The deadline for compliance with the Red Flags regulations looms, but that isn't the biggest driver of banks' increased spending on fraud prevention in 2008, Gartner says. In fact, 60 percent of banks surveyed say they are compliant with the rules.
Still, Gartner opines that other compliance demands remain the main driver for fraud prevention and customer authentication spending in 2008. Perhaps these stats aren't worrisome enough: Fifty-two percent of banks surveyed said they experienced a phishing attack against the institution in the last year; 22 percent lost data through a breach at a third-party associate; 20 percent suffered a lost or stolen employee laptop or mobile device with sensitive customer data on board; and 20 percent had malware on a customer's PC that stole bank account data. Further, eight percent said they experienced a system breach where an insider got unauthorized access to the bank's system, another eight percent say an outsider got unauthorized access.
But of greatest concern, respondents said, is a system breach where an outsider gets unauthorized access to the bank's system (64 percent), followed by unauthorized access by an insider (62 percent) and a breach at a third party associate (60 percent).
The top priorities for bank spending are fraud detection for money transfers and an AML system, followed by fraud detection for online banking. Eighty-two percent said they have fraud detection for money transfer applications in place already; six percent plan to implement it within the next two years.
The average institution will spend $2.8 million on fraud proejcts in 2008-that's 12.5 percent of the average IT budget.(c) 2008 Bank Technology News and SourceMedia, Inc. All Rights Reserved.http://www.americanbanker.com/btn.html/ http://www.sourcemedia.com/