I recently returned from the BAI Combating Payments Fraud Conference, held earlier this week in Florida.  As usual, the highlight for me was the opportunity to talk to many industry professionals - bankers, vendors and consultants – about the latest trends in bank fraud and fraud prevention.

At the Bank Fraud Forum and Memento booths, we invited visitors to take part in an informal survey that we called “Which Fraud Threat Costs You the Most?”.  The purpose of the survey was to gauge where banks are investing their fraud prevention resources.  Each visitor was given 10 poker chips, and told to place them in any of 6 glass jars labeled by the following fraud areas – ACH, check, debit/credit, employee, online and wire.  Their task was to allocate the chips according to the fraud area that costs their institution the most in terms of resources (people, technology, time, etc.).

More than 75 bankers and fraud professionals participated in the survey, and the results are shown in the photo below. 

To be honest, these results were striking, but not all that surprising.  Check fraud is characterized by never-ending attempts and significant losses.  High false positive rates mean check fraud alerts require armies of analysts at the big banks, or take up way too much of the fraud team’s day at smaller institutions.  And so check fraud continues to dominate the bank fraud landscape from a resource investment, operational expense and opportunity cost perspective.

While the outcome is admittedly unscientific, the survey results do seem to validate what we’ve been hearing from banks and credit unions for a long time now… the industry needs better approaches for solving this longstanding problem.

How would you allocate your chips?  Do the results from BAI surprise you?  Please share your thoughts.

If you are interested in On-Us Fraud, sign up today for Memento’s webinar on March 25th!