ID fraud to surge by 2025

Wednesday 13 March 2024 09:09 CET | News

UK-based database operator Synectics Solutions has uncovered new research indicating that ID fraud represents the most prominent fraud type reported by banks.

Research conducted on the UK’s largest database of syndicated risk intelligence underlines that ID fraud is the most notorious type of fraud reported by banks and other financial service providers, accounting for 45% of all adverse contributions made in 2023. Additionally, the analysis suggests that the amount could increase to 50% by the end of 2024. Also, data indicated that ID fraud originating online is currently the most common fraud threat facing the financial industry.

UK-based database operator Synectics Solutions has uncovered new research indicating that ID fraud represents the most prominent fraud type reported by banks.

Synectics Solutions’ response to the analysis

According to Synectics Solutions’ officials, banks and financial institutions need to focus their efforts on a more robust online ID verification. However, this also comes with risks, as the widespread adoption of solutions that deny admission in fraud too indiscriminately is set to potentially block important system access to ‘ID Poor’ customers, a market segment which increases in size every year. Having an incorrect response to ID fraud can lead to financial exclusion, with this being a concern in the Government’s 2024 report on public dialogue on trust in digital identity services.

Furthermore, to support institutions navigate this difficult environment, Synectics released information on the most common forms of ID fraud reported, and advice on implementing inclusionary verification methods. National SIRA contains over 300 million rows of data, with it being constantly being updated and verified by fraud teams all over the UK from more than 170 banks. In 2023, 72% of all SIRA entries were related to internet-based interactions with over 37% being ID fraud originating via the internet. Analysing the reason for these specific types of ID fraud filings, research underscored at least 24% of them being related to instances where an applicant’s name was found to be fictitious, 27% to applicants stealing another genuine person’s address details, and 28% to cases where details such as name, address, contact information, were linked other applications already flagged for potential ID fraud.

Representatives from Synectics highlighted that ID fraud has progressively become more sophisticated. For example, fake names can be easy to spot in some cases, however, when paired with real data and leveraged to develop a synthetic ID that accumulates a genuine credit rating, the task increases in difficulty. The research’s findings demonstrate the importance of enhanced online ID verification processes. Officials stated that banks should choose solutions that can verify ID details against multiple authoritative sources and which risk score individuals on the frequency, recency, and quality of their digital interactions with organisations. Through this, they can minimise the risk of false positives, especially for good customers who may have thin credit files, while increasing protection from ID fraud. As these checks can be conducted instantly, banks can now balance improved services with enlarged defences against fraud, while ensuring that ‘ID poor’ customers are not excluded.

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Keywords: identity theft, identity verification, identity fraud, banks, financial institutions
Categories: Fraud & Financial Crime
Companies: Synectics Solutions
Countries: United Kingdom
This article is part of category

Fraud & Financial Crime

Synectics Solutions

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