Guest blog: Fraud in financial services

RSM UK Associate Director Erin Sims outlines the various types of fraud risks that banks and building societies face.

Erin Sims, RSM UKBy Erin Sims, Associate Director, RSM UK

Fraud is now the most frequently reported crime in the UK, representing 41% of offences reported to police. Adding to the challenge, only around 1% of fraud cases result in prosecution. UK Finance reported in its annual fraud report that £1.2bn was stolen through fraud in 2022 and separate figures obtained by RSM UK under a freedom of information request show a 10% rise in reported cases of fraud committed by employees against their employers.

Banks and building societies are natural targets for fraud-related crimes, therefore it’s crucial for them to understand the fraud risks associated with their operations in order to best prevent future attacks.

Fraud risks in finance

The table below explores various types of risks, in addition to employee fraud, that banks and building societies face and how to mitigate against them. 

Increased fraud threat through hybrid working 

Since the pandemic, there has been a rapid shift to extensive hybrid working, bringing significant benefits for the workforces of banks and building societies. In fact, our People Perspectives survey identified hybrid working as the top benefit offered to attract or retain employees at 41%. Meanwhile, 57% of respondents had already begun, or were considering, upskilling managers to better manage a hybrid workforce. A recent survey has also found that UK employees are working from home more than workers in other European countries, doing so for an average of 1.5 days a week.

However, these agile working patterns present an increased exposure to fraud risks, including heightened cyber security vulnerabilities, weaker preventative controls, misuse of sensitive data, increased insider collusion opportunities, and new avenues for social engineering attacks.

It’s key for banks and building societies to balance the benefits of agile working with strong preventative measures, auditing, and oversight controls. Ongoing risk assessments and fraud prevention training for the workforce are also critical.

Conclusion

As the landscape of agile working evolves and technologies including generative artificial intelligence develop, banks and building societies are faced with an increased fraud risk. To counteract this, they find themselves needing to bolster their fraud defences. Just as importantly, there is an increasing need to foster an ethical and risk-aware culture. This can be achieved through frequent and bespoke workforce education on fraud red flags and effective security habits, applicable to both remote and in-branch work.

Leadership must clearly communicate expectations around information security, data privacy and fraud prevention in an agile environment.

As well as a continuous assessment of current obligations to prevent financial crime, banks and building societies will need to ensure that they consider the ‘failure to prevent’ offence, introduced by the Economic Crime and Corporate Transparency Bill in October 2023.

Find out more:

Erin Sims on LinkedIn: https://www.linkedin.com/in/erin-sims-rsm/
RSM UK: https://www.linkedin.com/company/rsm-uk/ 


The views, opinions and positions expressed within guest blogs are those of the authors and do not necessarily represent those of the BSA.

 

You may also be interested in...

BSA Card
  • BSA.Event Event
  • People

Women's Leadership Programme - "The Becoming Journey®"

Taking place between 12 Sept. - 3 Dec. 2025

BSA Card
  • BSA.Event Event
  • Prudential Regulation

Risk appetite training for credit unions

This course has been postponed. Please contact the events team if you're interested in attending a future course. With increasing regulatory focus ...

BSA Card
  • BSA.IndustryResponse Industry Response
  • Mortgages & Housing

BSA response to FCA CP25/11: Mortgage Rule Review

The BSA welcomes the opportunity to comment on the Mortgage Rule Review.

BSA Card
  • BSA.Event Event
  • Prudential Regulation

Treasury risk and balance sheet management

Due to popular demand, we now offer three tiers of treasury management training for BSA Members, Associates and Non-members. The courses will be repea...

BSA Card
  • BSA.IndustryResponse Industry Response
  • Prudential Regulation

BSA Responds to CP2/25 proposals to increase threshold for leverage ratio framework

The BSA responds to the PRA's CP2/25

BSA Card
  • BSA.Event Event
  • Financial Crime

Financial crime prevention seminar

This full-day event in Leeds provides BSA members with expert briefings on current key risk areas in financial crime to help them review and focus the...

BSA Card
  • BSA.Event Event
  • Prudential Regulation

Treasury management training for credit unions

This course has been postponed. Please contact the events team if you're interested in attending a future course. The objective of the course is to...