According to a 2019 LexisNexis cost of fraud study, whether you’re a massive institution or a small firm, you’re experiencing the effects of fraud. It affects all parts of the industry, and is increasing sharply everywhere.
Every sector is experiencing fraud differently. As you might expect, due to the large volume of transactions processed, mid/large banks continue to report the most fraud attempts (2,278 per month), with mid/large lending firms not faring much better (1,565 attempts per month).
Key Challenges in the Fight against Fraud
The issues that weigh on financial firms generally centre around revenue loss, the inability to stay ahead of emerging fraud risks and the pressure to provide seamless digital experiences.
• The cost of fraud for financial services firms now equals about 1.78% of revenue. Lenders suffer even more, taking a 2.19% hit to the bottom line.
• Our study reveals that the most at-risk financial services and lending firms may not be optimizing solutions and methods to address newer, more complex fraud types such as bots.
• Compounding the issue further, these providers are battling fraud in an era of customer-centricity, where the need to provide positive, fast, low-friction experiences is key to competitive success.
See the Way Forward
•There are several identity-related sticking points to address across channels, and particularly with mobile and international transactions:
• Determining the source of transaction origination
• Limited ability to determine geolocation
• Balancing speed of verification with customer friction
• Study findings underscore the value of adding third-party, real-time data and transaction tracking tools.
• There’s also a need to employ more digital identity and behaviour data and analysis to overcome the complexities of “faceless” digital channels.
• Balance is key: Best results come from a multi-layered approach incorporating different levels of authentication and verification appropriate to the potential risk of the transaction. The toolset should include advanced identity verification and risk assessment solutions that understand the nuances unique to digital and physical channels.
Source: LexisNexis Risk Solutions
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