UK banking fraud predicted to exceed GBP $38 million by 2029

According to a recent study by Juniper Research, fraudulent banking and money transfer transactions in the UK are projected to reach GBP $38 million over the next five years. The study anticipates a staggering 111% increase in fraudulent activities from the current GBP $4.2 million in 2024 to GBP $8.8 million in 2029.

The UK, known for its advanced Fraud Detection and Prevention (FDP) market, is expected to require additional measures, including AI-based real-time FDP, to counteract this growing threat. The report, titled "UK Fraud Detection & Prevention in the Banking Market 2024-2029," underscores the need for these advanced systems in response to the escalating fraud risk.

The upcoming Payment Systems Regulator (PSR) reimbursement regulation is expected to significantly impact fintechs' adoption of these solutions. This regulation aims to combat the rapidly increasing Authorised Push Payment (APP) fraud, in which fraudsters manipulate victims into making substantial bank transfers.

Despite these measures, there are growing concerns about the potential impact on the speed of payments, which might be slowed to verify the legitimacy of APP transactions. Effective implementation of AI in FDP systems is seen as crucial to help financial institutions quickly recognise APP fraud while maintaining the efficiency of faster payments.

The report's author, Cara Malone, emphasised the importance of data sharing in maximising the effectiveness of FDP solutions. "The plethora of data collected throughout the payment processes will be utilised to develop several different FDP tools, ranging from behavioural biometrics to identification," she stated. Enhanced data sharing between stakeholders in the payments ecosystem is deemed essential for the efficacy of real-time fraud detection, particularly in the context of faster payments.

In addition to forecasting and analysis, Juniper Research's new research and data suite claims to offer the most comprehensive overview of the UK's fraud detection and prevention market to date. It features over 400 data points across a five-year period, a Competitor Leaderboard, and an examination of future market opportunities.

The findings from Juniper Research highlight the need for enhanced fraud detection and prevention measures within the UK banking sector. With fraudulent transactions projected to rise significantly over the next five years, reaching alarming numbers, financial institutions face mounting pressure to adopt advanced technologies like AI-based systems.

The impending Payment Systems Regulator regulations are expected to drive adoption further, albeit with potential implications for transaction speed. As stakeholders navigate these challenges, collaboration and data sharing among industry players will be crucial in fortifying defences against evolving fraud threats while maintaining the integrity and efficiency of banking operations.