Signicat: Organisations Are Still Unprepared to Fight AI-Driven Fraud

Fraud prevention decision-makers across Europe are acutely aware of the rising threat posed by AI-driven identity and financial fraud, but many remain unprepared to address it, according to a new report from Signicat, a European digital identity and fraud prevention solution provider, as highlighted in The Fintech Times.

The study, titled «The Battle against AI-driven Identity Fraud,» surveyed over a thousand fraud decision-makers from banks, insurance providers, payment providers, and fintechs across Belgium, Germany, the Netherlands, Norway, Spain, Sweden, and the UK. The findings reveal significant concern about AI’s role in facilitating fraud, with 73% of respondents agreeing that AI is a major driver of identity fraud.

Signicat’s research indicates that 42.5% of detected fraud attempts involve AI, and approximately 29% of these attempts are successful. Alarmingly, one in nine respondents estimated that AI is used in up to 70% of fraud attempts within their organizations, with AI-driven attacks accounting for 38% of revenue loss due to fraud.

Asger Hattel, CEO of Signicat, highlighted the severity of the issue, stating, «Fraud has always been one of our customers’ biggest concerns, and AI-driven fraud is now becoming a new threat to them. It now represents the same amount of successful attempts as general fraud, and it is more successful if we look at revenue loss. AI is only going to get more sophisticated from now on. While our research shows that fraud prevention decision-makers understand the threat, they need the expertise and resources necessary to prevent it from becoming a major threat.»

Despite recognizing the threat, many organizations lack the necessary tools and strategies to effectively combat AI-driven fraud. David Birch, director of Consult Hyperion, emphasized the importance of robust identity systems, stating, «Identity is the first line of defense. Identity systems must be able to resist and adapt to ever-changing fraud tactics, to protect legitimate customers and ensure the reputation of the service.»

Signicat suggests that a layered approach to fraud prevention, incorporating data enrichment, verification solutions, and ongoing identity monitoring, is essential to stay ahead of AI-driven fraud. The firm warns that account takeover attacks, often exploiting weak or reused passwords, are the most common type of fraud, while deepfakes are becoming increasingly popular for impersonating account holders.

While organizations are aware of the dangers posed by AI-driven fraud, there is a pressing need for them to adopt advanced fraud prevention technologies and strategies to mitigate these risks effectively.