Financial institutions losing clients in the wake of a single fraud attack – research

The research, which was conducted by fraud prevention services company Guardian Analytics in partnership with independent research firm the Ponemon Institute, surveyed Nearly 1,000 owners and executives of small-and-medium-sized businesses (SMBs) in the United States.

The survey has also found that as a result of fraud, SMBs are not only losing confidence in their financial institutions fraud prevention practices (30 percent of responses), but are taking some or all of their banking business elsewhere (40 percent).

The study has revealed that 73 percent of online fraud attacks result in the successful transfer of money. Despite efforts by financial institutions to recover funds, 61 percent of reported fraud attacks result in lost funds. Reimbursement of losses varies – in some cases the business takes the full loss, in some instances losses are shared, and in one quarter of instances, banks reimburse the business fully for any losses. In the end all parties suffer significant financial loss as a result of fraud.

The research has also found that SMBs are rapidly increasing their use of online and mobile banking: 54 percent of polled businesses use mobile devices to access online banking, up from 23 percent in 2010. The proportion of businesses doing all business banking online has more than doubled from 9 percent in 2010 to 20 percent in 2012.

Moreover, the survey has revealed that fraud attacks against businesses are widespread: 74 percent of SMBs have experienced electronic banking fraud and 52 percent have been hit by fraud in past 12 months. Additionally, 72 percent of polled businesses have indicated that they hold the financial institutions primarily accountable for ensuring that their online bank account is secure.