North American Financial Executives Most Worried by Fraud

When it comes to wire and automated clearinghouse (ACH) fraud, global financial executives agree that the biggest negative impact is reputational damage according to ACI Worldwide.

However the electronic payments and banking systems group reports that regionally, its recent survey finds that North American financial executives are experiencing less fraud than their global counterparts.

The survey, entitled ‘Strategies to Prevent Attacks on Commercial Accounts’, was conducted by Gatepoint Research on behalf of ACI Worldwide and examines global fraud trends in wholesale and commercial banking. Respondents were comprised of 100 senior finance, fraud and operations decision makers from financial institutions across the globe (76% director-level or above, 50% vice president-level, 3% CxO-level).

Results show that North American financial executives also perceive an increase in the rate of online account takeover attacks (63%) compared to their global counterparts (50%) in the last 12 months. Yet in the same period, attempted and actual wire and ACH fraud related to account takeover is lower in North America than at the global institutions, based on survey responses.

Forty per cent of North American financial executives experienced attempted ACH and wire fraud versus 54% in the rest of the world, while 14% of US/Canada respondents experienced actual ACH and wire fraud versus 43% outside North America.

The group comments that a heightened concern and bleaker view of online account takeover fraud means that both North American and global respondents are fighting hard to protect their wire and ACH accounts – with varying focuses. North American financial executives are placing more emphasis on utilising tools that address device protection, while their global counterparts are more focused on payment-specific transaction monitoring and online session anomaly detection.

Eighty-four per cent of North American banks are utilising device protection tools, such as device ID, secure browsing and malware protection, while 89% of rest of world banks are utilising payment-specific transaction monitoring.

Although fraud protection is top-of-mind, when it comes to compliance with regulations around the security of commercial accounts, only 18% of all respondents admit to being only mostly or partially compliant with current security regulations. Federal Financial Institutions Examination Council (FFIEC) guidelines in the US have brought a spotlight to monitoring online banking activity and are a likely driver as to why most organisations must continue to shore up their defences.

Confidence in Fraud Management Tools

All survey respondents report confidence in fraud-fighting tools, although they differ in terms of which tools they believe are most effective. In an effectiveness scale from 1-5 (with 5 being most effective):

  • North American respondents rank layered security protocols highest (4.06 ranking), followed by payment transaction monitoring and device protection.
  • For the rest of world, payment-specific transaction monitoring slightly edges device protection as the most effective approach (4.0 ranking)

Real-time settlement in global financial markets has impacted the focus and need for fraud prevention tools. All respondents agree that cross-channel fraud monitoring and online session anomaly detection have the most room for improvement.

“As electronic payment transaction volumes increase, so too do fraud attacks on those transactions,” said Mike Braatz, senior vice-president (SVP), payments risk management solutions, ACI Worldwide. “Financial institutions are faced with not only increasing scrutiny and regulatory pressures, but also the risk of reputational damage and loss of customers, which is why they’re working tirelessly on preventative measures.

“The real-time nature of payments has a direct impact on fraud prevention tactics. Longer ACH settlement times likely contributed to the lower fraud rates in the US compared to their global counterparts. For example, Faster Payments in the UK has put increased pressure on banks to stop attempted fraud in real time.”

The survey results can be downloaded here.

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