Outsmarting Fraud Without Overspending: A Cost-Efficient Approach for Banks and Credit Unions

Balancing the demand for advanced anti-fraud technology with tight budget constraints remains a challenge for many banks and credit unions.

The good news? Cost effective solutions are readily available.

The latest data shows that as we enter 2025, fraud in the United States continues to rise at an alarming rate. According to the FTC, US consumers lost $7.9 billion to various fraud typologies during the first three quarters of 2024 alone. The phishing landscape is equally concerning, with SlashNext reporting a 202% increase in phishing messages and an astonishing 703% rise in credential phishing attacks in the second half of 2024.

Additionally, ACI Worldwide projects that by 2028, the value of authorized push payment (APP) scams in the US will rise by 7%, accompanied by a 19% increase in APP scams occurring over real-time payment rails. These trends suggest that, unfortunately, the future may be on track to set even more records for fraud losses among US consumers.

Navigating fraud protection within budget limitations

Given the current fraud landscape, there’s no doubt that US financial institutions need effective fraud mitigation strategies. Fraudsters are increasingly targeting the weakest point in fraud prevention—the human element—using sophisticated social engineering schemes. However, implementing advanced fraud prevention systems can be challenging, particularly for credit unions and other mid-tier financial institutions.

Credit unions often lack the financial resources that larger banks can allocate to state-of-the-art fraud detection technologies and specialized personnel. Additionally, fraudsters frequently see credit unions as easier targets due to their perceived weaker defenses compared to those of larger banks. Being relationship-driven, credit unions prioritize member experience and may carefully evaluate the potential impact of stricter security measures that could increase customer friction.

This creates a situation where credit unions often rely on legacy systems that lack the flexibility and advanced capabilities needed to effectively detect modern fraud patterns. As fraudsters increasingly employ sophisticated techniques, such as authorized push payment scams and AI-driven phishing schemes, credit unions are becoming especially vulnerable.

The high cost of fraud vs. the value of prevention

Delaying the deployment of advanced fraud prevention solutions may seem cost-effective at first, but it can ultimately prove far more expensive than investing in proactive measures.

According to an ACI Worldwide survey, more than 30% of APP fraud victims in the US chose to leave their existing financial institution. Given that fraudsters are indiscriminate of who they target, banks and credit unions must weigh the costs and benefits of advanced fraud protection technologies.

The truth is that fraud causes damage on multiple levels:

• The loss of clients and their associated revenue
• The expense of acquiring new clients to replace those lost
• The financial burden of reimbursements
• The impact of a damaged reputation and the costs of PR communication efforts

Therefore, preventing fraud with state-of-the-art technology powered by artificial intelligence and machine learning proves to be cost-effective in the long run. It protects credit unions not only from the costs of reimbursement but also from member loss, the expense of acquiring new members, and the need for costly damage control through PR campaigns.

Behavioral intelligence: The key to smarter fraud defense

In the fight against fraud, financial institutions are not alone. By partnering with vendors offering state-of-the-art fraud protection technology and deep expertise, they can effectively safeguard their customers and reputation while maintaining reasonable costs.

ThreatMark’s Behavioral Intelligence Platform is a prime example. It collects and analyzes a broad spectrum of data on devices, transactions, and user behavior—such as login frequencies, transaction habits, navigation preferences, and keystroke dynamics—to establish a unique “normal behavior” benchmark for each user.

Continuous monitoring enables the detection of deviations that may indicate fraudulent activity, such as unexpected login locations, unusual transaction patterns, installed malware, active phone calls, or the use of remote access tools. This allows for immediate action to prevent potential fraud in real time, including sophisticated cases like RAT attacks, account takeovers (ATO), and APP scams.

Boosting detection rates while reducing costs

Implementing behavioral intelligence facilitates significant cost savings. The Behavioral Intelligence Platform cuts authentication expenses—such as SMS-based authentication—by up to 90%. Additionally, its advanced and more accurate detection significantly reduces false positives. This allows financial institutions to achieve more efficient fraud detection without increasing customer friction, which is especially critical for credit unions.

Additional active phishing site detection is available through the Cyber Fraud Fusion Center. This service protects banks and credit unions from targeted phishing attacks by detecting threats and swiftly shutting down phishing sites, with an average detection-to-notification time of just 6 seconds. This prevents brand abuse and safeguards financial institutions and their customers at scale.

To summarize, by implementing advanced behavioral intelligence, financial institutions can achieve:

• Significantly improved detection rates
• Up to 90% reduction in authentication costs
• Up to 90% fewer false positives
• Flexible implementation options (on-premises or cloud deployments)
• Proactive detection and shutdown of phishing sites
• Deeper insights into emerging fraud patterns

Outsmarting fraud without outspending the budget

Smaller and mid-tier financial institutions, such as banks and credit unions, don’t have to fall behind in adopting advanced fraud protection. With typically smaller fraud prevention teams, these institutions can greatly benefit from leveraging automation and outsourcing.

Implementing holistic third-party solutions, such as ThreatMark’s Behavioral Intelligence Platform, provides state-of-the-art fraud protection, deep expertise, and consistent performance—all while keeping costs manageable. After all, leaving customers and members vulnerable to fraud is always far more expensive than being prepared.

Learn more about behavioral intelligence