trusting relationships.
Download this free white paper on building a proactive fraud shield with AI for unstoppable banking
Sponsored by Mitek
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