Banks and FinTechs overestimate fraud readiness, research reveals

By Divya Shah

Banks and FinTechs remain confident in their ability to combat emerging fraud threats, but many are falling short when it comes to operational readiness, according to research released by Feedzai’s Confidence & Capability: The Feedzai Fraud Readiness Index 2026.

The research, based on responses from more than 1,000 senior fraud leaders across 12 countries, found that financial institutions rated their fraud readiness at an average of 80.2 out of 100. However, when assessed on actual capabilities across data management, AI adoption, intelligence sharing and fraud operations, the average score dropped to 66.9. 

The findings point to a 13.3-point gap between perceived readiness and real-world capabilities, suggesting that many institutions have yet to fully operationalise the tools and processes needed to address increasingly sophisticated, AI-enabled fraud. 

Despite strong investment plans, operational inefficiencies continue to hinder fraud prevention efforts. Nearly all respondents (96%) expect spending on AI-powered fraud solutions to increase over the next two years. However, 73% said fraud analysts spend too much time manually gathering data from multiple systems rather than investigating suspicious activity. 

The research also found that only 41% of institutions have fully connected data across fraud, anti-money laundering (AML), compliance and cybersecurity functions. Fragmented systems can delay investigations and limit the ability of fraud teams to identify threats in real time. 

For FinTechs and digital-first financial providers, the challenge is particularly relevant as faster payment ecosystems and digital onboarding processes continue to expand the fraud landscape. The research suggests that integrating data sources and automating investigative workflows are becoming critical requirements for effective fraud management. 

Scams have emerged as the largest source of fraud losses in 10 of the 12 countries surveyed, prompting greater industry collaboration. As fraud tactics become more organised and cross-border in nature, 87% of respondents said they would consider securely sharing fraud intelligence with other institutions, including competitors. 

“Banks aren’t short on ambition or budget. What’s holding them back is inefficiency: data that doesn’t connect and analysts spending their day hunting for information instead of stopping fraud with modern technology such as AI,” said Nuno Sebastião, co-founder, chairman, and CEO of Feedzai. 

“Criminals don’t target one bank at a time, so the industry can’t defend itself one bank at a time either. The fact that most institutions would consider sharing intelligence with their competitors shows how much has changed in the fight against fraud,” Sebastião further added. 

Only 25.5% of institutions qualified as “leading” organisations with a fraud readiness score of 76 or higher. According to Feedzai, these institutions stand out through stronger data integration, more automated fraud operations and a greater ability to free analysts from manual tasks. 

Overall, the industry achieved an average readiness score of 69.3, with 73% of institutions placed in the “Capable” category. The research also highlighted growing interest in agentic AI, with 68% of organisations either using or planning to deploy the technology across three or more fraud-related use cases, although concerns around autonomous decision-making continue to influence adoption strategies.