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Fraud is evolving, and so must we
With fraud now the most prevalent crime in the UK, and attempts continuing to increase, as reported by the Office of National Statistics (ONS) with a 19% surge over the last year, the urgency for immediate action is apparent.
Yet, despite UK Finance recording 3.31 million instances of fraud in 2024, the UK remains a global leader in reducing fraud losses. The industry prevented £1.14bn of unauthorised fraud last year, equivalent to stopping 67p for every £1 a fraudster tried to steal, and reimbursed customers for 98% of all unauthorised fraud.
There is no time for complacency, however. Criminals are always among the first to embrace new technologies, ceaselessly innovating, and evolving their tactics. The industry must act now, collaborating on preventive strategies to protect consumers proactively.
Success in preventing Authorised Push Payment (APP) fraud – with case volumes dropping in 2024 to their lowest level since 2021 – has led fraudsters to seek fertile new grounds for attack. Remote purchase fraud, for example, has surged, while pressure for the Single European Payment Area to adopt real-time cross-border payments presents a significant opportunity for criminals to abuse.
The UK's success in mitigating fraud and reimbursing customers is no reason to stop adapting. Fraud is often just as emotionally damaging as it is financially draining, with a Lloyds Banking Group survey last year finding more than two-thirds of fraud victims suffered negative psychological impacts from the experience. To protect victims from trauma and prevent fraudsters from realising any profits, continuous adaptation and early intervention, not just reimbursement, is needed.
Behavioural and device intelligence – including keystroke and mouse activity, touch screen behaviour, and physical device attributes – empowers banks to recognise and stop fraud in real-time, before any money leaves a would-be-victim's account.
Banks cannot do this alone, however. They are often the last line of defence. Fraud typically begins upstream, with phishing, fake ads, and scam calls occurring on social media and other online channels. Other sectors need to bear some responsibility for the origins of these attacks and adopt the same commitment to fraud prevention as their financial services counterparts. Regulators must also hold those other sectors accountable.
The Online Safety Act, while a step in the right direction, has fallen short of enforcing responsibility among tech giants. The government's future strategy must provide direction and incentives to ensure collaboration between the tech, telecoms and banking sectors.
International examples provide a blueprint. In Australia, for example, banks are now working together as part of the world's first behaviour-based financial crime intelligence-sharing network, discussing fraud prevention strategies, new intelligence, and potential risks. With well-designed regulations and the motivation to collaborate across sectors, we as a society can better innovate and devote more resources to the fight against fraud.
Public awareness also plays a crucial role. Australian banks, through their financial crime intelligence network, are supporting customers in actively identifying risks, and the National Australia Bank (NAB) alone has reportedly stopped around $50m of payments by customers within just two months. This outcome highlights the importance of public awareness in preventing fraud and encourages more proactive customer behaviour.
While public awareness is crucial, it's equally important to strike a balance in educating people about the risks of fraud without discouraging them from using digital services. Reduced reliance on technology can lead to lower efficiency and productivity, as well as higher costs, ultimately harming innovation, investment, and economic growth. Getting this balance right is essential.
Even with collective action, we cannot eliminate fraud, but we can disrupt, deter, and make it unprofitable for criminals. By fostering collaboration across the financial services sector, technology, telecoms, government, and society, we can transition from a reactive to a proactive approach, creating friction for fraudsters while reducing friction for consumers.
Jonathan Frost is Director of Global Advisory for EMEA at BioCatch
"Fraud is evolving, and so must we" was originally created and published by Retail Banker International, a GlobalData owned brand.
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