Study from Datos Insights and Deduce Shows Increasing Concern over AI-Driven Fraud Among Financial Institutions

Deduce, the only patented technology platform designed to prevent AI-driven identity fraud, in association with Datos Insights, today released a study showing new trends in identity fraud growth within the financial industry. The research explores the current landscape of stolen and synthetic identity fraud in North America, providing crucial insights into the challenges faced by financial institutions (FIs) and the emerging threat of artificial intelligence (AI).

“At Deduce, we recognize the evolving nature of stolen and synthetic identity fraud poses a real threat to the financial sector,” noted Ari Jacoby, CEO of Deduce. “Our latest research with Datos reveals that AI amplifies these risks, creating complex and harder-to-detect stolen and synthetic identities. This new fraud threat is causing widespread increases in false positives as existing fraud solutions cannot differentiate AI-driven fraud from legitimate customers who receive frustrating incremental friction. By adopting innovative technologies and fostering industry-wide collaboration, we can stay ahead of fraudsters and safeguard the integrity of our financial systems.”

Datos Insights conducted interviews with 15 senior-level fraud, risk, and compliance executives from leading banks across North America. These executives were selected based on their roles and responsibilities in overseeing financial crime strategy, operations, and prevention within their respective institutions.

Key Findings Include:

• New Threat: 81% of respondents report that AI-driven fraud is a recognized new threat and indicated that they plan to invest in new layers of defense to tackle synthetics.

• Persistent Problem: Stolen and Synthetic identity fraud continues to plague financial institutions in North America, with many struggling to identify and quantify the extent of synthetic identity attacks despite having detection solutions in place.

• AI-Generated Deepfakes: Reports of AI-generated deepfakes bypassing document verification processes highlight deficiencies in current identity validation tools.

• Inconsistent Tracking: The lack of consistent tracking and reporting capabilities across the industry hampers efforts to effectively understand and address synthetic identity fraud.

• Detection Challenges: Current strategies for detecting stolen and synthetic identities are often inadequate, making it difficult for FIs to distinguish stolen and synthetic identities from legitimate ones.

• Generative AI Threat: Generative AI poses a significant threat to identity verification processes, potentially fueling more sophisticated and harder-to-detect synthetic identities.

“Our research reveals that stolen and synthetic identity fraud remains a persistent threat to financial institutions, with many struggling to detect and quantify its impact,” said Jim Mortensen, Strategic Advisor in Fraud and AML at Datos. “As AI threatens to supercharge this problem, solutions such as Deduce’s become key to unmasking increasingly sophisticated synthetic identities and protecting financial institutions.”

To read the complete study and download the “Synthetic Identities and Generative AI: Assessing the Threat to FIs” whitepaper, please visit: https://www.deduce.com/resource/the-impact-ai-is-having-on-stolen-and-synthetic-identities/

About Deduce

Deduce detects stolen and synthetic AI-driven identities that fool legacy identity-fraud security solutions and damage trust. Deduce unmasks these identities using patented technology and the largest purpose-built, activity-backed identity graph, which sees 185M+ identities more than three times every week, generating 1.5B+ authenticated online events per day across 150,000+ websites and apps. Deduce Identity Graph data drives real-time multicontextual digital forensics to protect new account opening workflows, expose “sleeper” stolen and synthetic identities that are already in customer databases, reduce friction and false positives in onboarding, reduce onboarding operational costs, and improve customer acquisition KPIs.

Deduce awards include Tech of the Future - Fighting Fraud at the 2024 Banking Tech Awards USA, the #1 Security spot in Fast Company’s World’s 50 Most Innovative Companies 2022, and the 2022 CISO Choice Award for Fraud Prevention. Learn more about the AI-driven identity fraud threat and Deduce’s solution at deduce.com.

About Datos Insights

Datos Insights delivers the most comprehensive and industry-specific data and advice to the companies trusted to protect and grow the world’s assets, and to the technology and service providers who support them. Staffed by experienced industry executives, researchers, and consultants, we support the world’s most progressive banks, insurers, investment firms, and technology companies through a mix of insights and advisory subscriptions, data services, custom projects and consulting, conferences, and executive councils.

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