Why effective fraud prevention in 2024 takes advanced ID verification
Preventing fraud is on track to be a major priority throughout 2024, with GBG’s Global State of Digital Identity showing businesses will respond to rising fraud with more significant investments in preventative solutions. This sentiment can be attributed to the expansive digital adoption from previous years and the fact that consumers heavily embraced the digital landscape. An effective strategy for deterring fraud is to rely on advanced identity verification. However, not all solutions offer the same level of protection. Having a multi-pronged verification strategy can support financial institutions in their efforts to deter more fraud in 2024.
Fraud is a growing problem
Fraud is seeing an unfortunate surge across different industries and demographics. Online payment fraud was projected to surpass $48 billion in 2023, up from $41 billion in 2022. GBG uncovered that 72% of US businesses experienced fraud attempts – the highest rate of any market surveyed and far outpacing the 55% global mean rate.
Fraudsters are also getting more targeted with their approach to scamming consumers. Criminals know to exploit the weakness of different groups of consumers based on their demographic. For example, Gen Z and Millennials are more likely to experience identity theft than other generations. While their high online exposure plays into this element, these generations tend to be less proactive when it comes to securing their accounts. Roughly 70% of consumers aged 18-34 reported disliking when a bank required additional security checks to determine a high-risk transaction. Most consumers in this demographic also believe it’s a company’s responsibility to protect their personal information.
On the other hand, Baby Boomers are more likely to fall victim to social engineering scams like romance and fraudulent IT support. Financial institutions shouldn’t take these types of scams lightly either. Nearly 73,000 people in the US lost more than $1bn to romance scams. The median loss for romance scams was $2,400, but those aged 70 and over saw the highest median loss at $9,000.
Create a winning defense in 2024
A layered defense offers a competitive edge against trending fraud. A modern approach to identity verification can empower institutions to effectively manage fraud throughout the customer lifecycle.
Financial institutions must adopt intelligent identity verification technology to combat fraud. An automated verification system is critical to prevent fraud without causing undue inconvenience to customers. The correct approach enables seamless workflows and applies friction only when necessary, resulting in a more efficient and effective onboarding process that promotes customer loyalty and fosters long-term relationships. An orchestrated approach to fraud prevention that relies on automation allows institutions to strike an essential balance between fighting fraud and creating efficient customer journeys.
Learn more techniques to safeguard against fraud in our article, Preventing fraud in 2024, featured in this month’s BAI Banking Strategies Executive Report.