The opinions expressed here are those of the authors. They do not necessarily reflect the views or positions of UK Finance or its members.

Dubbed the European capital of fraud, the UK clearly has a problem with fraud. In fact, Britons are almost 9x as likely to be victims of scams than their German counterparts, with 134 cases of card fraud per 1,000 people in the UK.

Opinions vary as to why fraud rates are so high in the UK. Some attribute it to the English language being the lingua franca for both legal and illegal activity, others point to an overstretched police force, overcomplicated digital identity strategy, or UK’s inconsistent approach to fraud prevention in its overseas territories and crown dependencies. There’s also the perception that the UK is a comparatively wealthy country, which places a target on the backs of British businesses and citizens.

UK banks’ preference for database identity checks and faster payment systems, both of which can be argued contribute to the problem and the solution, could also be posited as a reason for its comparatively high fraud numbers.

Yes – there is there such a thing as good friction!

While technology can be used to optimse operations, enabling banks to offer faster onboarding and transactions to even more customers, there is often a knock-on impact to the adoption of digital advancements and new services. For example, 2FA (Two factor authorisation) is now widely viewed as vulnerable to account takeover fraud, alongside social engineering and real time phishing attacks.

With UK bank branches and brick and mortar businesses closing at a rapid pace, and the use of technology to offer sophisticated fraud attacks on the increase, businesses would be wise to supplement its automated processes, such as AI-enabled identity verification solutions with the human touch and oversight, albeit delivered digitally.

Looking to the continent.

Could the UK learn a thing or two from Europe regarding fraud prevention and identity verification processes? In notoriously strict and regulated markets like Germany, video identity verification has been the standard identity verification process for almost a decade. 

In fact, BaFin, which is the German regulatory body overseeing and enforcing financial institutions’ compliance with AML and KYC regulations, does not currently permit the use of artificial intelligence and biometric-based verification that other regulators (including the UK) do. However, that could well be set to change in coming months, as the German regulator explores ways of softening this approach to allow partially automated solutions.

Up until recently, video identity verification methods were rarely used in countries outside of Germany due to expensive running costs. New versions of video identity verification solutions have changed the game, as they can be customised according to scale and risk appetite and are becoming increasingly popular outside of Germany, including the UK.

Facing up to fraud.

Video verification can help organisations perform an enhanced and more holistic identity verification check to gain additional insights into the ‘realness’ of their customers and the validity of their documents. Through regular training sessions led by fraud and identity verification experts, banks can empower their customer service agents with the skillset and tools to become indispensable in the fight against fraud. With video identity verification, customer service agents can help detect:

• Fake ID fraud by requesting applicants cover or bend certain parts of documents as a way of identifying fake IDs and document deepfakes.
• Identity theft fraud by performing interactive motion detection tests like a hand movement challenge to detect deepfakes.
• Social engineering fraud by asking a series of questions specifically designed to identify whether someone may be victim of a social engineering scam, like romance fraud or social media fraud. Being able to see and hear customers and also ask follow-up questions, agents can gain valuable insights into whether their customers may be being coerced.
• Money mules by being able to pick up on suspicious social cues (e.g. if customers appear nervous or are looking over to the side of the camera when answering) and pose certain questions. 

The pursuit of new technological advancement needn’t come at the expense of the human element. Indeed, the future of businesses interactions are likely to be a clever combination of man and machine; of old and new.

To find out more about the future of fraud in the UK, and how human-machine harmony can help, watch this free on-demand webinar: Unveiling Britain's Fraud Landscape: Harnessing Human-Machine Harmony to Combat Scams.