The state of security in digital banking

This week saw the launch of the latest GFT Banking Disruption Index, our quarterly survey of consumer sentiment towards digital banking. This time, we focus on security. With the ever-increasing digitisation of banking and the symbiotic relationship between technology and banking institutions, ensuring banks are secure remains a high priority.  

This blog from Richard Kalas (Client Solutions Director, Retail Banking at GFT UK) is a preview of the full report which you can download here. 

As a founding principle in the creation and subsequent evolution of banks, the importance of security cannot be understated. It is this importance that has led banks to develop a range of industry-leading security measures to ensure the financial safety and protection of their customers. 

As time and technology has evolved, so too has the means with which banks can protect their customers from financial harm or crime. However, the digitisation of banking has also brought with it a new wave of technologically-based threats with the sole purpose of defrauding customers.  

According to UK Finance, cybercriminals were able to steal £580 million through unauthorised and authorised fraud (where the account holder is tricked into making a payment) in the first half of 2023 alone. 

With this in mind, we wanted to survey customers on their experiences with bank fraud, how confident they are with their banks’ current security measures and their sentiment towards traditional and neobanks when it comes to tackling fraudulent activity.  

Fraudsters taking advantage of digital ‘over-confidence’ of younger customers  

Today’s data shows a rather surprising situation with younger generations of banking customers being impacted significantly more so than older consumers throughout the UK. Despite the common sentiment that older, wealthier and less technologically-native consumers are most at threat from bank fraud, almost half (48%) of 25-34-year-olds have or know someone who has been a victim of fraud, in comparison to other age groups, such as 45–54-year-olds where less than a third (31%) have been impacted. Of those aged 55+, only 24% of respondents had been affected by fraud themselves, or knew of someone who had been affected by fraud.  

Our data found that £570 is the average amount being stolen in a fraudulent event, which is having a direct impact on the confidence that customers have in their banking partners. 

As the 55+ age group are losing the most on average to fraud, you may think this would diminish their confidence in banks when it comes to keeping their money safe. However, our latest data shows that of all age groups in the UK, older banking customers (those aged 55+) are incredibly confident in their banks’ ability to keep their money safe, with 92% believing their money is secure, and 57% believing it is very secure. Of this age group, only 14% are worried about their banks’ security and fraud prevention measures.  

By comparison, 27% of 25-34-year-olds advised that they are worried their banks’ security measures are not fit for purpose. 

Recovering lost funds  

In a recent report from Which.co.uk, they highlighted that a significant portion of authorised push payment (APP) fraud had been successfully reimbursed to customers in the UK, with victims receiving over £152 million in the first half of 2023 alone, a positive sign for consumers, but also a serious financial undertaking for banks. 

Our data shows that fraud remains a constant threat across all age groups, but how are people finding the experience of getting their money back? 

Find out by downloading our latest GFT Banking Disruption Index here  

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