Fraudulent activities and scams within the banking sector have reached new levels of sophistication, with 76% of banks acknowledging the increasing complexity of these threats. This revelation stems from the latest report by Mitek Systems, a leading provider of identity verification solutions. Conducted in January 2024 and published recently, the Identity Intelligence Index 2024 surveyed 1500 risk and innovation professionals in the financial services industry across the UK, US, and Spain.

Among the key findings, the report highlights the diverse array of fraud threats faced by banks, ranging from traditional issues like money laundering and account takeover to emerging challenges such as AI-generated fraud and deepfakes. Notably, 32% of risk professionals estimate that up to 30% of transactions could be fraudulent.

The research underscores the acute risk associated with onboarding new customers, with 42% of banks identifying this stage as particularly susceptible to fraud. Despite the implementation of global Know Your Customer (KYC) regulations, nearly 1 in 5 banks struggle to effectively verify customer identities throughout the customer journey.

Respondents also emphasized the importance of regulatory intelligence and streamlined technology stacks to enhance customer protection. While 41% of fintech professionals have implemented identity verification measures, only 33% of mature banks have done so. Additionally, technologies like liveness detection and biometrics are increasingly being utilized to prevent fraudulent activities.

Chris Briggs, Senior Vice President of Identity at Mitek Systems, highlighted the urgent need for collaboration among sectors to address the growing threat landscape. “Financial institutions are under attack. In today’s banking world, we know our customers are overwhelmed by an increasingly complex fraud landscape, ranging from AI-generated fraud and deepfakes globally to record high increases in check fraud in the US,” Briggs warned. “We need to unite government, businesses, and technology to keep people safe online.”

The research, conducted by Censuswide, targeted heads of risk and innovation in both retail and corporate banking sectors. This report sheds light on the evolving nature of fraud within the banking industry and underscores the imperative for proactive measures and collaborative efforts to mitigate these threats effectively.