Is it important for financial institutions to deploy the best possible tools to fight fraud?
Consider this: According to LexisNexis Risk Solutions in its 2018 True Cost of Fraud study for the financial-services sector, for every dollar of fraud a financial institution absorbs, it drains an additional $2.92 in associated costs — that’s up 9% from $2.67 in 2017.
LexisNexis Risk Solutions canvassed 175 executives at retail and commercial banks, credit unions, and related companies to compile the report. In addition to the cost of fraud, the firm calculated the lost value of the transaction plus fees and interest, labor costs for investigations, fines, legal fees, and related expenses.
The mobile channel in particular for mid-size and large financial firms causes concerns, though these worries seem to have eased a bit this year. Just as retailers have to contend with growth in mobile transactions, so too do financial institutions. Seventy-three percent of executives at mid-size to large online-only firms said the evolution of mobile payments and the mobile channel adds significant risk of fraud. In 2017, 86% said so.
Furthermore, the 2017 ABA Deposit Account Fraud Survey reported a 28% increase in check fraud attempts ($6.1B to $7.8B) and check fraud losses ($615 to $789M) from 2016 to 2017.
As the popularity of mobile deposits and remote deposit capture increases, financial institutions should consider incorporating an image and transaction analysis prevention solution to mitigate check fraud and risk in their RDC channels.