ATLANTA, Jan. 6, 2022 /PRNewswire/ -- LexisNexis®
Risk Solutions today released the 2021 edition of the LexisNexis®
True Cost of Fraud™ Study: Financial Services & Lending, the
5th edition of the report. The study examines fraud trends for
the United States and Canadian
financial services and lending sectors and key pain points related
to adding new payment mechanisms, transacting through online and
mobile channels and international expansion. This edition is based
on responses from more than 500 risk and fraud management
executives in August and September
2021 and reveals that fraud costs and attack volumes remain
significantly higher compared to before the pandemic. U.S. banks
and mortgage lenders are experiencing much of the increase in both
areas, as is the mobile channel.
The cost of fraud for U.S. financial services and lending firms
has increased between 6.7% and 9.9% compared with before the
pandemic. Every $1 of fraud loss now
costs U.S. financial services firms $4.00, compared to $3.25 in 2019 and $3.64 in 2020. While the LexisNexis Fraud
Multiplier™ is slightly less for Canadian financial services firms,
they have experienced a sharper year-over-year rise of 15.5%. The
LexisNexis Fraud Multiplier for U.S. lenders is now $4.16, compared to $3.90 in early 2020 and $4.00 for Canadian lenders, up 12.4% prior to the
pandemic.
Fraud Trends in Financial Services and Lending
- Mortgage Lending Attracts Fraudsters – Mortgage lenders
have been seriously impacted by fraud, with mortgage lending fraud
costs now 23.5% higher than just before the pandemic hit in early
2020.
These costs continue to be higher than other segments. Attacks on
larger mortgage lenders have increased in recent years,
particularly among those originating loans through online/mobile
channels. While slightly down from the early pandemic spike, every
$1 of mortgage lending fraud loss
costs $4.40.
- Targeting the Mobile Channel – The mobile channel
continues to impact higher fraud costs and volumes, as financial
services and lending firms say that criminals have targeted this
channel for fraud during the pandemic.
As banks and mortgage lenders have conducted more transactions
through the mobile channel, these firms have also begun to
attribute more of their fraud costs to it. More than half of
respondents representing U.S. banks and credit lenders surveyed
indicate a 10% or greater increase in mobile channel fraud this
year.
There is also a significant percentage rise across financial
services and lending firms for malicious bot transactions. It is
difficult to identify such bots and other types of fraudulent
transactions involving synthetic identities without support from
digital identity and transaction fraud detection solutions.
- Fraud Across the Customer Journey – Identity
verification, including digital attributes, is a top challenge
across the customer journey. This aligns with identity fraud
representing a significant percent of fraud losses at the point of
funds distribution while these losses continue to grow with new
account openings.
There are additional challenges that tend to be more pronounced for
banks and mortgage lenders at certain points in the
journey.
- For banks, balancing fraud detection with customer friction is
a top challenge alongside new account openings and account logins,
while identifying malicious bots and the transaction origination
are more concerning at funds distribution.
- Mortgage lenders tend to rank balancing fraud detection with
customer friction, identifying malicious bots and knowing the
transaction origination as top challenges across the customer
journey. They are also more likely than other respondents to
include a lack of tools to detect and prevent cross border fraud,
especially with account takeover.
"The foreseeable future is unclear about the new normal. With
the accelerated movement to online/mobile transactions and
payments, financial services and lending firms must continue to
build out and enhance the digital customer experience while
protecting against fraud," said Christopher
Schnieper, director of fraud and identity, LexisNexis Risk
Solutions.
"Fraud prevention must assess both physical and digital identity
attributes as well as the risk of the transaction. It is difficult
for even the best trained professional to detect the increasingly
sophisticated crime occurring in the remote digital channels
without the aid of solutions that detect digital behaviors,
anomalies, device risk and synthetic identities," Schnieper
continued. "According to the study, the financial services and
lending firms doing this – along with fully integrating
cybersecurity operations, the digital customer experience and fraud
prevention – tend to have a lower cost of fraud and fewer
challenges."
Methodology
The report's findings stem from an
extensive survey of 502 risk and fraud management executives in
financial services and lending companies, including retail and
commercial banks, credit unions, firms, trusts and wealth
management, as well as auto lenders, mortgage companies, finance
companies, and non-bank credit card and personal loan issuers.
Download the LexisNexis® True Cost of Fraud™ Study: Financial
Services & Lending.
About LexisNexis Risk Solutions
LexisNexis® Risk Solutions harnesses the power of data and advanced
analytics to provide insights that help businesses and governmental
entities reduce risk and improve decisions to benefit people around
the globe. We provide data and technology solutions for a wide
range of industries including insurance, financial services,
healthcare and government. Headquartered in metro Atlanta, Georgia, we have offices throughout
the world and are part of RELX (LSE: REL/NYSE: RELX), a global
provider of information-based analytics and decision tools for
professional and business customers. For more information, please
visit www.risk.lexisnexis.com and www.relx.com.
LexisNexis and the Knowledge Burst logo are registered
trademarks and LexisNexis Fraud Multiplier is a trademark of RELX
Inc. True Cost of Fraud is a trademark of LexisNexis Risk Solutions
Inc. Other products and services may be trademarks or registered
trademarks of their respective companies. Copyright © 2021
LexisNexis Risk Solutions Group.
Media Contact:
Marcy
Theobald
678.232.0948
Marcy.Theobald@lexisnexisrisk.com
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