Table of Contents
Executive Summary
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- The market
- Fraud incidents are on the rise
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- Figure 1: Number of fraud and computer misuse incidents, 2017/18-2018/19
- Total losses from card fraud grow in 2018
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- Figure 2: Value of card fraud losses, 2009-18
- Mobile banking is increasingly at risk
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- Figure 3: Value of internet, telephone, and mobile unauthorised remote banking fraud vs total number of unauthorised remote banking fraud cases, 2015-18
- GDPR leads to a dramatic increase in incident reporting
- Banks disagree on how best to reimburse APP victims…
- …while ombudsman raises bar on definition of negligence
- Behavioural biometrics enter the market
- The consumer
- Just under half have some experience of fraud
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- Figure 4: Types of fraud experienced, November 2019
- The vast majority reported their issue…
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- Figure 5: Where fraud was reported to, November 2019
- …while most do not suffer a financial loss
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- Figure 6: Proportion who suffered a financial loss, November 2019
- Experiencing fraud can have a positive impact on the customer relationship…
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- Figure 7: Consequences of fraud and security issues, November 2019
- …and will lead to victims improving their financial security
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- Figure 8: Ways of preventing fraud and security issues, by experience of fraud, November 2019
- New providers face challenge to overcome security concerns
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- Figure 9: Financial activities most susceptible to fraud and security issues, November 2019
- Most say they prioritise security over speed
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- Figure 10: Attitudes towards fraud and security, November 2019
- What we think
Issues and Insights
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- Prioritising fraud and security will improve the customer relationship
- The facts
- The implications
- Using fraud and security to create a point of differentiation
- The facts
- The implications
The Market – What You Need to Know
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- Fraud incidents are on the rise
- Total losses from card fraud grow in 2018
- Mobile banking is increasingly at risk
- GDPR leads to a dramatic increase in incident reporting
- Banks disagree on how best to reimburse APP victims…
- … while ombudsman raises bar on definition of negligence
Market Environment
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- The number of incidents of fraud grows by 15%
- Computer misuse incidents show a fall…
- …but detection is getting harder
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- Figure 11: Number of fraud and computer misuse incidents, 2017/18-2018/19
- Figure 12: Proportion of incidents of fraud and computer misuse which were flagged as cyber and non-cyber-crimes, December 2018
- Remote purchase fraud accounts for 75% of all card fraud losses
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- Figure 13: Value of card fraud losses, 2009-18
- Total unauthorised remote banking fraud is on the decline…
- …although mobile banking is becoming more susceptible to fraud
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- Figure 14: Value of internet, telephone, and mobile unauthorised remote banking fraud vs total number of unauthorised remote banking fraud cases, 2015-18
- Figure 15: Remote mobile banking fraud, gross losses and number of cases, H1 2015-H1 2019
- Invoice and mandate scams result in the largest losses among APP scams
- …while investment scams pose the most risk for the individual consumer
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- Figure 16: Value and volume of authorised push payment fraud, 2018
Regulatory and Legislative Changes
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- GDPR results in a dramatic increase in cyber incident reports to the FCA…
- …and personal data breach reports to the ICO
- PSD2 set to have a wide reaching impact
- Online card payments
- Mobile apps
- Temporary APP scam voluntary code launches
- Landmark ruling increases the threshold of consumer negligence
Companies and Brands – What you Need to Know
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- Behavioural biometrics enter the market
- Banks take alternative approaches to tackling APP fraud
Brand and Company Developments
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- The rise in behavioural biometrics
- Voice and speech recognition services become more common
- Banks take differing approaches to tackling APP fraud
- TSB pledges to refund all customers
- Santander attempts to raise awareness
- ‘Confirmation of Payee’ rollout is expected in March 2020
- New solutions can prevent ‘smishing’
- Experian is helping customers identify and prevent fraud
The Consumer – What You Need to Know
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- Just under half have some experience of fraud
- The vast majority reported their issue…
- …while most do not suffer a financial loss
- Experiencing fraud can have a positive impact on the customer relationship…
- …and will lead to victims improving their financial security
- New providers face challenges in overcoming security concerns
- Most prioritise security over speed
Experience of Fraud
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- Over 40% have experienced some form of fraud or security issue
- Millennials are the most at risk
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- Figure 17: Types of fraud experienced, November 2019
- 20% have experienced more than one issue
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- Figure 18: Repertoire of types of fraud experienced, November 2019
- Chances of fraud increase with the more financial products owned
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- Figure 19: Types of fraud experienced, by repertoire of financial products held, November 2019
Reporting Fraud or a Security Issue
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- 75% say they reported the issue
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- Figure 20: Where fraud was reported to, November 2019
- Card fraud victims predominantly turn to their provider
- Investment and payment fraud victims more likely to escalate their case
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- Figure 21: Reporting channel used, by type of fraud experienced, November 2019
Financial Loss and Reimbursement
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- Most do not suffer financial loss
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- Figure 22: Proportion who suffered financial loss, November 2019
- Victims of investment and payment fraud are most at risk
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- Figure 23: Proportion who suffered financial loss, by type of fraud experienced, November 2019
- Close to 70% are fully reimbursed for financial loss
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- Figure 24: Reimbursement from fraud, November 2019
Consequences of Fraud and Security Issues
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- Experiencing fraud can have a positive impact on the customer relationship…
- …and can prevent issues occurring again in the future
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- Figure 25: Consequences of fraud and security issues, November 2019
- Suffering a financial loss can have ongoing consequences
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- Figure 26: Agreement with attitudes toward consequences of fraud and security issues, by financial loss suffered, November 2019
- Victims who have to escalate their case will view their provider more negatively
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- Figure 27: Agreement with attitudes about consequences of fraud and security issues, by reporting channel used, November 2019
Preventing Fraud and Security Issues
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- Consumers tend to improve security measure after experiencing fraud
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- Figure 28: Ways of preventing fraud and security issues, by experience of fraud, November 2019
- Multi-product holders are more secure
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- Figure 29: Ways of preventing fraud, by repertoire of financial products held, November 2019
Perception of Risk in Different Financial Activities
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- Challengers face a major obstacle in overcoming customer concerns
- Millennials are less likely to see mobile banking as risky
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- Figure 30: Financial activities most susceptible to fraud and security issues, November 2019
- Data breach and payment fraud victims have increased concerns
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- Figure 31: Financial activities most susceptible to fraud and security issues, by type fraud experienced, November 2019
Attitudes towards Fraud and Security
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- Providers expected to shoulder the main responsibility
- Security trumps speed for the majority
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- Figure 32: Attitudes towards fraud and security, November 2019
- Greater trust among those who have experienced fraud
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- Figure 33: Attitudes towards fraud and security, by experience of fraud or security issues, November 2019
- Significant overconfidence among younger men
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- Figure 34: Fraud and security in financial services – CHAID – tree output, December 2019
Appendix – Data Sources, Abbreviations and Supporting Information
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- Abbreviations
- Consumer research methodology
- CHAID analysis methodology
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- Figure 35: Fraud and security in financial services – CHAID – table output, December 2019
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