Financial Crime World

Fraudulent Transactions Soar in US Minor Outlying Islands, Banks Struggle to Keep Up

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A recent report by PYMNTS in collaboration with Hawk AI has revealed that more than 40% of banks in the United States Minor Outlying Islands have experienced an increase in fraudulent transactions compared to last year. The average cost of fraud for these institutions has also risen by approximately 65%.

Increased Fraud and Rising Costs

According to the study, account information misuse remains the most common type of fraud, with scam losses averaging nearly half a million dollars per incident.

  • 43% of financial institutions (FIs) have experienced increased fraud compared to 2022
  • Average scam losses reaching nearly $500,000
  • Financial institutions investing heavily in machine learning (ML) and artificial intelligence (AI) to combat fraudulent transactions

Challenges Facing Financial Institutions

The study revealed that data breaches, faster payment rails, and complex regulations are among the top challenges faced by FIs in their fight against fraud.

  • Data breaches: a major concern for financial institutions
  • Faster payment rails: making it easier for criminals to carry out fraudulent activities
  • Complex regulations: adding complexity to the already challenging task of combating fraud

Implementing ML and AI Solutions

Most FIs are expected to add or have already added ML and AI technologies within the next year. However, smaller FIs may continue to struggle with implementing these solutions due to limited resources and expertise.

  • Larger FIs with assets totaling more than $5 billion have experienced an average increase in fraud losses of 65%, from $2.3 million in 2022 to $3.8 million in 2023
  • Smaller FIs may be more vulnerable to fraudulent activities due to limited resources and capabilities

Collaboration is Key

The report emphasizes the importance of collaboration between financial institutions, technology providers, and regulatory bodies to combat fraud effectively.

  • Financial institutions, technology providers, and regulatory bodies must work together to develop innovative solutions and strategies to address the growing threat of fraudulent transactions
  • By working together, stakeholders can develop effective tools and strategies to address the growing problem of fraud in the US Minor Outlying Islands’ banking sector

For more information on this study and its findings, readers are encouraged to visit PYMNTS website or access their White Paper Library for detailed reports and insights on the topic.