UK banks prevented £651m of unauthorised fraud from being stolen through advanced security systems in the first half of 2023.
According to UK Finance’s half-year fraud report, 77% of Authorised Push Payment (APP) fraud started online and another 17% started through telecommunications networks. The financial services sector is at the forefront of efforts to protect customers from fraud. This includes partnering with other sectors, government and law enforcement to prevent and disrupt this criminal activity and bring perpetrators to justice.
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More work to be done: Martin Cheek, MD SmartSearch
Martin Cheek, MD, SmartSearch, told RBI: “The latest UK Finance half-year fraud report reveals eye-watering yet insightful figures. While it is encouraging to see a 2% decrease in fraud losses, amounting to £580m in the first half of 2023, regulated firms cannot afford to get complacent.
“The report highlights the effectiveness of advanced security systems that have prevented an additional £651m in unauthorised fraud. This is a testament to the financial services sector’s ongoing efforts to protect its customers. But it is clear that there is more work to be done.
“The staggering 77% of Authorised Push Payment (APP) fraud originating online, with another 17% through telecommunications, underscores an urgent need for robust digital countermeasures. The digital landscape is a nefarious and fertile ground for criminal gangs, and firms must be vigilant in safeguarding their reputations.
“As the report correctly points out, the financial services sector is at the forefront of anti-fraud efforts, with established collaborations with other sectors, the government, and law enforcement. That said, the fight against these criminal gangs is a collective responsibility that extends to all regulated firms. Technology is playing an increasingly vital role in preventing these crimes and the money laundering that is an inevitable consequence of them.
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By GlobalData“Regulated firms must continue to invest in electronic verification to help protect their customers from fraud – and themselves from the fines and reputational damage which come from anti-money laundering breaches.”
Industry still needs to get its house in order: Tom Voaden, BR-DGE
Tom Voaden, Head of Partnerships at payment fintech BR-DGE told RBI:” This latest data from UK Finance is a clear reminder that the industry still needs to get its house in order when it comes to fraud prevention and protecting consumers from the most harmful effects of criminal activity.
“While it is positive to see a drop in fraud levels overall, there is work to be done to counter the most sophisticated and severe forms of fraud, in particular Authorised Push Payment (APP) fraud. This new data reveals how the industry continues to grapple with a myriad of challenges including the negative impact of social media, persistent card-based fraud, and a lack of awareness around fraud prevention.
“Recent initiatives from the payments industry have led to positive results but there is a complex road ahead to counter fraud. There needs to be greater awareness for all around payment fraud risks so that new innovations are adopted. Biometric authentication at the checkout through the likes of open banking should support a reduction in fraud in the coming years.
“Network tokenisation also has the ability to further clamp down on data fraud and mass data breaches. Increased usage of artificial intelligence in fraud data screening could make a real positive impact on fraud rates but we are only in the foothills of what is possible in this area. Ultimately, the industry needs to continuously innovate to move quicker than constantly adapting criminals. But this needs to be alongside greater adoption of new technologies across the payment lifecycle.”
