As the digital landscape continues to evolve, AI-generated fraud and deepfakes are emerging as primary concerns, according to Mitek Systems’ latest report, the Identity Intelligence Index 2024.

The study surveyed 1500 financial services risk and innovation professionals across the UK, the US, and Spain. Among the key findings, 76% of banks reported an escalation in the sophistication of fraud cases, reflecting the evolving nature of financial crime.

The research, conducted by Censuswide, targeted heads of risk and innovation in both retail and corporate banking sectors, providing a comprehensive overview of the challenges facing the industry in combating financial fraud in an era of rapid technological advancement.

The research sheds light on the multifaceted nature of fraud threats to banks, covering traditional issues like money laundering and account takeover, alongside emerging challenges posed by AI-generated fraud and deepfake technology. 

Alarmingly, 32% of risk professionals estimated that up to 30% of transactions could potentially be fraudulent.

One critical area of vulnerability highlighted in the report is the onboarding process for new customers, identified by 42% of banks as particularly susceptible to fraudulent activity. 

Despite the implementation of global Know Your Customer (KYC) regulations, 19% of banks struggle to effectively verify customer identities throughout the customer journey, posing significant risks to financial institutions and their customers alike.

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While 41% of fintech professionals have implemented identity verification measures, the adoption rate among mature banks lags behind at just 33%. Technologies such as liveness detection and biometrics are increasingly leveraged to combat fraudulent activities, signaling a shift towards more robust security measures.

“Financial institutions are under attack,” said Chris Briggs, senior vice president of Identity, Mitek Systems. 

“In today’s banking world, we know our customers are overwhelmed by an increasingly complex fraud landscape, ranging from AI-generated fraud and deepfakes globally, to record high increases in check fraud in the US. We need to unite government, businesses and technology to keep people safe online.”