Banks saw more monthly fraud attacks in 2021 compared to the year prior, according to a new study from LexisNexis Risk Solutions. The average volume of monthly fraud attacks for banks earning more than $10 million in annual revenue has increased since 2020 from 1,977 to 2,320, the report found.
Fraud costs also continued to rise. For every dollar of fraud lost in 2021, U.S. financial services firms saw $4.00 in costs, up from $3.64 in 2020 before the pandemic. Those costs represent the transaction face value for which firms are held liable, fees and interest incurred, fines and legal fees, labor and investigation costs and external recovery expenses.
Online banking accounted for 33% of U.S. banks’ fraud costs in 2021, up from 26% in 2020, while mobile transactions accounted for 29% of costs, up from 20% the year prior. In-person fraud accounted for 21% of fraud costs in 2021, down from 29% in 2020.
The report also found that fraud losses take place across all stages of the customer journey—from new account opening to account login to the distribution of funds from a bank or investment account or a loan. Among U.S. banks, the distribution of funds stage was identified by 43% of respondents as being the phase of the customer journey most susceptible to fraud, followed by account login. Banks noted that identity verification was a top challenge for online and mobile channels at all stages of the customer journey.