A recent study conducted by Tunic Pay in collaboration with Opinium, reveals that the UK’s current banking measures to combat fraud are falling short of effectiveness.
According to Finextra, this study comes in the wake of new regulations by the Payments Systems Regulator, which mandate UK banks to compensate victims of Authorised Push Payment (APP) scams up to £85,000.
Despite these rules, the £4bn issue of APP fraud persists, with banks investing heavily in systems designed to delay payments and encourage customer vigilance.
Nico Barawid, co-founder of Tunic Pay, expressed concerns about the current strategies, noting, “The PSR’s important new rules have placed more financial burden on banks than ever before to get a handle on the potentially £4bn problem of APP fraud.
“The banks have channelled huge amounts of money and effort into creating friction to slow down payments and get customers thinking harder about who they’re sending their money to. Is the friction working? Not a lot. If two in three people aren’t paying attention to the warnings they click through, the system is broken and the fraudsters win. Slower payments don’t mean slower fraud.”
The research indicates that while 85% of UK adults are aware of their banks’ anti-fraud actions, only a third actually heed these warnings when making payments. Furthermore, a scant 32% find these warnings useful for making considered payment decisions. Most users are skeptical about the delay tactics used by banks, such as holding payments for up to 72 hours, with 75% doubting their effectiveness.
The study also highlights a disparity in the responsiveness between customers of traditional high street banks and those of online or challenger banks. Customers of online banks are slightly more likely to perceive the warnings as effective compared to their traditional counterparts.
Nicky Goulimis, CEO of Tunic Pay, advocates for a shift towards more proactive and technological solutions. “Customers are tired of outmoded fraud prevention measures that aren’t working for them. They expect banks to step up with smarter, proactive security measures rather than relying on friction and delays that ultimately put the responsibility on customers. This shift in expectations is a huge opportunity for FinTechs and a call to action for banks to prioritise real-time detection and more intuitive safety features.”
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