LexisNexis® 2019 True Cost of FraudTM Study examines the rising effects of fraud.
Whether you’re a massive institution or a small firm, you’re feeling the effects of fraud. It touches all parts of the industry, and rising sharply everywhere. Our 2019 True Cost Of Fraud Study of Financial Services and Lending finds that fraud attempts increased 22% for lenders and a whopping 110% for financial services firms (defined as banks, investment firms and wealth management firms.) But every sector is experiencing fraud differently.
As you might expect, due to the sheer volume of transactions processed, mid/large banks continue to report the most fraud attempts (2,278 per month), with mid/large lending firms not faring much better (1,565 attempts per month).
However, we also see that fraudsters are setting their sights on a broader set of targets. Comparing our 2019 data to that of 2018:
The cost of fraud is rising too.
The loss to institutions goes well beyond the value of the transaction. There are labor and investigation costs. There may be fees and interest incurred during the application, underwriting and processing stages. All of this adds up—and totals are higher than ever. Over the past year, banks and credit lenders have shouldered the steepest increases.
For every $1 of theft, banks went from $2.85 (2018) to $3.34 (2019) in total fraud costs. Credit lenders jumped from $3.01 to $3.49. The most pronounced cost increases occurred in smaller organizations:
How are fraudsters getting in?
Unfortunately, mobile is a double-edged sword—making for highly convenient, accessible service with the potential for added exposure. It’s a delicate balance to manage, especially for small firms: More of them are allowing mobile channel transactions—but few are using (or can afford) the solutions their larger counterparts have put in place to mitigate fraud risks unique to the mobile/digital environment.
Participants in our study cited some specific challenges:
Find out how fraud takes shape in your corner of the industry.
While there are central themes to the fraud challenges across the industry, it doesn’t show up as a single, homogenous recipe for everyone. It’s important to understand how firm size, channel usage, transaction methods, customer base and other factors can impact your particular flavor of fraud.
Learn more about the trends driving fraud in the 2019 True Cost of Fraud Study: Financial Services and Lending edition.