Two of the largest challenges facing financial institutions are identity-related, according to the new Aite Group impact report: Financial Institution Fraud Trends: ATO and Application Fraud Rising Rapidly.
Application fraud and account takeover fraud threats were initially fueled by the wealth of personal information available from so many data breaches, Aite said in a press release. The fraudsters have since built on this personal financial information to become far more sophisticated at aging the synthetic identities they create, thereby developing a new set of challenges for FIs, which chave regulatory, reputational and market risks if they don’t keep up with fraudsters’ latest ploys.
However, the FIs also need to consider the costs involved, so they are evaluating whether improving security and the customer experience can offer a competitive advantage, according to Aite.
The company’s survey data indicates that for 74 percent of U.S. FIs, improving the customer experience is an important component in the business case for a new fraud solution.
“Improved security doesn’t have to translate to greater friction for customers,” Aite Group senior analyst Shirley Inscoe said in a prepared statement. “Both FIs and fraud solution providers will benefit from understanding the current challenges and the resulting opportunities in the market.”