Lenvi Riskfactor, the provider of risk management software for the receivables finance industry, launched its 2023 European Fraud Readiness Report. The report reveals a detailed picture of how fraud has affected receivables finance lenders in recent years, how it might affect them in the future and how strategies to prevent fraud are being developed in four key European markets: the United Kingdom, France, Spain and Germany.
Almost nine out of 10 (89%) respondents across the four markets noted an increase in fraudulent activity against their businesses in the last year; with more than eight in 10 (81%) expecting a continued increase through the current financial year (23/24).
This issue is compounded by the perception that fraud is becoming even more sophisticated – a trend reported by almost three-quarters (73%) of all responding receivables finance lenders. As a result, lenders are increasing their budgets for fraud prevention, by an average of 39% year-on-year.
In spite of this, even the lenders with the highest confidence in their fraud prevention abilities – some 40% of respondents – estimate that they fail to detect one in every four fraud attempts made against them. Nearly a third (30%) of lenders believe they were unable to detect half of all fraudulent activity in the past year.
Looking ahead to the remainder of the financial year, 70% of all receivables finance lenders recognise fraud to be a significant risk for their business; with this figure rising to 83% for lenders with less than 250 employees.
Whilst increased spend on fraud prevention does little to mitigate concerns, there is a clear link between a lender’s adoption of technology and the extent to which their business is concerned by the threat of fraud. 84% of lenders with a predominantly manual-led approach to fraud prevention note fraud to be a significant or high risk, dropping to 70% among lenders with a technology-led approach, and 66% for those firms utilising a blended strategy.
“Whatever strategy lenders deploy to try to address and repel the growing threat of fraud, this is no time for complacency. Instead, companies need to develop and refine approaches to fraud prevention, based on an effective combination of technology solutions and human expertise – and a willingness at the top of the business to take responsibility for addressing and mitigating fraud risks,” Ahmed Amin, sales director at Lenvi, said. “Businesses in the receivables finance industry will need to be diligent and endlessly watchful if they are to continue to protect themselves and their customers from fraud risks in the years to come.”
Read the report here.
