As cybercriminals increasingly turn to artificial intelligence to carry out fraud attempts and execute complex scams, the financial sector is in a fight to protect its customers and assets. New data from Signicat’s Battle Against AI-Driven Identity Fraud report reveals that AI-driven fraud now makes up 42.5% of all fraud attempts detected in the financial and payments sector, marking a turning point critical for cybersecurity in the financial industry. Furthermore, it is estimated that 29% of these attempts are successful.
This report sheds light on the rapidly expanding threat posed by AI-enhanced fraud attempts, including the use of deepfakes, synthetic identities, and sophisticated phishing campaigns. These advanced techniques allow fraudsters to operate at an unprecedented scale and level of sophistication.
Current trends in AI-powered fraud
- 42.5% of detected fraud attempts are related to AI– Nearly half of all fraud attempts are now AI-based, demonstrating the growing sophistication and prevalence of these attacks.
- 80% increase in overall fraud attempts: The financial sector has seen an 80% increase in fraud attempts over the past three years, driven in part by the adoption of AI by cyber criminals.
- Only 22% of companies have implemented AI-based defenses: Despite escalating risk, less than a quarter of financial institutions have taken steps to implement AI-based fraud prevention measures, exposing a significant vulnerability.
A weak response: financial institutions, behind in their defenses against AI
Faced with this evolving threat landscape, financial institutions are increasingly aware that traditional defenses are proving insufficient against AI-driven attacks. The report, produced in collaboration with Consult Hyperion, calls on companies to adopt AI-based detection systems, improve cybersecurity frameworks and encourage greater collaboration in the sector to stay ahead of the evolution of fraud techniques.
42.5% of the fraud attempts that have been detected are related to Artificial Intelligence
According to Kasada’s 2024 State of Bot Mitigation report, 87% of respondents say their executive team is concerned about bot attacks and AI-powered fraud. However, Signicat’s report reveals that three-quarters of respondents say they lack the experience, resources and budget to tackle AI-powered identity fraud. This suggests that companies in the financial sector are not prepared for this threat.
Knowledge gap: financial institutions struggle to keep up
“Naturally, companies are putting in place defense mechanisms against AI-powered identity fraud, but the threat is growing. The acceleration of digitalization that we are seeing in recent years has also made attacks more sophisticated and executed at scale. The mechanisms that worked a few years ago are no longer sufficient and it is urgent that companies consider a multiple approach, combining, for example, electronic identities with risk analysis and, if necessary, the adoption of reinforcement measures. Only then will they be able to find the right balance between allowing 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. Additionally, it highlights the importance of educating employees and customers about the new threats posed by AI in the changing cybercrime landscape.
