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Fraud Detection and Prevention Market

Fraud Detection and Prevention Market: Information by Component (Solutions, Services), Solution (Fraud Analytics), Services (Professional Services), and Region — Forecast till 2030 

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Market Snapshot

market snapshot
Base Year:
2021
Study Period:
2020-2030
CAGR:
23.2 %
Fastest Growing Market:
Europe
Largest Market:
North America

The global fraud detection and prevention market size was valued at USD 29.2 Billion in 2021 and is expected to reach USD 190.93 billion in 2030 expanding at a compound annual growth rate (CAGR) of 23.2% from 2022 to 2030. Fraud detection & prevention is a combination of methods & strategies aimed to identify, monitor, & prevent fraud. The first stage in determining the source of the issue is to detect fraud, and after this has been accomplished, the fraud must either be avoided automatically or manually using software designed specifically for this purpose.

Activities that fall under the category of fraud include instances of money laundering, cyber security threats, tax evasion, identity theft, fraudulent insurance claims, fraudulent bank checks, and terrorist financing. These fraudulent activities can be found in the financial institutions, government, healthcare, public sector, and insurance industries. As a result, in order for businesses to combat the growing number of opportunities for fraud, they have implemented contemporary fraud detection and prevention technologies as well as risk management strategies. These strategies combine big data sources with real-time monitoring and apply adaptive and predictive analytics techniques such as machine learning and artificial intelligence.

The incumbents in several industries, such as the banking and financial services industry, the healthcare industry, and the e-commerce industry, are taking the initiative to recognize the need to upgrade antiquated technologies and existing methods in order to combat digital fraud. However, there are certain companies that continue to employ and adhere to traditional techniques of fraud investigation, which are difficult and time-consuming. The sophistication of Advanced Persistent Threats (APTs) and fraudsters continually adapt their methods of intrusion, allowing them to avoid detection by employing conventional notions. Therefore, with the use of analytical and authentication tools, real-time detection of fraudulent activities becomes simple, and as a consequence, it is envisaged that this will promote the adoption of fraud detection and prevention (FDP) solutions.

Fraud Detection and Prevention Market share

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Market Dynamics

Fraud Detection and Prevention Market Drivers

  • The rate of adoption of fraud detection and prevention systems grew as a result of the growing use of digitalization and IoT

A digital revolution is currently taking place all over the planet. Internet users today not only conduct online searches and participate in online social networking, but they have also moved on to other online activities such as online banking and online shopping. People stayed inside their homes because of the lockdown that was implemented during COVID-19, and a significant portion of the populace participated in online transactions. Because of this, there has been a dramatic increase in the number of fraudulent websites. In addition to the financial sector, there has been an increase in the number of fraudulent websites that impersonate businesses and services that transport goods to customers' homes. These websites lure customers into making transactions online.

IoT is rapidly becoming an essential component of modern consumer lifestyles as well as industrial processes as its use spreads and as new gadgets with IoT built in are introduced to the market. According to projections made by the Global System for Mobile Communication (GSMA), the number of Internet of Things connections will reach 23 billion by the end of the year 2020. Connected devices are one of the elements that make it easier for hackers to break into computer systems because of the ease they provide. Connected devices are responsible for the collection, transmission, and storage of a wide variety of sensitive customer data.

Frauds using advertisements and automated teller machines are examples of significant IoT scams that are pervasive and taken very seriously in the industry. The rise of cybercrime that targets individuals with fraudulent debit and credit card activations, online bookings, free coronavirus testing, and job offers has been a contributing factor in the development of fraud detection and prevention systems.

The rise in popularity of business-to-consumer (B2C), business-to-business (B2B), and consumer-to-consumer (C2C) e-commerce transactions, which frequently involve a mutual exchange of critical information, identity information, and personal data of both individuals and businesses, has been correlated with an increase in the risks of online fraud. The proliferation of mobile gaming and the expanding usage of social media both contribute to an increase in the likelihood of future fraudulent activity. The money lost as a result of fraudulent activities is growing even as the schemes used to commit them get more complex.  Help Net Security conducted a review of more than 44 billion events that occurred across 800 million active users throughout the world and found that the sophistication of newly discovered threats is rapidly increasing. Because of this, there is now a pressing requirement to place a significant focus on contextual detection systems that are in a position to pro-actively resist invasions before any possible losses occur.

