Faster Payments Get Faster Fraud Defense

Faster payments means faster fraud, at least that’s the fear.

FedNow® Service’s debut a year and a half ago, and traction gaining across The Clearing House’s RTP network (which recently crossed the 1 billion transaction mark) have given consumers and enterprises a broadening range of payments choice, where funds can be delivered in real time, instantly, without taking days to settle.

But for banks, along with the rewards of faster payments, there are risks too — and to keep their customers safe, they are leveraging high-tech tools to ward off the bad actors. Banks’ clients are aware of the growing arsenal that their financial institutions (FIs) can leverage, and they are willing, too, to endure a bit of friction (and they want some reassurance from their banks, too) in order to transact with a bit more confidence.

Fraud is on the upswing. As noted in the Ingo Payments/PYMNTS Intelligence report “How Faster-Payments Providers Are Reducing Fraud Risks” our data shows that a growing percentage of FIs are under attack, as the percentage of FIs experiencing increased fraud-related dollar losses rose from 29% to 40% year over year in 2024.

These attacks are varied, because the fraudsters are nimble and resourceful. The attacks range from simple scams to sophisticated deep fakes or waves of botnets.

The risks are more than financial — for the FIs themselves, the seismic impact can extend far beyond the attacks themselves. It can take a lifetime to build a reputation, and the reputation can be in tatters in a matter of minutes. Customers can and will flee a bank if they feel they’re not being look after — and especially if they have experienced fraud themselves. 

And those that are being bombarded?  Well, that includes just about everyone. Studies show that 76% of U.S. consumers in 2024 received unsolicited communications via text, email or phone that they suspected to be scam attempts. Fifty-one percent of U.S. consumers reported having friends or family members who were scammed last year.

Data shows 75% of clients would switch providers if they perceive that their FIs’ fraud protections were inadequate. This means that banks must step up their fraud game, given the fact that within three years 70% to 80% of all FIs in the U.S. will have the ability to receive real-time payments; about 30% to 40% will have the ability to send them.

Another 55% of consumers say that security and privacy are among their top concerns — and 70% of customers say they are willing to spend “more time” on identity verification in order to make sure that funds are flowing and being received safely. 

The willingness to have stepped-up, tech-fueled defenses in place comes as, we found, three-quarters of global FIs are also actively employing artificial intelligence (AI) for fraud detection, while 74% are using the technology to uncover financial crime before the criminals make off with ill gotten gains.

The advanced technologies systems typically monitor customer behavior, flagging deviations that would in turn be used to introduce intelligent friction into the mix.  In that way, there would be benefits that run both ways: Customers would trust that their bank is delivering the top technologies to aid in their defense; while the FIs would gain from consistent dialogue that fosters greater customer loyalty.

The post Faster Payments Get Faster Fraud Defense appeared first on PYMNTS.com.