To Fight Fraud, Banks Betting Big on Tech

Fraud and security concerns are driving financial institutions to invest more in technology over the next two years in an effort to combat cyber threats, according to a new report from financial services technology provider Jack Henry.

Seventy-nine percent of banks and credit unions plan to increase their tech spends, with the largest chunk (35%) preparing for a 6% to 10% bump. Fourteen percent of institutions planned to up their tech budget by more than 10%, according to the survey of 118 bank and credit union CEOs between January and March of 2023.

Investment plans. What will these new funds go toward? Fraud and security (40%) was second only to digital banking (44%) on the tech priority list. Phishing attacks (70%), real-time payments fraud (54%), and data breaches (49%) were the top three security concerns for respondents.

Here to stay. “The influx of fraudsters that emerged over the course of the pandemic is here to stay—creating long-term consequences for financial institutions, such as rising attack volumes, consumer-targeted scams, and zero-day threats that render traditional, rules-based fraud-control methods inadequate,” the report stated.

On the rise. The authors say financial institutions should be on the lookout for authorized push payment (APP) fraud, which is increasing in prevalence. Victims of APP are coerced—often through “social engineering attacks involving impersonation”—into making real-time payments to scammers.

“For fraudsters, this method is easy and the rewards are immediate,” the report said. “Combatting APP fraud will remain a priority for financial institutions as losses grow.” 

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