Fraud Detection and Prevention Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

Fraud Detection and Prevention Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

The Global Fraud Detection and Prevention Market was valued at USD 18.24 billion in 2020, and it is expected to reach USD 48.71 billion by 2026, registering a CAGR of 18.19%, during the period of 2021-2026. The COVID-19 pandemic has led to people showing increasing curiosity regarding viruses, which has resulted in high-volume searches. Hackers are trying to misuse this interest by making malicious programs hidden in files related to coronavirus.

Key Highlights

• Moreover, companies across various industries are experiencing increased operational and financial pressure due to the pandemic. This creates a heightened level of economic risks such as reduction in revenue and profits, loss of market demand, etc. These financial risks may lead to increased motivation toward committing fraud through manipulation of financial results, misrepresentation of facts, misappropriation of assets, among other fraud schemes.
• The fundamental shift from physical cards, checks, and currency toward digital payments continue to transform the way consumers and businesses transfer value. Identity, security, and trust are fundamental requirements for payments, commerce, and finance, especially in a digitized economy.
• According to the Wipro State of Cybersecurity Report 2019, the consumer and retail sectors are being targeted at a greater frequency compared to other sectors. The report further adds that at least 73% of the organizations are anticipated to lose revenue in case of an attack due to the non-availability of services at critical times.
• Concurrently, a significant rise in the retail IT infrastructure includes POS checkout terminals, self-checkout units, information/web kiosks, PCs, and back-office servers. Thus, the increasing dependency on IT, ranging from wholesalers and distributors to manufacturers and suppliers, demands greater security for consumer data.
• Even with the increased awareness about cyberattacks and breaches, employees are falling prey to social attacks. As per Verizon’s Data Breach Index Report 2019, financial pretexting and phishing represented 98% of the social incidents. Among 93% of all the breaches investigated, emails continued to be the main entry point (96% of such cases).

Key Market TrendsBFSI Sector is Expected to hold Significant Market Share

• Fraudulent activities in the industry have evolved over the decades. While it was previously limited to cheque frauds and wire frauds, with the growth of the cybersphere and the accompanying expansion of the cybercriminal realm, it has taken on more virtualized forms.
• The increasing technological penetration, coupled with digital channels such as internet banking and mobile banking, is becoming prominent customer choices for banking services, making it a crucial need for banks to leverage fraud prevention solutions.
• Fraud prevention and detection represents one of the biggest areas of concern for financial institutions and is likely to become one of the prominent drivers for IT spending. Moreover, online transactions fraud, insurance claim frauds, and card-related frauds have been increasing the usage of these solutions in the insurance and banking and financial services sector.
• The potential risk of fraud has been one of the biggest in online payments, which is anticipated to grow in tandem with the availability of digital customer relationships, as more companies are now offering online payments.
• Out of all the industries, BFSI has been most prone to insiders/employees in terms of the types of fraudulent activities. There have been multiple instances where employees have been accused of fraud (for instance, PNB fraud in India). In order to prevent these, the industry needs robust fraud detection and prevention solutions.

Asia Pacific region is expected to witness fastest growth during the forecast period

• As emerging economies in the Asia Pacific are adopting digitalization, the risk of breach of customer data and data channels is increasing, due to which, utilization of fraud detection and prevention solutions isrising at a significant rate.
• Bank debit and credit cards accounted for the most substantial fraudulent activities, mainly due to the rapid increase in e-commerce transactions. However, organizations are aware that they may face a similar threat in the future, due to which they are upgrading their systems to the latest available technology.
• According to Experian, a credit information company, India has the second-highest risk of fraud in a digital transaction, in the Asia-Pacific region. In addition, the company stated that approximately 48% of consumers in the country experienced retail fraud directly or indirectly. As a result, retail companies, such as Amazon, Flipkart, and Limeroad, are expected to adopt the latest fraud detection and prevention systems.
• Singapore has imposed a strict regulation against data breaches. The country has levied one of the highest penalties in the Asia-Pacific region, worth about USD 1 million, in case of a data breach, in accordance with the country’s data protection provision. This will ensure that companies operating in the country have adequate provision for fraud detection and prevention provision, making an affluent growing market in the region.
• Moreover, in Vietnam, many frauds are being witnessed in the retail and telecommunication industries due to the increasing penetration of digitization and the Internet of Things (IoT). This is expected to propel companies to incorporate fraud detection and prevention systems. Thus, the aforementioned factors are expected to aid the growth of the Asia-Pacific segment of the market studied during the forecast period

Competitive Landscape

The Fraud Detection and Prevention Market is moderately fragmented, with few firms enjoying a small share in the market. The companies keep on innovating and entering into strategic partnerships to retain their market share.

• January 2021 - SAP launched a new collection of services and software, offered as a single subscription product called “Rise with SAP,” designed to assist customers with cloud migration and digital transformation initiatives. As part of the Rise with SAP announcement, the company said it is acquiring Signavio, a Germany-based developer of business process intelligence and process management tools. The Rise with SAP offering is built around SAP software and services, with S/4HANA Cloud and the SAP Business Technology Platform at the core, with the software available through SAP’s private cloud service as well as hyperscale public cloud platforms such as Azure and Amazon Web Services.
• February 2021 - Experian launched a new version of its own fraud prevention platform, which is targeted at businesses that experienced high demand for digital services or were dealing with a bump in the number of online accounts.

Additional Benefits:

• The market estimate (ME) sheet in Excel format
• 3 months of analyst support

Companies Mentioned

SAP SE
IBM Corporation
SAS Institute Inc.
ACI Worldwide Inc.
Fiserv Inc.
Experian PLC
DXC Technology Company
BAE Systems PLC
RSA Security LLC (Dell Technologies Inc.)
Oracle Corporation
Nice Ltd.
Equifax Inc.
Lexisnexis Group
Fair Isaac Corporation
Cybersource Corporation
Global Payments Inc.
Feedzai Inc.

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