How banks can turn fraud prevention into relationship building

Fraud isn’t just financial, it’s emotional. To foster trust, banks should approach fraud prevention as a collaborative, customer-focused effort.

Summary:

• Fraud is emotionally and financially damaging, yet victims often feel unsupported by banks. 
• Banks must shift from loss prevention to trust-building through smarter, customer-centric fraud strategies. 
• Fraud prevention relies on adaptive tech, real-time tools and shared responsibility across the customer journey. 

Fraud has become a pressing issue for both customers and banks. In the current digital landscape, the risk of fraud is closer than many customers realize. This affects not only the individuals but the overall trust in financial institutions. For organized crime, fraud represents a low-cost, low-risk and high-reward business model, which challenges banks to keep up with the increasingly sophisticated attacks.

The hidden scale of fraud

Quantifying fraud is challenging due to underreporting. The 2023 Swedish “Criminal profits from fraud crime” report indicates that approximately 230,000 suspected fraud cases are reported annually, but the actual number could be 2 to 2.9 times higher. Under PSD2 regulations, banks are required to report fraud losses related to payment services to financial supervisory authorities every six months. According to PSD2 data, in 2024, Swedish bank customers lost about SEK 940 million. Although this is a significant amount, it marks an improvement from 2023, with losses being approximately 20% lower. However, reimbursement policies vary across the Nordics, with Swedish data showing that customers absorb around 80% of reported losses. 

This issue is not just financial; it strikes at the heart of banking’s core promise: keeping customers’ money safe. 

A call for enhanced protection 

The industry recognizes the urgent need for a greater focus on fraud prevention. Many banks are now prioritizing fraud awareness in customer communications and offering preventative tools that introduce friction in digital channels. These efforts are particularly effective in reducing losses from vishing, a major target for Swedish banks. 

As the landscape evolves, fraud prevention must become a shared responsibility across the entire customer journey. Many banks are transforming their strategies to leverage technology and customer data more effectively. 

A new paradigm: trust as a strategic asset 

Change in fraud prevention is being driven by regulators, banks and customers alike. Customers need to feel their money is secure and accessible, and that support is available if fraud occurs. This trust is essential for banks to stay relevant and build long-term, profitable relationships. 

Currently, fraud prevention focuses largely on loss avoidance, but the future lies in reframing this approach — viewing fraud as a way to build trust, not just manage risk. 

The industry is moving from blanket controls and friction-heavy interventions to more adaptive, transparent and user-personalized safeguards. Instead of freezing accounts when fraud occurs, future systems will respond with contextual nudges, explainable alerts and customer-configured risk settings. This will improve detection, reduce false positives and enhance the overall customer experience in banking operations.

Key actions for banks

1. Invest in real-time intelligence: Use artificial intelligence (AI) or machine learning (ML) tools to detect emerging fraud patterns immediately, targeting both victims and mule accounts.
2. Embed fraud prevention into design: Integrate fraud teams into product, UX and data groups. Ensure new features, such as P2P payments, launch with built-in safeguards rather than retrofitted patches. 
3. Enable customer co-control: Provide customers with configurable security settings such as geo-blocking, spending limits and notification preferences. This fosters shared responsibility for protection while reducing false positives.
4. Shift from ‘loss prevention’ to ‘trust management’ metrics: Track resolution time, customer trust recovery and fraud victim NPS, rather than solely focusing on fraud losses. Supportive measures can strengthen customer loyalty, even after incidents of fraud.
5. Build proactive fraud education as a service: Offer nudges, simulations, and explainable alerts to help customers recognize fraud in their daily digital lives. Position banks as trust coaches to enhance credibility and customer relationships.

Fraud prevention goes beyond implementing security measures; it involves cultivating a culture of trust between banks and their customers. By investing in real-time intelligence, embedding fraud prevention into product design and empowering customers with configurable security settings, banks can transform the narrative from one of loss prevention to trust management. 
 
Looking ahead, banks need to educate and involve their customers in preventing fraud. By positioning themselves as trusted partners, banks can build lasting relationships that withstand the challenges posed by fraud. The question remains: Is your bank ready to embrace this transformative journey and redefine trust in fraud prevention? The time to act is now, as the stakes have never been higher.