Every year, fraud costs the typical U.S. fintech $51 million, and many lose far more. Even still, that sum hardly scratches the surface of the devastating impact fraud may have on the operations of FinTech companies. The underlying effects of fraud go well beyond the balance sheet’s black and white.
The many ways that fraud may harm FinTechs’ bottom lines are described in “The FinTech Fraud Ripple Effect,” a project by Ingo Money. In order to gain a deeper understanding of the fraud problem’s scope and potential effects on FinTechs’ broader operations and customer experience, we questioned 200 FinTech executives from throughout the country.
FinTechs put additional friction on their account holders as they encounter more fraud. For their account users, FinTechs that care about fraud expenses place twice as many restrictions on them as those that do not.
Most FinTechs claim that their customers have problems transferring funds between their accounts, although fraud-prone FinTechs are more likely to encounter these frictions. Customers find it more difficult to deposit and pay with their funds when there is a poor user experience and 26% more FinTechs that suffer from fraud report this difficulty than those that do not.
To enhance the user experience, the typical FinTech aims to invest in quick products. Near the top of FinTechs’ wish lists for innovation are investments in instant cryptocurrency wallet deposits and in-store cardless cash withdrawal options, with 31% planning to invest in the former and 28% in the latter over the next three years.
These are just a few conclusions drawn from our most recent research. The full picture of fraud’s true cost is presented in “The FinTech Fraud Ripple Effect.”
