The COVID
Crime Index
The true cost of the pandemic to Financial Institutions and consumers
Covid Crime Index Overview
baesystems.com/financialservices
The COVID
Crime Index
The true cost of the pandemic to Financial Institutions and consumers
Covid Crime Index Overview
Financial institutions (FIs) were hit from both sides by cyber crime during the pandemic.
On the one hand, back-end IT systems and remote workers were targeted with information-stealing malware, ransomware and other serious cyber threats. On the other, customers were relentlessly targeted by fraudsters as the crisis forced many to try online shopping for the first time. Those same customers are now demanding that their banks do more to educate and protect them.
To better understand exactly how cyber crime and fraud affected the industry last year, we surveyed:
902
FIs
2,000
Consumers
in the US and UK
What per cent of consumers do you think now do all their shopping online, since the pandemic began?
17%
17%
36%
36%
53%
53%
That's correct!
Since the pandemic began, 36% of consumers now do all their shopping online.
That's not quite right.
Since the pandemic began, 36% of consumers now do all their shopping online.
Yet where there is money and people, crime isn’t far behind.
And digital commerce offers a wealth of opportunity for quick-witted fraudsters. Over a quarter (26 per cent) of consumers surveyed said they’d bought something from a fraudulent site over the past year, and half (50 per cent) have been victims of cyber crime or online fraud in the past. This chimes with other industry figures.
UK Finance claims that fraud
losses on UK-issued cards topped
£574 million in 2020
Yet where there is money and people, crime isn’t far behind.
And digital commerce offers a wealth of opportunity for quick-witted fraudsters. Over a quarter (26 per cent) of consumers surveyed said they’d bought something from a fraudulent site over the past year, and half (50 per cent) have been victims of cyber crime or online fraud in the past. This chimes with other industry figures.
UK Finance claims that fraud
losses on UK-issued cards topped
£574 million in 2020
Backed by a cyber crime economy worth trillions, today's fraudsters are sophisticated.
They use tools to hide their tracking details and others to automate the testing of stolen card data and log-ins across huge volumes of accounts. They have a readymade supply of identity data to buy on the dark web for use in such scams, and the means to carry them out at speed and scale across multiple channels. The advent of Open Banking has provided yet another avenue to hijack customer accounts and steal sensitive data.
Which data points are fraudsters able to hide to distract Financial Institutions?
Location
Location
Device
Device
Identity
Identity
None of these
None of these
All of these
All of these
That's correct!
Fraudsters are able to hide data points including location, device and identity in order to distract Financial Institutions.
That's not quite right.
Fraudsters are able to hide data points including location, device and identity in order to distract Financial Institutions.
On the other hand, FIs are increasingly stretched as they attempt to mitigate the impact of cyber attacks on back-end systems and customers.
We found that IT security, fraud and risk funding had been slashed by 26 per cent on average by FIs during the pandemic. Over a third of banks warned that budget cuts could lead to the loss of key staff members.
Despite these financial headwinds, new opportunities are emerging for FIs to differentiate on the quality of fraud prevention and outreach they can provide to customers. Part of this seems to stem from increased awareness levels among consumers impacted by surging fraud levels during the pandemic.
72 per cent said they noticed an increase in malicious activity over the past 12 months
23 per cent are now more concerned about cyber than they are physical crime
The result?
JOB OF FIs
Over half (53 per cent) of consumers think it’s the job of FIs to protect them from cyber crime — more so than government (47 per cent), the police (34 per cent) or even themselves (40 per cent).
MORE TRANSPARENCY
A majority also want more transparency from their banks about the risks they face online, as well as guidance and educational content.
CYBER PROTECTION
Over 80 per cent claimed they now consider how proactively FIs address cyber protection when changing providers.
On the other hand, FIs are increasingly stretched as they attempt to mitigate the impact of cyber attacks on back-end systems and customers.
We found that IT security, fraud and risk funding had been slashed by 26 per cent on average by FIs during the pandemic. Over a third of banks warned that budget cuts could lead to the loss of key staff members.
Despite these financial headwinds, new opportunities are emerging for FIs to differentiate on the quality of fraud prevention and outreach they can provide to customers. Part of this seems to stem from increased awareness levels among consumers impacted by surging fraud levels during the pandemic.
72 per cent said they noticed an increase in malicious activity over the past 12 months
23 per cent are now more concerned about cyber than they are physical crime
The result?
JOB OF FIs
Over half (53 per cent) of consumers think it’s the job of FIs to protect them from cyber crime — more so than government (47 per cent), the police (34 per cent) or even themselves (40 per cent).
MORE TRANSPARENCY
A majority also want more transparency from their banks about the risks they face online, as well as guidance and educational content.
CYBER PROTECTION
Over 80 per cent claimed they now consider how proactively FIs address cyber protection when changing providers.
“We’re noticing a clear collaboration emerging between different groups of criminals across the wider landscape of serious and organised crime. Fraudsters and cyber criminals seek to exploit fear, uncertainty and change, and the pandemic has offered them new opportunities to probe for weaknesses they can monetise and new ways to disguise their activity. Attackers are building increasingly advanced capabilities to target core banking systems and becoming more aggressive, harming victims’ ability to respond to attacks. Online criminals have reacted fast, adapting their approach to hunt out remote working security gaps and prey on the vulnerable.”
Adrian Nish
Head of Cyber at BAE Systems Applied Intelligence
77%
Over three-quarters (77 per cent) of FIs surveyed were worried about the continued rise of cyber security and fraud threats over the course of this year.
By channelling these concerns into a proactive overhaul of existing cyber crime strategy, there’s a great opportunity to differentiate by meeting the demands of a new generation of fraud-aware customers.
77%
Over three-quarters (77 per cent) of FIs surveyed were worried about the continued rise of cyber security and fraud threats over the course of this year.
By channelling these concerns into a proactive overhaul of existing cyber crime strategy, there’s a great opportunity to differentiate by meeting the demands of a new generation of fraud-aware customers.