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APP Fraud, Identity Fraud and AI-Enabled Fraud Spotlighted as Main Threats Facing Fintech

During PAY360, the dedicated payments-focused event, its organisers, The Payments Association conducted a survey of its attendees to understand the fraud landscape and what organisations are most fearful of.

The Payments Association asked three questions to those leaving the event, about their views on fraud. The aim of the survey was to help firms in the space understand where resources should be allocated to protect their data and consumer funds.

The three biggest fraud types identified by attendees were APP fraud, identity fraud and AI-enabled fraud.

Thirty-nine per cent of respondents said that in 2024, someone being tricked into buying goods that don’t exist or send a bank transfer to a fraudster impersonating someone else, otherwise known as APP fraud, would be the biggest cause for concern. More complex and financially damaging types of APP fraud include romance scams.

Other concerns

Following this, 18 per cent identified identity fraud and 23 per cent of respondents said AI-enabled fraud as the main threats that needed resources. While both share some similarities with APP fraud, AI is increasingly being used as a force-maximiser by fraudsters, who can use Large Language Models to communicate with their targets in a broadly realistic way. Identity fraud can be used to make a scam seem more realistic by hijacking the established identity of a real person.

Tony Craddock, director general of The Payments Association
Tony Craddock, director general, The Payments Association

Tony Craddock, director general of The Payments Association, commented: “The survey results show that our focus on APP fraud as a major vector of losses for both business and the general public was correct. Around £240million was lost to APP fraud in the first six months of 2023, and this figure is likely to increase, at least in the short term as payments companies struggle to adapt to new forms of fraud.

“We expect these adaptations to include enforcing pauses on payments from time to time, to validate a transaction when the payment is out of the ordinary, so consumers will no longer be able to expect faster payments to be fast.”

Finding a solution

To turn the tide, more than half of respondents (57 per cent) said that the next game-changer in the fraud prevention space will be AI. This is already used extensively throughout anti-fraud operations, but is continually becoming more powerful and precise.

While AI can be seen as a threat, according to 57 per cent of respondents, it can also be the game changer that can protect users from fraudsters. In fact, the technology is already used extensively throughout anti-fraud operations and is continually becoming more powerful and precise.

Lastly, when asked how their company stays updated on emerging fraud trends and threats, 43 per cent said that collaboration with other financial institutions, and 21 per cent said industry reports were key. This highlights the importance of intelligence sharing and staying connected to work together as an industry.

How to optimise AI
Riccardo Tordera
Riccardo Tordera, head of policy and government relations for the Payments Association

Riccardo Tordera, head of policy and government relations for the Payments Association added: “We’re watching the development of AI in this space very closely. We have known for years that machine learning is the only thing with the sophistication and the capacity to tackle increasing volumes of fraud, but it’s not a simple case of installing an AI solution and watching it clean up fraud on your system.

“It needs careful monitoring and optimisation to be truly effective, and this can be enabled by working together to share best practices.

“We fully expect the technology to be part of upcoming, future-forward regulations like PSD3, and we’re working with the industry to better help them separate genuine solutions from the hype.”


  • Francis is a journalist and our lead LatAm correspondent, with a BA in Classical Civilization, he has a specialist interest in North and South America.

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