As cybercriminals increasingly use artificial intelligence to carry out complex fraud attempts, the financial sector finds itself in a high-risk battle to protect its customers and assets.
New data from Signicat’s 2024 Battle Against AI-Driven Identity Fraud report reveals that AI-driven fraud now accounts for 42.5% of all detected fraud attempts in the finance and payments sector, marking a critical turning point for cyber security in the financial sector.
Furthermore, it is estimated that 29% of these attempts are considered successful.
This report highlights the rapidly escalating threat posed by AI-enhanced fraud methods, which include the use of deepfakes, synthetic identities and sophisticated phishing campaigns. These advanced techniques allow fraudsters to operate on an unprecedented scale and at an unprecedented level of sophistication.
Current trends in AI-powered fraud:
- · 42.5% of detected fraud involves AI: Almost half of all fraud attempts are now AI-powered, showing that these attacks are becoming increasingly sophisticated and widespread.
- · 80% increase in the total number of fraud attempts: The financial sector has seen an 80% increase in the number of fraud attempts over the past three years, which is partly due to fraudsters’ use of artificial intelligence.
- · Only 22% of companies have implemented AI defenses: Despite the rising risk, less than a quarter of financial institutions have taken steps to implement AI-driven fraud prevention measures, revealing a significant vulnerability.
Weak preparedness: Financial institutions lag behind with AI defenses
With an evolving threat landscape, financial institutions are increasingly aware that traditional defenses are inadequate against AI-driven attacks. The report, developed in partnership with Consult Hyperion, calls on companies to adopt AI-based detection systems, improve cyber security frameworks and promote greater industry collaboration to stay ahead of new fraud methods.
According to Kasadas 2024 State of Bot Mitigation-rapport 87% of respondents say their leadership team is concerned about bot attacks and AI-powered fraud. Nevertheless, Signicat’s report reveals that three-quarters of respondents claim to lack the expertise, resources and budget to tackle AI-driven identity fraud. This suggests that companies in the financial sector are not prepared for this threat.
The expertise gap: Financial institutions struggle to keep up
“Companies are of course in the process of introducing defense mechanisms against AI-driven identity fraud, but the threat is growing. The accelerating digitization we have seen in recent years has also made the attacks more sophisticated and carried out on a large scale. Mechanisms that worked a few years ago are no longer sufficient and it is important that companies consider a multi-layered approach that e.g. combines electronic identities with risk analysis and, if necessary, escalations. Only then can they strike the right balance between letting legitimate users through with less friction and introducing additional security measures when there is a risk.” says Pinar Alpay, Chief Product & Marketing Officer at Signicat. “Since account takeover is one of the most common forms of identity fraud, secure and robust digital identity solutions also protect end users and their accounts when they log in or accept documents”.
The report emphasizes the need for a proactive, multi-layered cybersecurity approach that integrates AI with traditional security measures. It also highlights the importance of educating employees and customers on the new threats posed by AI in the evolving cybercrime landscape.
Source: it-kanalen.dk
