BOSTON — Fraud is becoming more difficult for credit unions to detect and prevent as cybercriminals adopt increasingly sophisticated tactics, while members are placing a greater emphasis on security when choosing financial products and services, according to a new report.
The report, “Defending the Member: How Credit Unions Are Responding to a New Fraud Landscape,” from PYMNTS Intelligence and Velera found that fraud threats are expanding across multiple channels as credit unions continue to grow their digital offerings, creating new vulnerabilities that institutions must monitor and address.
According to the report, 82% of credit union members said the security of a payment method is the primary factor influencing how they choose to pay. Researchers said the finding underscores how security has become a central component of the member experience and an important factor in maintaining trust and engagement.
The Top Challenge
The report also found that 77% of credit unions experienced unauthorized network access incidents during the past year, highlighting the growing prevalence of cyber threats. In addition, 56% of credit unions identified cybersecurity and fraud prevention as their top challenge, marking the second consecutive year the issue ranked as the industry’s leading concern.
PYMNTS and Velera said fraud prevention is no longer viewed solely as an operational function designed to reduce losses. Instead, institutions increasingly see it as a critical element in preserving member relationships and protecting their reputations.
The report noted that fraud now extends well beyond individual transactions, with attacks targeting multiple channels and exploiting gaps created by disconnected systems and fragmented defenses.
As credit unions expand digital services, they also increase the number of potential entry points available to fraudsters, according to the report. That growing digital footprint requires institutions to monitor activity across accounts, payment channels and member interactions rather than focusing on isolated incidents.
Emerging Threats
PYMNTS and Velera said emerging threats such as synthetic identity fraud, artificial intelligence-enabled scams and coordinated cyberattacks are becoming more difficult to detect using traditional fraud prevention tools.
In response, many credit unions are investing in real-time analytics, machine learning technologies and integrated fraud management platforms designed to identify suspicious activity earlier and intervene before losses occur, according to the report.
The report said institutions that are most successful in combating fraud will be those that can combine greater visibility across channels with faster decision-making and more effective communication with members.
Changing Member Expectations
As fraud threats continue to evolve, member expectations are evolving as well, PYMNTS and Velera said. Consumers increasingly expect their financial institutions to detect threats quickly, communicate clearly and prevent fraud before it affects their accounts.
The report concluded that security is no longer an invisible back-office function but is becoming a key factor in how consumers decide where to conduct their financial business and which institutions they trust with their money.
