#Fraud Prevention #financial crime #Alloy

Understanding the Rising Threat of Bank Fraud

In recent years, the financial industry has faced a troubling increase in fraud activities, primarily attributed to organized fraud rings and professional criminals. Alloy's 2025 State of Fraud Report has revealed that a staggering 71% of fraud professionals now believe that most fraud attacks are orchestrated by these malicious entities. This article delves into the findings of the report and the evolving strategies financial institutions are adopting to combat this growing menace.

The report, which encompasses insights from nearly 500 senior fraud decision-makers across banks, credit unions, and fintech companies in the U.S., indicates a significant rise in fraudulent activities over the past year. Notably, fraudulent claims related to the Paycheck Protection Program (PPP) and unemployment benefits sum up to an estimated loss of $255 billion. This figure far exceeds earlier governmental projections, emphasizing the scale of deception running rampant within the system.

Tommy Nicholas, co-founder and CEO of Alloy, shared insights into how the perception of fraud has shifted in recent years. In light of the PPP loan fraud, he observed that criminals not only took advantage of the economic conditions but also capitalized on weaknesses within financial institutions. The past years have shown that organized crime has systematically targeted banks and fintechs, leading to an unprecedented increase in fraud incidents.

Despite the rising challenge, financial institutions are progressively learning to interpret the landscape of fraud more accurately. Today's decision-makers are increasingly aware that many instances of fraud are not isolated events perpetrated by individuals but rather deliberate attacks from well-coordinated crime rings. This understanding is fundamentally shifting how organizations handle fraud prevention.

In the 2025 State of Fraud Report, around 60% of respondents reported increased fraud instances in both consumer and business accounts. More alarmingly, 31% admitted to experiencing direct fraud losses exceeding $1 million. With rising stakes, the report highlights that 93% of organizations plan to bolster their investments in fraud prevention strategies moving forward. A notable 64% of these firms intend to adopt identity risk solutions, reflecting a proactive approach to safeguarding assets.

Artificial Intelligence (AI) is also expected to play a pivotal role in combating fraud. A majority of respondents (93%) agree on the game-changing potential of AI in detecting and preventing fraudulent activities. However, there is a consensus among the expert community for a more reserved expectation regarding AI's capabilities in 2025. Tommy Nicholas asserts that the upcoming year will likely witness