More than a third of banks and credit unions plan to increase their technology spending by between 6% and 10% over the next two years, according to research.
A new study by fintech firm Jack Henry found that, as well as prioritizing digital banking, financial services companies intended to focus on tackling fraud through technology.
Phishing attacks and data breaches are the main cybercrime concerns for financial institutions, the study found, while banks are also concerned about ransomware. For credit unions, a chief concern was real-time payments fraud.
The Jack Henry report stated: “The influx of fraudsters that emerged over the course of the pandemic is here to stay — creating long-term consequences for financial institutions, such as rising attack volumes, consumer-targeted scams, and zero-day threats that render traditional, rules-based fraud-control methods inadequate.”
It also warned that authorized push payment (APP) fraud was expected to rise in the next few years. This fraud method involves individuals tricking victims into making payments, and combatting this “will remain a priority for financial institutions as losses grow”, Jack Henry said.
Tackling fraud and improving security was the second-highest priority for banks after digital banking expansion, and was the third-highest priority for credit unions after data analytics capabilities and digital banking.
These areas were not mutually exclusive, however, as the report’s authors explained: “Collecting and analyzing payment data will play an important role in strategic planning, as payments data helps financial institutions gather competitive intelligence, understand accountholder patterns and preferences for marketing segmentation, and identify/prevent cross-channel fraud in real-time.”
The research comes as new data from verification technology company Sumsub showed an “alarming” increase in identity fraud cases. These included forced verification, where a person is persuaded to verify a transaction against their will, and “deepfake” technology through which criminals can create videos or images of a person to steal their identity.
Criminals are attempting to forge documents to get past verification checks, according to Sumsub, requiring improvements to standard ‘know-your-customer’ processes.
“Anti-fraud and verification providers who do not work constantly to update deepfake detection technologies are lagging behind and put both businesses and users at risk,” said Sumsub’s head of artificial intelligence and machine learning, Pavel Goldman-Kalaydin.
“Upgrading deepfake detection technology is an essential part of modern effective verification and anti-fraud systems.”