UK banks outperform rest of Europe in reducing card fraud

UK banks achieved the biggest reduction in card fraud losses last year among 18 countries across Europe, according to the updated FICO European Fraud Map. More than half of the countries saw increases in card fraud losses in 2019 according to the report.

“Following a frustrating increase in 2018 — largely caused by an explosion of data compromise ‘bust out’ events — much of Europe has once again turned the tide on fraudsters, achieving a combined 2% overall reduction,” explains Toby Carlin, director of fraud consulting in EMEA at FICO.

“British consumers should be reassured that the UK achieved the largest single reduction in fraud at 8%. This is a testament to the anti-fraud activities and investments by UK banks, which reduced fraud losses in 2019 by £52 million – that’s a million pounds every week.”

2019 was a strong year for many European countries in reducing basis point fraud losses (a ratio of fraud losses to card sales), against the backdrop of increased transactional volume and value in 2019. But there were also some worrying increases. Most notably, France and Italy saw the largest value increases, and were together responsible for 71% of the monetary loss increases across the 18 countries studied.

UK banks outperform rest of Europe in reducing card fraud

This was another strong year for many European countries in reducing basis point fraud losses against the backdrop of increased transactional volume and value in 2019. The UK led the field with a basis point reduction of 0.55 from 2018 (~75% higher than the next best reduction). Whilst the bottom three countries on the chart remain the same, the reductions reported by the UK, and the increases seen by France, have now closed the gap to just over a single point. Based on the current trends and performance, France is predicted to overtake the UK within the next two years.

Outside of the bottom 3, Sweden has overtaken Spain for 4th highest, with Italy and Hungary both gaining places further down the rankings. Norway is the other success story from 2019, reducing basis points losses by 0.14 and dropping 2 places in the rankings from 6th in 2018, to 8th in 2019.

Reporting across the EU is still being standardised in many countries, so the picture will continue to develop. However, it is clear that the threats in many areas are continuing to escalate and remain unchecked. 2020 has been a challenging environment for all, with COVID-19 having significant impacts on the transaction mix and threat. This has exposed many frameworks that were already pressured, with fraudsters now attempting to make up for lost time with increased volume and ferocity of their attacks.

Fraud basis points is a standard measure of card fraud severity, and can show how a bank or a country compares to others. 1 basis point is equivalent to 1 cent per €100. It works the same in any currency and provides an indicator of the fraud-to-sales ratio.

“2020 has been a challenging environment for all, with COVID-19 having significant impacts on the transaction mix and threat,” adds Carlin. “This has exposed many frameworks that were already pressured, with fraudsters now attempting to make up for lost time with increased volume and ferocity of their attacks. While our Fraud Map focuses on plastics fraud and, in particular, card-not-present fraud, this is just part of the story. The biggest threat today comes from digital fraud and scams which continue to increase exponentially across all markets.”

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