Financial Organizations in the UK Spend £22k per Hour in the Fight Against Fraud.
March 7, 2023
In your daily life, have you ever wondered just how much money it costs to fight fraud? I hadn’t until today, and the answer to that, at least in the UK, is a whopping £22k per hour.
The latest report from LexisNexis Risk Solutions, titled True Cost of Compliance, reveals UK financial services organizations spend £34.2 billion a year on something called financial crime compliance (FCC) better known to the layperson as fraud.
Compared to 2020, this figure saw an increase of 19%
To put the staggering figure in perspective, £34.2 billion is almost 3/4 the UK’s national defense spending for 2021 and 2022.
UK financial services firms are spending over £533,150 on fighting fraud, which translates to £22,200 an hour.
The reason for these costs is the increasing regulatory expectations, the ever-evolving criminal threat as well as the push for greater automation. The last of which is said to be by far the biggest ‘internal cost driver’.
This, as well as hiring technology-related workers and training costs, mean the expenditure in this area accounts for 50.9% of all FCC costs.
This includes identity authentication processes, which, as we know, are not only good for fighting fraud, but also to improve customer’s experiences.
It is expected by most firms that FCC costs will only continue to increase by an average of 8% for the next three years in order to keep up with demand for “CDD activities including KYC/IDV and fraud checks at onboarding, and transaction monitoring.”
According to Elliot, this report is “encouraging” as it shows financial services firms are investing in fighting fraud, but it also shows that the increasing costs are due to these same firms not being able to meet demand in the first place
It is necessary for these institutions to make the most out of the existing technologies and to take advantage of the software and data sources they are investing in.