• Tristan Prince, Product Director, Fraud & Financial Crime at Experian


• 10.12.2024 01:00 pm
#FraudPrevention #FestiveSeasonSecurity

As the festive season approaches, UK consumers are expected to spend an impressive £28 billion. However, this surge in spending brings with it a worrying rise in identity fraud. Online criminals are continually refining their methods to exploit personal information, placing significant pressure on financial services firms to ensure their fraud-prevention systems are robust and future-ready.

A growing threat 

Fraud has become a critical concern over the past few years, with identity fraud rates soaring by 21% during the festive season since 2021. Last Christmas alone, 83% of fraud cases were identity related. Alarmingly, 2024 saw a 12.5% rise in identity fraud cases in just its first six months.

The good news? Leading companies are turning to cutting-edge technology to combat these threats. Advanced tools like artificial intelligence (AI) and enhanced data-sharing networks are empowering financial institutions to tackle fraud more effectively than ever before.

The role of AI

AI is proving to be a game-changer in fraud prevention. By processing vast amounts of data in real time, AI can spot unusual patterns and anomalies that might indicate fraudulent activity. Here are three keyways AI is making a difference:

1. Real-time fraud detection
   AI algorithms monitor transactions as they happen, flagging suspicious activity instantly. This proactive approach helps prevent fraud before it can escalate.

2. Behavioural analytics
   By analysing customer behaviour, AI identifies deviations from typical patterns—such as sudden changes in spending habits—that may signal fraud. This technology also improves customer experience by streamlining processes for genuine users, reducing unnecessary friction.

3. Identity Verification
   AI-powered systems enhance identity verification by cross-referencing user data across multiple sources, ensuring that the person making a transaction is legitimate.

Collaboration through data sharing is another vital weapon in the fight against fraud. By exchanging information on fraudulent activities, suspicious transactions, and emerging threats, financial institutions can collectively strengthen their defences.

Key benefits of data sharing include:

Enhanced detection: Sharing data across the industry allows for a clearer picture of fraud patterns, enabling quicker identification and mitigation of risks.

Faster responses: When one organisation flags a suspicious activity, others can be alerted in real time, creating a united front against fraud