New report reaffirms reliance on evolving anti-fraud technologies

GBG has just launched our report into the challenges European Financial Institutions (FI’s) are facing in balancing fraud prevention and detection with a frictionless customer experience.

The report, Smoothing the Customer Journey and Preventing Fraud, is illuminating reading, particularly at a time when fraud levels are at unprecedented levels. In 2020, cases of impersonation scams in the U.K. doubled, and Authorised Push Payment (APP) fraud losses amounted to £479 million, an increase of 5% on the previous year.

It’s not surprising, then, that 96% of respondents in our report noted an increase in some type of fraud in 2020, including scams, phishing or third-party identity theft.

Consequently, 93% cited ‘Managing fraud losses in current businesses’ as their highest priority.

The findings also reflect the significant challenges faced by FIs in managing those losses and maintaining control, while ensuring customers’ experiences are impacted as little as possible by these measures. The most challenging in which to achieve this balance, respondents agreed, was the new customer onboarding phase.

What was clear was the focus on technology and its key role in meeting this challenge. Almost all of the FIs surveyed (96%) plan to invest in or prioritise new technologies and capabilities to combat fraud.

Launching the report, GBG EMEA Managing Director Boris Huard said: “Our ‘Smoothing the Customer Journey and Preventing Fraud’ report leaves no doubt as to the emphasis FIs are placing on data and technology to help solve their biggest challenges. Multi-layered verification and data diversity are amongst the top best practices to reduce friction and fraud.”

The report provides insights from more than 900 respondents working in fraud at FIs in five key European markets: the United Kingdom, Germany, France, Spain, and Italy.

Further findings include:

An increase in fraud

• The majority of FIs reported an increase in scams more so than other areas of fraud in 2020.
  
  
• The increase in scam cases in the U.K was almost double that of Italy’s increase.

A focus on integration

• Two-thirds of respondents agree that integration is the most important feature of fraud mitigation technology.
  
  
• More than 75% of respondents have either fully integrated fraud/compliance processes or are planning to integrate both in 2021.

Significant technology investment plans

• While 34% plan to upgrade existing fraud systems, almost as many plan to invest in new technologies, such as end-point threat detection, identity verification, AI solutions including machine learning, new applications and transaction and payment systems.
  
  
• Half of the respondents plan to spend at least £2 million on fraud technology investments in 2021, the focus on which is online channels.
  
  
• FIs in Germany, France and the U.K, plan, on average, to spend up to £20 million.
  
  
• 30% are considering machine learning and other advanced artificial intelligence techniques to detect a wider range of complex fraud behaviours and drive operational efficiencies.

It’s clear that while commercial growth and fraud mitigation are driving factors for FIs, so too is a smooth customer experience. As the perpetrators of fraud adapt and become more sophisticated, so do the technologies that FIs employ to detect them - but ensuring multi-layered solutions impact the vast majority of honest customers as minimally as possible is key.

To read the report in full, download it here and find out how GBG can help you meet your fraud mitigation and customer experience goals.