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Every country that has moved to instant payments has also seen a rise in fraud. The U.K. experienced a substantial increase in cybercrime following the introduction of its Faster Payments Service. Twenty years ago, U.K. banks started to face a surge in phishing attacks with losses escalating to £36 million by 2006. Anticipating the risks associated with the Faster Payments launch in 2008, U.K. banks implemented strong authentication measures using hardware devices to login and transact online, leading to a drop in fraud losses by 2007. And then the Faster Payment service was launched as the banks held their breath.

Despite all the measures they took, fraud incidents tripled within three years after the launch, proving the adaptability and creativity of cybercriminals to exploit new systems.

The trend suggests a clear lesson: Securing faster payment markets is a complex challenge, requiring banks to employ a diverse array of adaptive and flexible controls. ...

... Banks will need to equip their fraud teams with a strong scam detection model, and educate relationship managers to contact clients for confirmation before following verbal or digital instructions to move money via FedNow.
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