Documentary fraud in the banking sector

According to a study carried out by the French Association of Banks in 2020, documentary fraud increased by 37 % in 2019, mainly due to counterfeiting of credit cards and checks. This trend is supported by a survey conducted by KPMG in 2021, which found that 49 % participants reported an increase in document fraud within their company over the last two years. Document fraud in banking establishments includes the falsification or manipulation of documents with the aim of deceiving banks or financial institutions. The repercussions of document fraud for banks and their customers are considerable, including significant financial losses and customer distrust of financial institutions. This article discusses the causes, consequences and preventive measures of documentary fraud in the banking sector.

I. The rise of documentary fraud within banks

Documentary fraud in banks is often motivated by substantial financial gains for the fraudsters. According to a study carried out by the Payment Card Security Observatory in France in 2020,Bank card fraud represented a total amount of 464.5 million euros, be one increase of 19.3 % compared to the previous year. Fraudsters may also use document fraud for money laundering or to finance criminal activities.

Weaknesses in bank security systems can also allow fraudsters to succeed in their scam. According to a survey carried out by Accenture in 2020, 48 % banks worldwide have reported an increase in online fraud over the past two years. Cybercriminals can use sophisticated techniques to fool banks' security systems and gain access to confidential customer information. Banks must therefore invest in advanced security technologies to prevent document fraud and cyberattacks.

Documentary fraud in banks can have significant consequences for financial institutions and their customers. According to a study carried out by the French Banking Association in 2020, documentary fraud cost French banks more than 585 million euros in 2019. These financial losses can be considerable and impact the financial viability of the bank, as well as future investments in data security and document fraud prevention.

Additionally, customers may lose trust in financial institutions and turn to alternatives such as fintechs. A survey carried out by Ipsos in 2021 found that 68 % of French consumers believe that banks do not sufficiently take into account the protection of customers' personal data.

II. New frauds forcing players to protect themselves

In 2021, a network of fraudsters was dismantled by French police, after falsifying documents to obtain fraudulent loans from several banks. In 2019, a British police investigation found that Fraudsters had falsified documents to open bank accounts and transfer money abroad.

Recent statistics show an increase in documentary fraud in banks, with documentary fraud increasing by 37 % in 2019 in France. Implementing advanced security technologies, employee training and rigorous verification processes are effective preventative measures against document fraud.

Employee training is essential to spot the signs of document fraud. Banks have implemented training programs for raise employee awareness to the risks of documentary fraud and their learn to detect falsified documents. They must also be trained in the latest techniques used by fraudsters to fool bank security systems.

Additionally, banks have implemented rigorous verification processes for new customers to prevent document fraud. They can carry out checks by requesting additional identification documents.

III. A scourge affecting both large groups and fintechs

Documentary fraud is a major problem for financial institutions, whether traditional or part of emerging fintechs. Fraudsters use falsified documents to open bank accounts, take out loans or carry out fraudulent transactions.

Although traditional banks have security protocols in place to address these issues, fintechs are also increasingly facing document fraud risks. They are particularly vulnerable, because they have fewer resources to protect themselves against fraud. However, fintechs are attracting a growing number of customers, with annual growth of 18 % of the market in France, according to the study “The State of Fintech in France”, from Dealroom. Fintechs must therefore put in place robust security measures to prevent and detect document fraud. Online identity verification, facial recognition, biometrics and signature analysis technologies prevent fraud. In addition, fintechs must continuallyadapt and innovate to stay ahead of fraudsters who seek to exploit their weaknesses.

Documentary fraud is a growing problem for financial institutions in France, whether traditional or part of emerging fintechs. Fintechs must take serious security measures to protect themselves against document fraud and continue to offer innovative and secure financial services to their customers. By investing in security, fintechs can strengthen their reputation and market position.

‍Would you like to know more about our fake document detection solution? Contact a Finovox expert!