ID fraud dominates UK financial sector with a 45% surge


ID fraud is poised to become the main form of bank-reported fraud, with projections finding it could represent 50% of all cases by 2025.

A comprehensive analysis of the UK’s largest database of syndicated risk intelligence, managed by Synectics Solutions, underscores the gravity of the situation. As of 2023, ID fraud already accounts for 45% of all adverse contributions, with ‘ID fraud originating online’ identified as the most significant threat within the financial sector.

Chris Lewis, Head of Solutions at Synectics, emphasizes the critical balance between combating fraud and ensuring inclusivity. He highlights the potential risk of financial exclusion for ‘ID Poor’ customers, a demographic that is seeing year-on-year growth, should the response to ID fraud be mishandled. This concern is echoed in the Government’s 2024 report on public trust in digital identity services.

Synectics Solutions has taken a proactive stance by detailing the most prevalent forms of ID fraud and offering advice on adopting inclusive verification measures. The National SIRA database, a vital tool in this fight, contains over 300 million rows of data, with 72% of entries in 2023 relating to internet-based interactions. A significant 37% of these were ID fraud cases, emphasizing the digital nature of the threat.

The analysis further breaks down the nature of these fraud cases, revealing:

  • 24% involved fictitious applicant names.
  • 27% were cases of address detail theft.
  • 28% involved key details, such as names and addresses, linked to previously flagged applications for potential ID fraud.

Tomas Brown, Synectics’ Analytics Consultant, notes the increasing sophistication of ID fraud tactics. He points out the challenge of detecting synthetic IDs, which blend fake and real data to appear credible.

With the surge in digital ID adoption, spurred by the UK government’s Digital Identity and Attributes Trust Framework (DIATF), the need for robust online ID verification processes has never been more apparent. Chris Lewis, also a board member of the Open Identity Exchange (OIX), advises financial institutions to adopt solutions that verify ID details against multiple authoritative sources and use risk scoring based on digital interaction patterns. This approach aims to reduce false positives and ensure that ‘ID Poor’ customers are not unjustly excluded.

As the digital landscape evolves, the financial sector must navigate the fine line between securing digital identities and fostering inclusivity. The insights and recommendations offered by Synectics Solutions provide a roadmap for achieving this balance, ensuring that efforts to combat ID fraud do not inadvertently penalize vulnerable customer segments.

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