Digital Lending Surge Attracts Increasing Fraud Schemes

Digital Lending Surge Attracts Increasing Fraud Schemes

This IDC Perspective examines the increasing fraud threat faced by digital lenders in their efforts to provide rapid and convenient credit decisions to borrowers. Both financial institutions (FIs) and fintechs are susceptible to criminal activity by fraudsters in stealing money and data. Technology has enabled the digitization of lending to provide borrowers with a real-time, convenient application experience. This document alerts lenders to various fraud methods and schemes that disrupt digital lending as well as the technology solutions that can proactively defend against fraudsters.According to Kevin Dolan, research director, Worldwide Compliance, Fraud, and Risk Analytics Strategies at IDC, "Financial institutions offering digital lending need to be skilled at detecting fraudulent application techniques and post-adjudication fraudulent techniques. These institutions should adopt an enterprise, multilayered approach to tackling financial crimes to measure, manage, and mitigate risk." According to Raymond Pucci, research director, Worldwide Consumer and Small Business Lending Digital Transformation Strategies at IDC, "Widespread digital lending fraud attempts are a wake-up call to financial institutions and fintechs to implement a line of defense against fraudsters. Existing technology platforms provide effective fraud detection and mitigation while continuing to deliver a friction-free experience for borrowers."

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