Financial institutions are pouring money into AI and other technologies to combat fraud, but according to a new survey, the biggest threat may still be sitting at the keyboard.
The research from ProSight found that gaps in fraud awareness among customers and employees were the single biggest cause of preventable fraud losses, according to financial services executives surveyed. What’s more, banks’ fraud prevention budgets continue to grow, with many institutions weighing investments in technologies like identity verification, real-time payment controls, and AI-powered fraud defenses.
However, many financial institutions are also recognizing that awareness can be an important line of defense. Roughly 87% of respondents said they planned to bolster spending on customer education, while more than three-quarters said they already use direct customer communications to help prevent fraud.
The Dual Investment
This emphasis on both education and technology exemplifies a two-pronged approach which has become more prevalent in fraud prevention. Rather than targeting financial institutions directly, cybercriminals are increasingly exploiting the people connected to them, including employees and customers.
For example, UK fintech giant Revolut was recently breached after a cybercriminal posed as a government agency and submitted fraudulent requests for customer information. Because the requests originated from a legitimate government domain, Revolut disclosed sensitive customer data.
A Vast Pool of Targets
Employees and customers also give cybercriminals a vast pool of potential targets, while advances in AI are making those attacks easier to scale and more convincing.
Criminals, for instance, can use deepfakes to pose as company leaders or trusted vendors, manipulating employees into authorizing fraudulent transactions or divulging sensitive information.
Consumers face similar risks. Technology has made it easier for bad actors to create convincing impersonation scams with potentially devastating consequences. According to data from the U.S. Federal Trade Commission, the highest reported losses from impersonation scams last year came from criminals posing as representatives of financial institutions.
By and large, these trends are creating an increasingly daunting fraud environment. In the ProSight survey, roughly 85% of executives said the threat landscape was changing faster than their institutions could respond, despite their efforts to keep pace.