Major shifts in the cybercrime landscape have had far-reachingeffects across multiple industries including financial services.The ongoing challenge is striking a balance between fighting fraudand improving customer experience.

In its 5th Annual Fraud Report, Atlanta-based fraud preventionIDology found businesses in industries including financialservices, healthcare, insurance, and ecommerce experiencing moresophisticated fraud attempts across multiple customer-not-presentchannels. Sixty-seven percent of organizations reported an increasein fraud attempts, compared to just 42% in 2016.

This year's report revealed some notable trends:

• Shifting criminal tactics, along with the complexity ofidentity verification, as the top challenges to fraudprevention.
• Addressing rising synthetic identity fraud and improving thecustomer experience by reducing friction found as key areas ofstrategic interest.
• More than half of companies indicated an increase inmobile-based fraud, led by device cloning.

Major breaches have provided criminals withmore identity data to utilize as they regularly change strategiesto elude discovery. Criminals also use more sophisticated schemesthat are harder to detect, such as synthetic identity fraud, ablend of actual and invented authentication data used to create anew identity. Thirty-one percent of businesses say SIF hasincreased and 58% were “extremely” or “very” worried about it.

Credit, debit, and prepaid card fraud, along with first-partyfraud and account takeover, were the most prevalent forms of fraud.First-party fraud had the most growth, with a 96% increase inprevalence over last year. Half of all fraud attempts had anaverage transactional value of $1,000 or less.

In addition to deterring changing and sophisticated fraudtactics, respondents also are highly focused on improving theexperience for legitimate customers by reducing friction, or theeffort required to verify their identities. Forty percent ofrespondents stated reducing friction was one of the biggestchallenges facing companies with respect to identity verificationand fraud prevention.

IDology disclosed 2017 brought its fair share of challenges tofinancial services:

• Sixty percent of financial institutions reportedthat first-party fraud is a common problem.
• Synthetic identity fraud was more rampant within financialservices—50% of financial institutions reported it as prevalent,compared to 38% across all industries.
• Forty-eight percent of financial institutions reportedbalancing fraud prevention with a frictionless customer experiencea challenge to their business.

“The data indicates that fraud is growing in prevalence, typeand sophistication and this is changing how businesses approach theidentity verification value chain,” John Dancu, CEO of IDologysaid. “In today's post breach environment, pulling together andassessing identities based on several smart layers of informationfrom different sources, including data on mobile devices, ensureslegitimate customers are approved with less friction for a moresecure and positive experience.”

Now in its fifth year, IDology's Annual Fraud Report measuresfraud trends across a variety of industries in an online surveybetween September 6, 2017, and October 4, 2017. The surveygenerated 77 respondents from 58 unique companies. Respondenttitles included C-level executives, vice presidents, directors,managers, and analysts in the risk, fraud, compliance, product, andoperations departments.