Mounting instances of online or offline frauds have been taking a toll on various industries of late, thereby fueling fraud detection and prevention (FDP) market trends. According to a 2018 report by Association of Certified Fraud Executives (ACFE), various enterprises around the globe experience a revenue loss of over 5 per cent per annum due to fraud which translates to a hefty loss of USD 4 trillion per year.
Frauds in any domain lead to a misuse of humongous amount of tax money, increase in goods and services prices, and are a potential threat to human life. Electronic mail attacks and phishing have led to a drastic effect in the banking, educational, retail, and other sectors. A recent fraud instance in India drew the attention of the masses where an Indian public sector banking and financial service company was duped of Rs. 11,400 crores, the reports cited.
The incessant occurrence of frauds calls for a comprehensive approach for fraud detection and prevention as compared to the former fragmented approaches. With increasing frequency of such threats, demand for fraud detection and prevention solutions is anticipated to surge immeasurably over the forecast period, thereby augmenting the industry outlook.
The onset of enhanced FDP solutions can help various companies operate competently while saving costs, eventually leading to a robust rise in fraud detection and prevention market share. As per reports by Global Market Insights Inc., the FDP market share is anticipated to surpass a considerable USD 80 billion mark by the end of 2025.
The most common industry verticals that witness high fraud alerts and cases on a consistent basis include the banking, insurance, healthcare, government, education, and e-commerce sectors. The paragraphs below elaborate on 3 pivotal end-use oriented trends defining FDP industry outlook of late.
Robust fraud increase in the banking, insurance, and finance (BFSI) sector
Accounting to a huge number of monetary and data centric transactions, technological developments, and introduction of digitalization of financial sector, the probabilities of frauds in the BFSI segment are extensively high.
The escalating fraud ratio has exemplified the need for the organizations to adopt the FDP solutions on a large scale in order to forestall any fraudulent attacks. This has led the banking segment to hold a substantial percentage of FDP market share over the forecast period.
Of late, banks and financial institutions detect duplicitous transactions through complex algorithms while data analysts in the insurance sector are vigorously looking forward to the depletion of fraud by bringing into action numerous FDP algorithms and techniques to detect threat patterns and anomalies.
The robust proliferation of FDP solutions in the BFSI industry is also evident from the fact that numerous finance companies are striving to adopt these systems in their operational processes. As per trusted reports, Visa, an American multinational financial service company recently announced the deployment of a new fraud threat detection and restricting technology developed to bolster the transaction security and the authenticity of its payment network.
FDP market share from banking sector will also depict a rise on account of rising product deployment in credit & debit card applications. Estimates claim that credit & debit card fraud application segment accounted for 30% of fraud detection and prevention industry share in 2018 and is expected to register a substantial revenue by the end of the projected timeline. This can be attributed to the increase in digital payment usage, trend of cashless transactions, and rising deployment of chips in credit & debit cards that banks provide on a consistent basis.
Growing number of frauds in educational institutions
The global FDP market size from education sector is speculated to encounter a significant growth rate between the forecast years, owing to the dearth of the internal controls, uncertain reporting channels, and insufficient management reviews and fraud monitoring.
According to authentic reports, In May 2011, Stanford University’s reputation registered a setback when 5 of its medical school professors were rebuked for breaking the school’s policy. The members were paid to offer promotional speeches on the account of drug makers.
To obstruct the prevalence of frauds, the educational institutions have been instructed to take preventive measures by employing a hotline with a motive to address the suspicious behavior. It provides the students and the management a way to anonymously report a suspected fraud. As a leading model, the Texas A&M University System promotes the use of its risk, fraud, and misconduct hotline. It has been claimed that the reporting program is available 24x7.
Elevating retail and e-commerce duplicity
The retail sector has been a long-time victim of the counterfeit payments or in-store credit frauds. With more retailers opting the e-commerce means of trade, the online transactions are anticipated to rise whilst increasing the number of duplicity encounters. This calls for the demand for fraud detection and prevention solutions given that digital payments are at their peak.
It has been claimed that integrating a software technology to restrict the occurrence of fraud would prove to be of a great help to the merchants and the issuers. As the expanse of e-commerce industry widens, especially across the emerging economies of the APAC, fraud detection and prevention market size will exhibit a massive surge.
The major players operating in the FDP market include ACI Worldwide, Avast Software, SAP, SAS Institute, and many others. Aided by a vast end-use landscape, FDP industry trends are likely to undergo a massive transformation in the years ahead.