It takes a lot of work and more money to fight fraud.

Every dollar of fraud now costs credit unions and other financial services providers about $2.92 in fees, fines, interest, labor and other expenses —  a 9.3% increase over 2017, according to new data from LexisNexis Risk Solutions.

The survey of 175 risk and fraud executives at credit unions, banks, and investment, trust, and wealth management firms also found that fraud costs consumed 1.53% of every dollar of revenue for financial services providers in 2018, compared to 0.95% in 2017.

“Continuing the trend of prior years, the cost of fraud continues to rise for global financial institutions,” LexisNexis Risk Solutions Senior Director of Fraud and Identity Management Strategy Kimberly Sutherland said. “Particularly in the digital and international transaction spaces, while these firms are working to combat fraud, they are not doing so in the most optimal way. Fraudsters continuously test for the weakest entry point in the financial transaction system and these institutions should apply a multi-layered approach to fraud prevention to combat this growing issue.”

For mid- and large-size digital firms that allowed mobile transactions, the cost of fraud was higher — $3.26 for every dollar of fraud in 2018, compared to $3.10 a year ago.

Mid- and large-size digital financial services providers that offered both international and mobile transactions experienced the highest fraud costs — $3.38 for every dollar of fraud, according to the data. More transactions occurring by bill-to-mobile phone and increased challenges in assessing risk by country or region are likely the root of the problem, the report said.

The study defined digital financial services providers as those that obtained at least half of their revenues through online or mobile channels.

Identity fraud — including synthetic identities — accounted for more fraud losses than friendly fraud or account takeovers did, the study said. Among large banks, about 61% of fraud losses were due to identity fraud.

But increased use of mobile browsers and third-party mobile apps could be fueling fraud and its related costs, the study noted.

“The majority of transactional volume and fraud is still occurring through a mobile browser. That said, mobile apps continue to account for nearly as much mid/large fraud loss as do browsers, particularly for mid/large non-digital banks that have started using their own branded app,” it added. “That could be related to cardless ATM transactions or where consumers add their banking credit card to their mobile device and make purchases directly through this method.”

Identity verification was a top online issue for financial services providers and has become a more pressing mobile concern as well.

“For those conducting a majority of business online (digital), manual reviews and delayed confirmation are also ranked among top challenges. Since these digital firms rely heavily on the anonymous remote channel, and factors that cause customer friction, such as delayed transactions due to identity verification or manual reviews, can lead to significant longer term customer relationship issues (and potentially churn),” it explained.

Some other findings from the study included:

  • 56% of the respondents said fraud is inevitable.
  • 49% felt it’s increasingly difficult to manage fraud and minimize member friction.
  • Financial services firms that tracked fraud by channel and payment method paid $2.52 for every dollar of fraud.
  • Financial services firms that did not track fraud by channel and payment method paid $3.11 for every dollar of fraud.