New analysis from National SIRA, the UK’s most authoritative risk intelligence syndicate, reveals that ID fraud is the top fraud type reported by banks and other financial service providers. The typology accounts for 45% of all National SIRA adverse contributions made in 2023. This figure could reach 50% by the end of the year.
Exclusive Synectics Solutions research also shows that ‘ID fraud originating online’ is now the single most common fraud threat facing Financial Services organisations today. As a result, counter-fraud leaders are being urged to exercise vigilance against ID fraud, but do so with caution lest risk a financial inclusion fall-out.
To help institutions navigation the challenge, Synectics Solutions’ Head of Solutions, Chris Lewis, details the following guidance on implementing inclusionary verification measures:
“Focussing efforts on more robust online ID verification has to be the answer. But this presents risk. Widespread adoption of solutions that shut the door on fraud too indiscriminately will also potentially block vital system access to thousands of ‘ID Poor’ customers – a market segment increasing in size each year.
“With the wrong response to ID fraud, the financial exclusion fall-out could be huge. This concern was front-and-centre in the Government’s 2024 report on public dialogue on trust in digital identity services".
National SIRA contains over 300 million rows of data, constantly being updated and verified by fraud teams all over the UK from 170+ leading banks.
In 2023, 72% of all SIRA entries related to internet-based interactions with over a third (37%) logged as ID fraud originating via the internet, making this the most common fraud type/channel combination.
Drilling down into the reasons for these specific types of ID fraud filings analysis shows at least:
Synectics Solutions Fraud Analytics Consultant, Tomas Brown, provides further context to these worrying numbers:
“With ID fraud, we’re definitely seeing a sliding scale of sophistication. For instance, fake names can be relatively easy to spot in some cases, but when paired with real data and used to create a synthetic ID that has accumulated a ‘genuine’ credit rating, the task is much harder. Here, and certainly in the case of the 28% linked to previous applications, there’s clear value in being able to refence syndicated fraud data and check ID details against multiple sources.”
Given the clear internet-based bias, and with digital ID adoption in the UK now starting to surge following the government’s development of the Digital identify and Attributes Trust Framework (DIATF), the findings demonstrate the importance of robust online ID verification processes.
But how exactly can banks and other financial service providers make these processes effective, fast and fair - ensuring genuine customers, including those potentially classed as ‘ID poor’, aren’t unfairly penalised with slow services or entirely excluded.
As a board member of the Open Identity Exchange (OIX) - which aims to promote and support the safe adoption of digital ID solutions - and through his work at Synectics on projects with both banks and ID Service Providers (IDSPs), Chris Lewis has a very clear checklist institutions should look for.
“Banks should choose solutions which verify ID details against multiple authoritative sources rather than one or two, and which risk score individuals based on the frequency, recency, and quality of their digital interactions with organisations”, says Chris.
“This simultaneously lowers the risk of false positives, especially linked to good customers who may have thin credit files, while increasing protection from ID fraud. Given that all these checks can now be done in a matter of seconds, there’s no real reason why banks can’t balance good service with robust defences, while still ensuring that ID-poor customers are not excluded.”
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