As quickly as financial institutions implement gen AI to speed manual back-end processes and consumer-facing operations, bad actors are using the technology to streamline fraud efforts. 

Fraud within financial services is expected to rise 153% to $58.3 billion by 2030, up from $23 billion in 2025, according to a Juniper Research study released Aug. 18. 

Contributing to this surge is synthetic fraud, which fabricates a false identity based on data stolen from real people.

Gen AI makes it easier for fraudsters to create synthetic identities, according to the Federal Reserve Bank of Boston, by automating their creation using data from the thousands of breaches that happen each year. 

Read more about AI-driven fraud here. 

In addition to simplifying the creation of synthetic identities, gen AI can be used to imitate a person’s texting style, create authentic-looking documents and create deepfakes. 

Deepfakes are digitally altered audio or videos used to misrepresent people and information.

Education, notification 

FIs are on the frontlines, seeing this surge in synthetic fraud. 

The $330 million, Littleton, Colo.-based Red Rocks Credit Union, for example, has this note on its homepage: 

“Beware of spoofing scams. Scammers can fake caller ID to look like a trusted source. Always verify before sharing personal info or clicking links. Red Rocks Credit Union never uses WhatsApp or third-party messaging apps — only our secure app and main phone line. If you get a suspicious message or call, contact us directly.” 

“There is undoubtedly an uptick in fraud,” Red Rocks Chief Executive Darius Wise told Bank Automation News, noting that it’s the credit union’s responsibility to educate and notify members of scams.  

“We try to be proactive,” he said. “It is incumbent upon any financial institution to make sure that your membership is well informed.” 

Fraud-fighting tech 

To be proactive in fighting scams, technology is being deployed.  

In fact, AI voice fraud-detection startup Herd Security, launched in 2023, is a tech provider banks are leaning on to reduce targeted deepfake attacks, Brandon Min, co-founder and CEO of Herd Security, previously told BAN on “The Buzz” podcast. 

Hear more about fighting deepfake fraud here. 

The following FIs have deployed AI-driven fraud detection tools recently: 

• Trinity Bank taps gen AI-powered scam detection solution ScamFlag; and 

• Neighbors Federal Credit Union signed on to use Point Predictive’s Auto Pass solution. 

Check out our exclusive new bank industry data here.