The report, titled “The Human Impact of Fraud and Financial Crime on Customer Trust in Banks”, revealed that romance scams are the most common type of fraud. Approximately one in ten respondents have fallen victim to romance fraud, losing more than $8,400 to scammers.
However, despite the large number of fraud victims, many respondents still lack the knowledge to detect and distinguish types of financial crime.
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According to Feedzai, consumers believe it is the responsibility of their bank to reimburse them in case of falling prey to scammers. Around 77% claim they would leave their banking services provider should they not be refunded.
Pedro Barata, chief product officer at Feedzai, said: “Our latest report highlights a major issue in terms of public awareness and education surrounding the distinctions between various types of financial crimes.
“With a surge in digital banking services, a willingness among customers to switch banks, and an ongoing cost of living crisis, it is more important than ever for banks to foster strong relationships with their customers and establish trust”, Barata added. “The potential of AI and other advanced technologies to enhance security measures and better protect customers from these threats has never been clearer”.
Combating fraud through AI
Feedzai’s research found that emerging technologies such as ChatGPT create new challenges for banks and financial institutions in tackling financial crime.
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By GlobalDataHowever, 53% of respondents claim they feel safer knowing their bank uses AI to protect them against fraud. Still, 46% of them expect AI technology to be accurate in preventing fraud; otherwise, respondents say, they would consider leaving their bank if it stopped a legitimate transaction, even if the issue was solved quickly.
The number of fraudulent activities has drastically increased since Covid-19. With social engineering schemes overtaking traditional fraud techniques for the first time in 2022, experts warn against an increase in the number of fraud victims.
According to GlobalData’s “Trends in Payment Fraud” report published in February, authorised push payment fraud losses reached £811m (over $1bn) in 2022. The number is expected to grow at a CAGR of 20.5% between 2021 and 2026.
