A new white paper from Nexi Group says that as fraudsters professionalise and adopt sophisticated AI-led techniques, banks and fintechs need to fight back.
Launched today, Nexi’s Fighting the new industrial revolution in fraud points out that the so-called “fourth industrial revolution” in computing isn’t just helping legitimate firms, as fraudsters are also able to use AI and ML coupled with vast arrays of stolen data purchased on the dark web to aid their criminal activities.
Digital economy opportunities: legitimate and otherwise…
In the midst of a wholesale revolution in how people do business, sometimes it helps to stand back and consider the landscape.
Across Europe, e-commerce is growing at around 7% per year[1], with two-thirds of consumers on average buying and selling online.
In more advanced markets such as Norway, the Netherlands and Sweden, however, 95% of consumers now shop online. Digital spending is growing at twice the rate of physical sales, and is projected to hit $4 trillion by 2027[2].
While the digital revolution has created historic levels of opportunity for businesses of all kinds, the new white paper from Nexi points out that bank and fintech fraud defences are being increasingly tested amid this growth by new fraud types tailored to the digital era.
This includes not just standard fraud using fake or stolen cards online, but also new and more challenging types such as Account Takeover (ATO), synthetic ID fraud and Authorized Push Payment (APP) fraud, which is becoming a significant problem in the US, India and other markets as instant payments linked to Open Banking proliferate.
Different patterns for different markets = different solutions
Further complicating this picture is the fact that, just as Europe’s economies are seeing different levels of digital adoption, so the fraud patterns seen in individual markets are different.
While fraud related to identity such as synthetic ID and Account Takeover (ATO) has long been a problem in Romania and other markets, Germany saw a shocking 522% rise in Card Not Present (CNP) fraud last year[3] as fraudsters sought to take advantage of perceived weaknesses in some bank defences.
Meanwhile, the Netherlands has been beset by “phishing” scams via WhatsApp, which rose 11% last year[4], while Sweden is experiencing challenges relating to instant payments via Swish[5].
In the white paper Nexi outline the right strategy to tackle fraud in the digital era, which includes optimizing fraud defense for the attack vectors prevalent in each market, the use of 3D Secure and Risk-Based Analytics such as the Nexi Fraud Solution, and continuous monitoring to identify new attack vectors and fraud types as they emerge
Nexi also outline other critical approaches in their white paper crucial to cutting rates of transaction decline, identifying fraud and reducing “false positives” in fraud identification.
Download Fighting the new industrial revolution in fraud from Nexi now to learn more about optimizing fraud defences for the digital economy.
[1] Payments Cards & Mobile, April 2024: “The 2023-2024 Digital and Card Payment Yearbooks”
[2] Worldpay, 23 March 2024: “The Global Payments Report 2024”
[3] See FICO: European Fraud Monitor for Germany
[4] https://nltimes.nl/2024/02/03/sharp-increase-fraud-reports-2023-especially-via-whatsapp-sms
[5] https://www.telegraph.co.uk/money/banking/sweden-stopped-using-cash-fraudsters-having-field-day/
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