ALPHARETTA, Ga.– Every dollar lost in fraud actually costs financial institutions $5, according to a new report from LexisNexis Risk Solutions.
LexisNexis said its new “True Cost of Fraud Study 2025” found 44% of North American financial institutions (FIs) primarily rely on manual processes, “hesitating to fully embrace automation and AI to combat fraud.”
“The LexisNexis Fraud Multiplier shows fraud’s growing impact on operations, compliance, reputation and customer trust,” the company said in releasing its findings. “Since 2021, it has increased across all financial services segments in North America, now averaging more than $5 for every $1 lost to fraud, up 25% from $4 only four years ago.”
The Findings
Among the findings:
- FIs highlight fraud vulnerabilities at every stage of the customer journey. Among U.S. financial services firms, 30% of fraud is found at new account creation, 31% occurring within transaction activity and 39% during account login or access.
- Many organizations fail to track fraud comprehensively, leading to underestimated losses. Only 45% of FIs track fraud across both payment methods and transaction channels. Another 25% track it only across transaction channels, while 28% focus solely on payment methods, LexisNexis said.
- Nearly half of FIs (44%) rely mostly or entirely on manual processes, while only 20% are mostly or fully automated. As fraud becomes more advanced, FIs that avoid modernizing with automation and AI risk falling behind in prevention and customer protection, it said.
‘Escalating Threat’
“Fraud is a dynamic, escalating threat that touches every corner of an FI’s operations. However, FIs don’t need simply accept it as a cost of doing business,” Kimberly Sutherland, global head of fraud and identity, said in a statement. “Our latest study reveals that as fraud losses climb, many organizations still depend on manual processes that fail to match today’s sophisticated attacks. Leading FIs with the lowest fraud costs adopt automation, AI and cross-channel visibility to detect more fraud faster through a multi-layered approach. Importantly, they attain this while preserving the experience for genuine customers.”
Other Key Findings
LexisNexis said other key findings in its True Cost of Fraud Study 2025 North America found:
- Scams pose an increasing threat to FIs. Scams cause 38% of total fraud losses for U.S. lenders and 36% of overall fraud losses across all FIs.
- Malicious bots present a mounting threat to financial institutions. Forty-four percent identify bots as a major hurdle in verifying customer identities online and via mobile channels, while 48% report a rise in monthly bot attacks over the past year.
- Mobile fraud represents a major risk, accounting for over a third of total fraud losses across FIs. US FIs are the most vulnerable, with mobile fraud increasing in financial services while remaining steady or slightly declining among lenders. Seventy percent (70%) of U.S. organizations reported mobile fraud increased at least 10% in the last 12 months.
- Fraud controls have led to increased customer attrition for many North American institutions. Over the past 12 months, 71% of U.S. lenders and 78% of Canadian lenders reported higher customer churn due to fraud prevention strategies. “Balancing robust protection with a lower friction for trusted customers remains a critical challenge.,” LexisNexis said.
- Fraud-mature organizations take a proactive approach to tracking fraud and invest in future prevention. “This strategy strengthened defenses and reduced customer churn by 29% over the past year for those using mostly or fully automated systems. Fraud-mature organizations consistently report better outcomes in reducing churn and stopping fraud,” the company said.
For info: LexisNexis® True Cost of Fraud™ Study 2025 North America.
