A survey conducted by Alloy revealed that 27% of respondents lost over $1M to fraud in the last 12 months. 70% of respondents reported losing over $500K to fraud, with fintech companies and regional banks being the most likely to report higher losses. 37% of fintech companies and 31% of regional banks estimated losing between $1-10M to fraud.

The Annual State of Fraud Benchmark Report surveyed over 250 decision-makers working at financial institutions including community banks, fintech, crypto, national banks, regional banks, and online lending institutions). The survey ran from September 8-20, 2022, and respondents came from roles across fraud, compliance, risk technology procurement, digital banking strategy, and account opening.

Fraud continues to plague financial institutions of all sizes and across all segments. One-third of respondents said they experienced between 1,000 and 10,000 fraud attacks in the last twelve months. 91% of respondents said fraud has increased year-over-year since 2021.

“Fraud is the highest it’s ever been,” said Tommy Nicholas, CEO and co-founder of Alloy. “Rapid digitization and an influx of cash from pandemic relief scams have created the perfect conditions for fraudsters to thrive. Regardless of sector or size, financial institutions must do more to keep their customers’ assets safe from fraud, but without compromising on the customer experience.”

The report also found that fraud prevention is a costly and time-consuming enterprise for financial institutions: two-thirds of respondents reported that over half of their workforce is working on fraud-related activities. 71% of respondents have increased their spending on fraud prevention YoY. Respondents were also concerned about additional ‘hidden’ costs of fraud such as legal repercussions, regulatory fines, reputational damage, and loss of clients.

Respondents reported that the main barrier to defending against fraud is automation. 46% of respondents cited a greater need for automation as the most common barrier to being prepared to combat fraud, followed by an absence of dedicated teams for fraud (41%) and the inability to adapt to new threats (39%).

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A recent report from Mandiant Inc. provides new insight into how organizations navigate the increasingly complex threat landscape. The report is based on a global survey of 1,350 cyber security decision makers across 13 countries and 18 sectors – including financial services, healthcare and government. 

Operationalizing intelligence: an identified challenge

Despite the widespread belief that understanding the cyber threat actors who could be targeting their organization is important, 79% of respondents stated that their organizations make the majority of cyber security decisions without insights into the threat actor that is targeting them.

While the report found that nearly all respondents (96%) were satisfied with the quality of threat intelligence their organization is using, respondents declared effectively applying that intelligence throughout the security organization to be one of their greatest challenges (47%). Further, almost all (98%) of those surveyed said they need to be faster at implementing changes to their cyber security strategy based on available threat intelligence.

Underestimating the threat

According to the survey, 67% of cyber security decision makers believe senior leadership teams still underestimate the cyber threat posed to their organizations, while more than two-thirds (68%) agree their organization needs to improve its understanding of the threat landscape.

However, despite these concerns, security decision makers remain optimistic regarding the effectiveness of their cyber defenses. When asked about confidence in whether their organization is fully prepared to defend itself against different cyber security events, respondents felt most confident in tackling financially motivated threats, such as ransomware (91%), followed by those conducted by a hacktivist actor (89%) and nation-state actor (83%). When asked to rank which countries their organization would be unable to fully defend itself against, more than half of respondents (57%) said Russia, followed by China (53%), North Korea (52%) and Iran (44%).

Further, just over half of respondents (53%) felt they could prove to their senior leadership team that their organization has a highly effective cyber security program.

Other key findings:

• Cyber security is only discussed on average once every four or five weeks with various departments within organizations, including the board, members of the C-suite and other senior stakeholders. This cadence is even less frequent for groups such as investors, where the average lowers to once every seven weeks.
• Only 38% of security teams share threat intelligence with a wider group of employees for risk awareness.
• A majority (79%) of respondents relayed that their organization could focus more time and energy on identifying critical trends.

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