Fraud and reputation risks mount for French banks

Senior banking executives in France are increasingly concerned about the financial and reputational impact of fraud, with a new survey showing that most institutions are facing multi-million-dollar annual losses and heightened exposure to both scams and money laundering.

The study, commissioned by BioCatch, surveyed fraud management, anti-money laundering (AML), and compliance leaders across French banks. Nearly three-quarters (72%) of respondents estimated their institution’s annual fraud losses exceed $5 million (€4.22 million), while 44% reported that losses are continuing to rise.

Social engineering scams and money mule accounts were identified as the most pressing operational threats. However, risk priorities differed at the executive level. Among C-suite respondents, 27% ranked money laundering as the single biggest risk, and almost two-thirds placed it among their top three concerns. By comparison, 40% identified scams as their primary threat, reflecting a strategic focus on financial crime exposure even as customer-level fraud grows.

“We also see French C-suite execs as more likely to report an increase in fraud attempts at their organisation (47%) versus all those surveyed in France (31%),” said Thomas Peacock, Director of Global Fraud Intelligence at BioCatch. “This suggests leadership may see early warning signals not consistently visible across all banking teams.”

The findings come as European banks face a more complex threat landscape driven by instant payments, digital channels, and increasingly sophisticated attack methods, including AI-enabled impersonation and large-scale social engineering schemes.

Matthew Platten, France Country Manager at BioCatch, said institutions must balance stronger controls with customer experience. “The expansion of instant payments and rapidly evolving regulatory expectations have raised the stakes considerably. Mandatory reimbursement is coming to Europe. Delivering preventive, real-time controls while still maintaining user experience will be central to maintaining customer confidence in an increasingly complex threat environment.”

The survey indicates that regulatory readiness remains uneven. While 55% of French banks said they are proactively preparing for potential reimbursement requirements under forthcoming European frameworks such as PSD3 and the Payment Services Regulation, this lags the 73% average reported in neighboring countries.

At the same time, operational models are shifting toward digital. A quarter of respondents said their institutions have already begun implementing fully digital customer onboarding, and 69% expect to adopt a digital-only process in the future. The transition is expected to improve efficiency but may also increase exposure to identity fraud and synthetic accounts, reinforcing the need for advanced risk monitoring.

Reimbursement practices are already evolving. More than two-thirds (67%) of respondents said their bank reimburses at least half of scam victims, signalling a gradual move toward stronger consumer protection ahead of regulatory mandates.

Beyond direct financial losses, reputational impact emerged as the dominant concern. Nearly four-fifths (79%) of respondents said they worry more about brand damage and erosion of customer trust than the financial cost of fraud. This figure exceeds both the European (69%) and global (71%) averages.

The emphasis reflects a broader industry shift as fraud becomes a customer experience and retention issue rather than solely a risk management function. For French banks, the combination of rising fraud attempts, evolving regulation, and expanding digital services is accelerating investment in real-time detection, behavioural analytics, and cross-institution collaboration to contain financial crime while protecting trust.