Top 4 takeaways from Alloy’s 2025 State of Fraud Report

Alloy’s Principal Advisor of Fraud & Identity Risk, Sara Seguin , shares top takeaways from Alloy’s annual fraud report

2024 was another exciting year for fraud professionals. Last month, Alloy released its third annual?State of Fraud Report. The report surveyed nearly 500 fraud and risk leaders at banks, credit unions, and fintechs across the US to uncover trends in the fraud landscape and learn how different types of organizations are responding to these threats.

Each year, the report exposes the latest tactics fraudsters are using, highlights the impact of fraud on organizations of all sizes, and identifies the most effective tools for detecting, preventing, and stopping fraudulent activity.

Don’t have time to read the full report? Here’s a reader’s digest version with my top four takeaways financial institutions and fintechs should be paying attention to:

1. Organized fraud rings are the primary threat.

A staggering?71% of respondents identified financial criminals and fraud rings as the main culprits behind fraud attacks. These well-funded and highly organized groups pose a serious risk. They exploit vulnerabilities across various financial institutions and then hit those vulnerabilities at velocities we previously didn’t think were even possible.

Overall, fraud attacks remained steady year-over-year. However, this year's report showed a shift away from institutions reporting first-party fraud as their main problem. Instead, they said third-party fraud (powered by organized fraud rings) was the leading cause of fraud at their organization. This shift in reporting can reflect financial institutions have improved at identifying the root of the fraud. When we understand the identity of the person committing the fraud, we strengthen our ability to prevent it.??

It’s a bit of a double-edged sword. On the one hand, there are benefits when fraud rings are responsible for an attack, as an FI may be more easily able to identify their tactics and stop them. On the other hand, as financial institutions bolster their defenses to combat the attacks, fraud rings adapt and shift their focus to the next weakest entry point or financial institution. In other words, fraud doesn’t go away; it moves. The fight never ends!

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2. Mid-market institutions face higher fraud rates in ATMs, call centers, and branches.

Mid-market financial institutions (including community banks, regional banks, and credit unions) reported higher fraud rates in ATMs, contact centers, and branches compared to enterprise banks and fintechs.?

This trend is interesting because it begs the question: have enterprise institutions really invested that much more into fraud prevention at the branch and contact centers, or are mid-market institutions better at categorizing their fraud??

One possible explanation is that mid-market institutions may not have invested as heavily in fraud prevention technology for these channels compared to enterprise banks. Budget constraints could also be a contributing factor.?

Mid-market fraud investments may heavily lean towards their digital channels. And for good reason: 80% of respondents said that fraud most commonly occurred on online or mobile banking channels.?

As these measures take effect, we may see shifts in fraud trends, highlighting the importance of continually reassessing omnichannel fraud detection strategies.?Keyword: omnichannel.

3. Real-time interdiction remains underutilized

Despite the growing sophistication of fraudsters, only 47% of respondents reported using real-time interdiction for both applications?and transactions.

• 29% of institutions conduct real-time interdictions only for transactions.
• 21% conduct real-time interdictions only for applications.

The lack of real-time interdiction at the application stage presents a significant opportunity for financial institutions to improve both fraud detection and customer experience. Implementing real-time decisioning at account opening can streamline the onboarding process and prevent fraudulent accounts from being established in the first place — before a fraudulent transaction is ever made.

4. Manual fraud reviews remain excessively high

3 in 4 financial organizations reported that more than 25% of new account applications required manual review. Over 40% of respondents indicated that more than half of their new account applications go through manual review.?

Such high levels of manual review could suggest a lack of investment in fraud automation technology. As institutions scale and introduce new products, relying on manual reviews becomes increasingly unsustainable. Investing in automation can significantly enhance efficiency, reduce operational costs, and ultimately improve fraud detection accuracy.

With fraudsters leveraging sophisticated technology, financial institutions must prioritize advancements in their technology as well. Partnering with experienced solution providers can help institutions implement robust fraud mitigation strategies that increase automation and enhance security while maintaining a seamless customer experience.

Final thoughts

This report underscores the ongoing battle between financial institutions and fraudsters. While organizations have made progress in mitigating digital fraud, challenges remain in areas like real-time interdiction and automation. By investing in cutting-edge identity and fraud prevention platforms, institutions can stay ahead of evolving threats and protect both their assets and customers.

The good news is that 93% of respondents reported that their organization is making ongoing investments in fraud prevention in 2025. This marks a significant shift from the past, when securing funding for fraud prevention was a challenge. Now, fraud is so prevalent that it has become a top priority in budget considerations. As financial institutions continue to invest in fraud prevention technologies, they will be better equipped to proactively combat evolving threats and enhance their overall security posture.

Want more insights from the State of Fraud Report?

Download the full report here

Sara Seguin is a principal advisor on fraud and identity risk at Alloy. Sara has over 16 years of experience in financial crimes within enterprise banks, including fraud, payments, risk, and identity.