Fraud prevention has traditionally relied on identifying and blocking third-party entities at the transaction point. But fraud today doesn’t just exploit systems – it exploits people.
From phishing text messages and social media scams to fake financial apps that impersonate trusted brands, fraudsters are becoming more relentless and convincing with the intent of targeting your accountholders, your employees, and your reputation.
The result? Consumers are unknowingly authorizing fraudulent transactions – giving money directly to bad actors, leaving banks and credit unions to absorb the losses.
At the same time, the volume of compromised account credentials continues to accelerate. Although the total number of data breaches plateaued between 2023 and 2024, the number of affected accounts surged. In fact, financial services became the top-targeted industry for attackers – a position it hadn’t held since 2017.
This shift reflects an urgent reality: A fraudster’s success is a byproduct of widespread data exposure and fragmented financial behavior that legacy tools weren’t built to monitor.
Why Traditional Fraud Prevention Fails at Banks and Credit Unions
The nature of fraud has fundamentally changed. It’s no longer a system issue, but rather a people issue. Several factors are exposing critical blind spots in legacy fraud prevention methods, including:
- Data: Data is more exposed than ever, and fraudsters now have access to vast amounts of stolen identity data – enabling highly convincing, AI-generated scams operating at a speed and scale that can easily slip past static detection controls.
- Financial behavior: Today’s accountholders aren’t banking in one place. They’re managing 15 to 20 financial relationships, spanning banks, credit unions, fintechs, and payment apps all at the same time, resulting in fragmentation that limits visibility into the full picture of an accountholder’s financial activity.
Why Interconnected Fraud Prevention Matters Across Financial Institutions
While bad actors are organized and interconnected, the systems and financial institutions meant to stop them are often fragmented and siloed.
Fraud doesn’t stop at the walls of your financial institution. It continues to flow across entire financial ecosystems and beyond, making fraud prevention a shared responsibility.
With the speed and complexity of today’s sophisticated fraud, collaboration and secure intelligence exchange are essential to protecting your accountholders. Yet, the lack of a modern, coordinated infrastructure for anti-fraud intelligence sharing is still a critical vulnerability for the U.S.
In fact, the U.S. ranked number one globally for scam losses in 2024, with an average of $3,520 lost per victim.
These losses highlight a deeper issue: Without a unified approach to fraud prevention and powerful intelligence-sharing rails firmly in place, you risk operating with the same limited visibility that fraudsters are leveraging against you.
Proactive Fraud Prevention Checklist: Essential Steps for Financial Institutions
Fraud prevention can no longer rely on reactive tactics or isolated point solutions.
To lead in 2025 and beyond, start with a broader, more connected approach that improves visibility and fosters collaboration across the ecosystem, including:
- Enabling smarter data aggregation. Leverage open banking APIs to increase visibility, improve real-time anomaly detection, consolidate fragmented accountholder data, and reduce risky credential sharing practices.
- Prepare for Section 1033. While not a fraud-specific regulation, Section 1033 lays essential groundwork for secure, standardized data access. Early adoption positions you to support more informed defenses and gain a fuller understanding of accountholder behavior. Even if implementation is delayed, preparing now accelerates innovation and fosters a more security-minded strategy.
- Strengthen authentication beyond passwords. With credential stuffing and phishing on the rise, shared secrets are no longer sufficient. To ensure stolen passwords alone won’t lead to account compromises, Fast Identity Online (FIDO) passkeys and tokens should be implemented as the default standard – not the exception.
Top Three Fraud Concerns Facing Financial Institutions in 2025 and 2026
Fraud prevention has climbed to the top of the executive agenda in 2025, with CEOs across the industry naming account takeover, authorized payment scams, and check fraud as their top fraud concerns.
As these attacks continue to proliferate, leaders must remember these evolving threats demand more proactive, integrated strategies.
Effective fraud prevention is no longer about doing more alone – it’s about doing better together.
With fraud prevention that’s interconnected and built on trust, financial institutions that embrace secure intelligence sharing, adopt stronger standards, and engage in real-world collaboration will be better positioned to protect their accountholders – and preserve the trust that underpins every financial relationship.
Stay ahead of cyber and fraud threats
Download the Jack Henry™ Strategy Benchmark to assess your readiness and set your course for 2026.
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