GERMANY Increase in Fraud YoY

A Story of ‘Digital-First’ and ‘Fraud-Second’

Germany is rapidly moving forward with digital banking, but digital growth has come at a cost to fraud management for many institutions. Many are failing to prioritise investment in modern fraud prevention and detection technologies, resulting in the persistence of legacy systems and a limited pool of employees who have fraud-specific and analytical skillsets. There are various reasons why adoption of modern technologies has been disparate; institutions with relatively low fraud losses may have had little financial incentive to invest in enterprise fraud platforms, yet we also see a number of ‘digital first’ newcomers to the German market who are lagging when it comes to fraud prevention.

We have seen an increase in German participation within the FICO Falcon Intelligence Network in recent years, but the data shows us that overall losses and particularly CNP losses continue to rise. Some institutions feel that fraud on consumer finance applications presents the greatest threat to the German market; however, when we look at the story in basis points it is clear that Germany is one of the top three nations in Europe in terms of threat escalation. Fraud basis points increased by a staggering 522% last year (0.47 bp in 2020 to 2.93 bp in 2021). This clearly demonstrates that more needs to be done by the German banks if they are to tackle fraud across both card and consumer lending portfolios.