Treasury & Risk’s 2023 Payments Fraud Survey has been released. Not surprisingly, the facts revealed within it show payments fraud remains a serious risk to institutions, while traditional fraud detection and prevention methods remain woefully ineffective.
For banks and credit unions serious about mitigating the costly effects of fraud (we’ll get into the numbers momentarily), a more technology-centered approach to fighting payments fraud must involve the incorporation of artificial intelligence (Ai) with human fraud teams.
But until recently, only large and mega-cap commercial and regional banks had enough resources to include Ai in their budgets to fight fraud. Thankfully, recent advances like RembrandtAi™ have made real-time fraud detection and prevention economically accessible to institutions of all sizes, including small to medium-sized credit unions.
We’ll discuss more on RembrandtAi™ in a moment.
First, the numbers.
Of Treasury & Risk’s 2023 Payments Fraud Survey respondents, 56% reported one or more fraud attempts in the previous year, with 60% saying their top approach to minimize fraud is to “rely on more training for teams involved in initiating and approving payments.”
Earlier this year, the Financial Crimes Enforcement Network (FinCEN) reported a remarkable 84% increase in check fraud over the previous year. The respondents from the T&R survey have all but confirmed this astonishing number.
From paper checks alone, 50% of the respondents said they fell victim to fraud, with wire transfer fraud being reported by 33%, and ACH transfer fraud reported by 10%.
As stated earlier, 60% of respondents are fighting fraud with better employee training. And clearly, more intensive employee training is needed.
But as Treasury & Risk notes, “That means you’re only as good as your newest, least-trained frontline employee. But automation can be constructed to be as good as your best employee. So that raises the standard and equips organizations to deal with fraud more rapidly.”
Credit Union fraud rates increased by 70% in 2022. So, unless institutions adopt a more modern, technology-centered approach to fighting fraud, mitigation efforts will likely continue to fail, and resolution costs may continue to rise.
In fact, a recent industry survey found that 41% of Credit Unions and community banks had fraud losses ranging between $500k and $1 million last year. 20% of CUs and CBs had fraud losses between $1 million and $10 million.
“It’s a huge paradox to see that companies are aware that fraud is getting more and more sophisticated and see this complexity as a major blocker in their fight against fraud, but still think they’ll be able to stop fraud with manual methods… You can’t fight cyber-attacks with a ‘human only’ policy…
“Technology should be used to enhance humans, not replace them. Software is one line of defense. Humans are one line of defense. You’re always more secure having two lines of defense” – T&R.
And that best-in-class, second line of defense your human fraud team should deploy is RembrandtAi™.
We noted earlier how artificial intelligence solutions were once only accessible by well capitalized institutions. But thanks to RembrandtAi™, this technology-centered fraud response is now available to institutions of all sizes.
Its real-time capabilities have already allowed financial institutions to save hundreds of millions in fraud costs, and it can now help yours achieve savings too.
RembrandtAi™ is an all-encompassing, real-time fraud detection and prevention solution for all transactional banking. It incorporates all of your core, offline and online systems into one easy to use interface, alerting your human fraud teams of potential threats as they’re occurring….
Rather than in post-transactional batch data analysis.
When opening a new account, or remaining at their current institution, 74% of depositors say they’re concerned about “good fraud protection.”
Don’t simply offer them good fraud protection. Deliver them the best.
Consider experiencing a full demonstration of the remarkable RembrandtAi™ fraud detection and prevention technology and discover how it helps financial institutions like yours save massively on fraud costs, while helping to solidify your bottom line.