Artificial intelligence (AI) has been a godsend in the fintech industry. It has been able to vastly improve a lot of customer experiences as well as improve back-end data analysis for firms too. However, bad actors have also been able to abuse the tech, and in 2024, 87 per cent of industry experts have acknowledged the tech could be used to drive fraud attempts according to a new SEON report.
The end-to-end fraud prevention and AML platform, SEON, has published its latest findings in its Fraud Trends 2024 guide, revealing businesses’ challenges for the year ahead. Some of these challenges include volume, cost, and complexities of fraud. Despite a generally optimistic outlook on the fintech market for the upcoming year, increased fraud sophistication and frequency pose significant threats to the industry.
The report, informed by an extensive survey of 316 cross-industry experts and enriched with proprietary and independent fraud research, casts a spotlight on the pressing issues and strategic imperatives for businesses navigating fraud’s complex terrain.
AI will not be the only development accelerating fraud attempts. The guide also identifies the proliferation of fraud-as-a-service (FaaS), and the demand for fast transactions and escalating economic pressures as reasons for an increase in fraud.
A proactive anti-fraud strategy is no longer a nicety – it is a necessity
“The time for decisive action is now,” said Tamas Kadar, CEO and co-founder, SEON. “Business leaders and fraud and risk management teams must combat the increasingly sophisticated and complex emerging threats we are now seeing at scale thanks to advanced technologies like AI and machine learning. This report signals that companies can no longer afford to not have a proactive anti-fraud strategy. To safeguard their revenue, it’s imperative to adopt a comprehensive approach to fraud prevention.”
The guide also identifies the dual role of AI in fraud dynamics, rising fraud types and countermeasures and the importance of strategic investment in fraud prevention.
AI is expected to be the biggest challenge for fraud prevention in the coming months. In fact, 71 per cent of respondents named it as the number one issue, particularly in automated attacks and deepfake technologies.
Seventy-three per cent of respondents expect an uptick in these types of fraud: phishing, synthetic fraud, identity theft, account takeovers (ATO) and money-laundering.
Overcoming cost and integration issues will prove essential for effective fraud prevention with 57 per cent of respondents also planning to increase their spending on anti-fraud solutions in the year ahead.
As fraud continues to evolve, stopping fraud earlier in the customer journey will become a priority. Real-time data and AI-enhanced technologies are emerging as powerful tools to help businesses tackle rising fraud volumes.
Francis Bignell
