LexisNexis Risk Solutions has released a new True Cost of Fraud report that details the growing impact of fraud on the American financial services and lending sector. The report found that every dollar lost to fraud costs financial services providers $3.25 in liability, recovery costs, and other expenses, a figure that is up from $2.92 in 2018.
The numbers are even worse for American lenders, who face a $3.44 price tag (up from $3.05) for every dollar lost to fraud. Banks and credit lenders were the hardest hit institutions within that category.
LexisNexis Risk Solutions attributed many of those costs to the rise of digital banking, with many institutions sacrificing security in their efforts to streamline their services. More than 70 percent of financial institutions now offer a mobile channel to their customers, creating more opportunities for fraudsters to take advantage of weak identity verification systems.
“The trends we have identified represent the challenges surrounding identity verification and authentication,” said LexisNexis Risk Solutions Fraud and Identity Management VP Kimberly Sutherland. “However, firms utilizing a multi-layered approach with digital identity intelligence and behavioral biometrics can expect to lower the true cost of fraud.”
The report went on to note that the volume of international transactions is increasing. There has also been a double-digit increase in botnet activity, with fraudsters going after a wider array of small and large financial institutions.
The analysis was based on a survey of 205 financial executives. The new report arrives shortly after a previous LexisNexis Risk Solutions report that examined fraud in the retail sector.
October 30, 2019 – by Eric Weiss