How to turn identity fraud prevention into a competitive advantage

Identity fraud is an ongoing issue for banking institutions, but advancements in new technologies, like GenAI, are ushering in a brave new world for security teams. Scammers are using the tech to beat traditional fraud-deterrent systems, and forcing institutions to face new security threats – as well as opportunities for growth.

Some of the most common schemes – like “bust-out fraud” that involves applying for a line of credit with false identification and no intention of repaying debts – are now costing financial institutions billions of dollars a year and eroding customer trust. More than half of U.S. banks experienced $500,000 in direct fraud losses last year, while about a quarter of respondents reported losing over $1 million, according to recent research from Alloy.

Fraudulent attempts and attacks are increasingly sophisticated and are pushing executives to shift priorities from simple transaction-based security models to identity-based systems, according to the report. Fraud remained a top risk for banks with 57% of responding financial institutions hit with an increase in attacks last year.

 

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