Behavioral Science Meets Bank Fraud: Practical Lessons for the Front Lines

Digital banking has boosted convenience—and created new vulnerabilities. To better balance the tradeoffs, a small group of banks is leveraging behavioral science to understand not just fraudsters, but also customers and frontline employees. 

That’s the central takeaway from a new RMA Journal article featuring professionals helping bring behavioral science to banking: including David Grosse, an independent behavioral risk consultant; Jeff Kreisler of J.P. Morgan Private Bank; Mirea Raaijmakers, formerly of ING and the Dutch central bank; and Wieke Scholten of BR Insights. 

Here are some takeaways risk teams can apply: 

Slow down fast fraud. Digital tools have made transactions almost instant—but that speed also benefits scammers. “These fraudsters and scams are so attuned to their victims’ emotions, and we don’t think clearly when we’re thinking emotionally,” said Kreisler. Pop-up warnings help, but they’re easy to ignore. Better system design is needed to help people “slow down their decision-making” at critical moments. 

Use nudges and reminders. Behavioral nudges—small, well-timed prompts—can encourage safer actions from customers and employees alike. These might include reminders of ethical commitments or friction that interrupts impulsive behavior. “We view the organization as a social system,” said Raaijmakers, explaining how behavior drives risk. 

Reinforce the ‘we.’ Internal team dynamics matter. If departments don’t trust one another, fraud investigations can suffer. In one KYC review, Raaijmakers found that information from less trusted departments was ignored. Behavioral risk assessments can expose these blind spots before they do harm. 

Rethink incentives. “The extent to which we ‘do the right thing’ is highly driven by what the ‘we’ in our team think the right thing is,” Scholten explained. Monetary rewards don’t always deter employee fraud, for instance. Culture and peer behavior often matter more. 

Measure differently. Banks often hesitate to invest in behavior-based approaches because results are hard to quantify. As Grosse put it, “Even when thinking about human behavior, it’s tempting to want to put a decimal point on it.” Success, in this case, requires a broader definition of value—one that includes culture change, employee behavior, and customer trust. 

Fight fraud communities with community. Scammers operate in social systems, too. The answer? Build white-hat communities—like the ProSight Fraud Alert Network launching later this year—to share information and reinforce good practices across institutions. 

Bottom line: Fraud isn’t just a tech problem. It’s a people problem—and behavioral science helps banks fight back smarter.