Financial Crime World

Saudi Arabia’s Banking Sector Braces for Digital Fraud: New Account Creation and Synthetic Identities as Major Threats

Amidst the surge in digital services adoption in the Middle East, Africa, and Europe (EMEA), the region witnesses an increase in digital fraud, with over half of the respondents reporting an escalation in fraud by 6% or more in the last 12 months. nearly 52% of these fraudulent activities originate from digital channels.

In Saudi Arabia, where digital banking and commerce popularity are reaching new heights, criminals are targeting institutions and consumers by exploiting stolen or synthetic identities to create new fraudulent accounts. Consequently, nearly half of all losses in the financial services sector can be attributed to fraudulent new-account creation.

Stolen and Synthetic Identities: The Fuel Behind Saudi Arabia’s Fraud Epidemic

Fraudsters’ growing sophistication results in increasingly complex threats. Keeping up with these advanced tactics is essential to minimize losses. Below are some emerging threats that organizations are struggling to combat:

  1. Fake Reviews
  2. Collusion Fraud
  3. Promotion Fraud
  4. Policy-abuse Fraud
  5. Geolocation Fraud

Balancing Fraud Prevention and Customer Experience: A Constant Dilemma

Fraud prevention measures, such as email risk and verification, automated transaction scoring, device ID and fingerprinting, geolocation, and OTP/two-factor authentication, are crucial in the fight against fraud. However, these solutions must strike a balance between securing transactions and maintaining a seamless customer experience.

Cost of Fraud in Saudi Arabia: Unprecedented Consequences

The consequences of fraud are far-reaching. Organizations incur additional labor and investigative costs, liability, and fines. On average, every fraudulent transaction incurs costs at least three to five times the value stolen. Retailers face costs of replacing lost or stolen merchandise, while financial institutions deal with even higher costs in investigations and refunding customers.

Staying Ahead of the Curve: Combatting Fraud in a Rapidly Evolving Digital World

Forrester Consulting, on behalf of LexisNexis Risk Solutions, surveyed 1,845 senior decision-makers at financial institutions and retail/e-commerce institutions across Europe, Middle East, and Africa, including 541 decision-makers from Saudi Arabia. The study revealed the current fraud landscape and its associated challenges.

Key threats for the Saudi Arabian market include:

  1. Inability to Stay Current and Defend Against New, More Sophisticated Payment Frauds.
  2. Lack of Specialized Fraud Prevention Tools for International Orders/Transactions.
  3. Privacy Concerns.
  4. Inability to Manage and Prevent Fraud for New Transaction Methods.

As fraudsters continue to innovate and introduce new threats, it is essential for organizations to prioritize fraud prevention measures while ensuring a positive customer experience. The fight against digital fraud requires vigilance, agility, and strong partnerships between businesses and their trusted technology providers.

This document is for educational purposes only and does not guarantee the functionality or features of LexisNexis products. LexisNexis and the Knowledge Burst logo are registered trademarks of RELX Inc. Other trademarks and registered trademarks may be proprietary to their respective companies. Copyright © 2024 LexisNexis Risk Solutions. NXR16399-00-0324-EN-US.