A new study by Juniper Research has revealed alarming projections for the financial sector, forecasting a 153% increase in fraud, which is expected to escalate from $23 billion in 2025 to a staggering $58.3 billion by 2030.
This surge is primarily driven by the rise of synthetic identity fraud, a technique where fraudsters create fictitious identities using a combination of real, stolen, and fabricated information.
The rise of synthetic identity fraud
Synthetic identity fraud has evolved, becoming increasingly sophisticated as criminals leverage artificial intelligence to generate convincing new identities. This tactic enables fraudsters to exploit existing information, allowing them to bypass traditional fraud detection measures that rely on static checks.
“As these identities are partly based on genuine information, they can pass traditional fraud checks, forcing financial institutions to upgrade their fraud detection and prevention techniques,” warned Lorien Carter, senior research analyst at Juniper Research.
Dynamic verification is essential
To combat the growing threat of synthetic identity fraud, financial institutions must implement dynamic verification methods throughout the customer lifecycle.
Techniques such as biometric behavioural analysis—including typing rhythms and touch patterns—can help identify anomalies in real time and flag suspicious activities before they escalate.
The recent increase in fraudulent transactions not only impacts financial losses but also has regulatory implications. Banks like Monzo, Barclays, and TD Bank have faced fines for failing to adequately identify high-risk transactions, demonstrating that regulators are taking this issue seriously. This reinforces the necessity for banks to enhance their fraud detection capabilities continuously.
Investment in fraud prevention
As fraud techniques become more advanced, investment in fraud detection teams and technology becomes crucial. Financial institutions are urged to allocate more resources to bolster their fraud prevention strategies, not just to protect against immediate financial losses but also to safeguard their reputations.
As fraudsters become more innovative, the need for robust, adaptable fraud prevention measures is paramount for CISOs and their teams, ensuring that they can effectively mitigate risks in this rapidly changing landscape.
