Stop Financial Fraud Before It Starts: How to Prevent Identity Theft in Banking and FinTech
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Combat Banking and Financial Fraud with Advanced Identity Validation
A recent FICO survey found that 32% of Americans consider account fraud using stolen identities as their top financial fraud concern. Nearly 15% of customers have had their stolen identity used to open a financial account—impacting over 32 million victims, annually.1 At the same time, 63% of financial firms reported an overall increase in fraud in 2023, a 6% increase over the previous year.2
In addition to the financial disruption and frustration caused by this fraudulent activity, customers hold financial institutions responsible for these breaches. Although the typical customer has stayed with their current bank or credit union an average of 17 years, that relationship is more likely to be cut short when customers experience identity fraud that results in financial losses.3 In fact, U.S. consumers targeted by a scam are more likely to leave their primary financial institution as those who have not been targeted or affected by a scam.4
Fraud techniques, once limited to experts or the very brazen, are now available to virtually anyone. With the amount of personal data accessible to criminals, these activities have only increased. Malicious actors can easily find and exploit consumers with high credit and a good balance on their accounts—and take over their identity. There are several ways this can happen:
Large scale data breaches.
Financially motivated cybercriminals drover 95% of data breaches5 in 2024, exposing billions of records.
Compromised credentials on the dark web.
Posts selling stolen credentials increased 20% from 2023-20246, making account takeovers increasingly easier.
Mail theft.
Reports of high-volume mail theft has jumped 87% since the pandemic, exposing personal financial data to criminals.7
When fraudsters gain access to stolen identities, they exploit financial institutions – leading to rising costs and reputational damage. In 2023, every dollar lost to fraudulent account activity cost NorthAmerica’s financial institutions $4.41, a 28% increase over the previous year.4
Identity Verification Can Make or Break Customer Acquisition and Retention
When it comes to identity theft, financial institutions and customers both feel pain from the resulting fraud committed by criminals. But banks are caught in a bind. Although customers expect financial institutions to prevent fraud, 22% of checking account and credit card holders will reduce or stop using existing accounts because of complex or time-consuming identity checks.
As for opening new accounts or applying for loans, customers are willing to walk away and abandon the process rather than tolerate lengthy or difficult identity verification. In fact, unwieldy ID verification processes can result in abandonment of up to a quarter of applications for financial services.
Regardless of whether you are retaining existing customers or attracting new ones, the implications are clear: Time-consuming and difficult identity verification processes result in lost business.
But you can instantly and accurately validate IDs and prove identity and deliver a positive, protected customer experience—while reducing the business impact of financial fraud.
At Intellicheck, we help businesses stop financial fraud before it happens with seamless, real-time ID verification. Whether you need to strengthen customer onboarding, fraud prevention or compliance, our experts can tailor a solution to fit your business needs. See our Financial Solution brief to find out more or sign up for a demo to see how Intellicheck can help you reduce risk and improve security.
1. FICO® Consumer Fraud Survey: 2023
2. LexisNexis® True Cost of Fraud™ Study: FinancialServices and Lending Report 2024
3. Bankrate Survey: Customers Stick with the Same Checking Account
4. Javelin, Future Strategies for Effective IdentityVerification that Build, Not Break, Business, 2024
5. Verizon, 2024 Data Breach Investigations Report
6. CrowdStrike, 2024 Global Threat Report
7. United States Postal Inspection Service, ProjectSafe Delivery: Combatting mail theft and letter carrier robberies strategy
