Report reveals 76% of banks face sophisticated fraud threats

Mitek's new Identity Intelligence Index report has unveiled increasing threats to financial institutions (FIs), with an alarming 76% of banks surveyed stating that fraud cases and scams have become more sophisticated. These findings come at a time when banks worldwide are grappling with intricate threats to customer assets and sensitive data, signalling the importance of proactive methods to ensure safety.

Top threats to banks identified today encompass money laundering (25%), account takeover (23%) and forgeries (21%). However, the rising trend of AI-generated fraud and deepfakes has presented a new challenge, impacting 37% of the FIs surveyed. Notably, the survey also brings to light that the process of customer onboarding or account setup is where most banks (42%) witness the highest fraud and risk (41%).

The survey, commissioned by Mitek and Censuswide, gathered responses from 1,500 risk and innovative professionals in the financial sectors across the UK, US, and Spain. It sought to statistically validate the daily challenges confronting these institutions while helping these organizations strategize their future plans.

These FIs are battling a plethora of diverse fraud threats ranging from deepfake tech to money laundering. Risk and innovation leaders are constantly striving to combat these evolving threats for their customers' benefit. Up to 30% of all transactions are fraudulent, according to an estimate by almost a third (32%) of risk professionals, illustrating how intricate the contemporary fraud landscape has become.

Interestingly, the survey reveals that new customers often constitute the highest risk. Despite global Know Your Customer (KYC) regulations, nearly one in five (19%) banks find it challenging to identify customers at any stage of the customer journey. This difficulty in identification can lead to increased vulnerabilities, thereby undermining organisational integrity.

As per the survey, banks looking to amplify their protective measures equally prioritise (36%) understanding the latest regulations, a reduction in the technology stack, and the ability to respond in real-time to customer requests. To prevent or trap fraudulent attacks, 41% of fintech professionals use identity verification, compared with 33% in mature banks. Around one in three banking professionals employ both liveness detection (36%) and biometrics (32%).

Chris Briggs, Senior Vice President of Identity at Mitek Systems, highlighted the gravity of the situation, saying, "Financial institutions are under attack." He explained, "In today's banking world, we know our customers are overwhelmed by an increasingly complex fraud landscape, ranging from AI-generated fraud and deepfakes globally, to record high increases in check fraud in the US. We need to unite government, businesses and technology to keep people safe online."