The financial industry is particularly vulnerable to digital fraud.
Untold trillions of dollars cycle between financial institutions (FIs) and customers around the world every day, and bad actors are eager to snatch some of those funds for themselves.
Application fraud, which sees cybercriminals submitting financial product applications to banks with no intention of paying them back, is among the most popular techniques. Some studies estimate that up to 10 percent of banks’ bad debts — loans issued with little hope of recouping — is the result of application fraud, and each fraudulent credit application costs FIs $1,000 on average.
These attacks have grown more sophisticated as technology advances, and fraudsters are furthering their schemes with synthetic identity fraud, or scams in which bad actors invent new identities specifically for criminal purposes. Banks are also becoming more able to counter these attacks, however, and are now using tools enhanced by artificial intelligence (AI) and machine learning (ML) to stop them.