Fraud Detection and Prevention Market Restraints

  • Insufficient availability of skilled security personnel

One of the most serious challenges that businesses are confronted with in the modern day is a scarcity of competent employees who are able to combat fraudulent operations. When it comes to analyzing and identifying sophisticated fraud during cyberattacks, the organizations that are recruiting security specialists lack the necessary skills.

According to a study of data provided by the Bureau of Labor Statistics conducted by Peninsula News, the United States will be facing a shortfall of at least 500,000 qualified cyber security professionals by the year 2021. It was also claimed by the National Association of Software and Service Companies (NASSCOM) that there would be a demand for one million specialists in the field of cybersecurity by the year 2020.

According to responses from a study of 3,237 professionals conducted by the Non-Profit Professional Association for Cyber Security (ISC), fifty-one percent of respondents believe that a shortage of cybersecurity specialists poses extremely high risks for their companies.

Fraud Detection and Prevention Market Opportunity

  • Rise in usage of AI and machine learning in the banking sector to boost the FDP market

The banking and financial services industries are early users of risk-prevention technologies. Financial organizations are extremely vulnerable as a result of huge internet data exchanges. According to Facebook and BCG, India's online banking usage rate is predicted to treble to 150 million by 2020, thereby increasing the risk of fraudulent activity Financial institutions are now concentrating not just on financial risk reduction but also on real-time fraud detection.

With the emergence of pattern recognition, fraud detection systems are evolving. Machine learning technologies have given artificial intelligence a big boost in its ability to defend any system since ML can safeguard firms from insider fraud and spot any irregularities in persons who may leak data. As the need for AI and machine learning grows, so does the popularity of FDP solutions.

 

Segmentation of Fraud Detection and Prevention Market

In 2020, the solutions category accounted for more than 64.0 percent of total revenue. The rising number of Account Takeovers (ATOs) and phishing emails has prompted businesses to invest in sophisticated tools and solutions to spot fraud anomalies early on. These methods cut detection time by processing big data volumes in real-time. Furthermore, these solutions assist businesses in satisfying regulatory standards.

Over the projected period, the services category is expected to grow at the quickest rate. Developing-country businesses are increasingly deploying comprehensive fraud prevention techniques. Integration, consultation, training, and support services from fraud protection service providers are required to establish an effective framework. Over the projection period, the need for professional consultancy and other third-party services to detect fraud in real-time is likely to fuel segment expansion.

  • Insights into Solution

Based on Solution the market is divided into Fraud Analytics, Authentication, Governance, Risk, and Compliance. In 2020, the authentication solutions category led the market, accounting for more than 43% of total revenue. Businesses have traditionally utilized authentication systems to safeguard customer credentials and sensitive data. Enterprises are now relying on advanced authentication solutions like voice biometrics, single-factor authentication, and multi-factor authentication as fraud attempts in customer-facing apps become more complex.

Over the projection period, the fraud analytics solutions category is expected to grow at the quickest rate. Data assimilation from digital technology is on the rise, and it is transforming the corporate environment and opening new company growth chances. Analytical solutions aid in the investigation of fraud and anomalous activities in businesses that hold huge amounts of data. The use of such predictive and preventative analytical tools aids businesses in taking necessary corrective action. Over the projected period, these potential benefits supplied by the solutions are likely to fuel segment expansion.

The professional services category had the highest revenue share of more than 70% in 2020 and is predicted to maintain its dominance throughout the projection period. Professional services include consultancy, assistance, and training and development. These service providers assign a specialized team of specialists to assist firms in deploying technology and training personnel. Training and support programs are an important component of professional services since they assist professionals in closing security holes and implementing fraud detection methods.

The managed services category, on the other hand, is expected to develop at the quickest CAGR throughout the projection period. Managed services are used by organizations who want to take preventive actions to combat fraud in real-time. Managed service providers monitor company activities in real-time and harvest atypical user behavior from large data created across all touchpoints. Real-time data review and mining is a proactive way to detect fraud. Moreover, outsourcing such risk-based security frameworks to managed service suppliers frees up time for enterprises to focus on higher-value operations. Over the projected period, these factors are expected to enhance demand for managed services across all industrial verticals.

In 2020, the application of payment fraud had the highest revenue share of almost 53%, and it is predicted to expand at a stable CAGR during the projection period. The demand of consumers for cashless payment methods and e-wallets is increasing, providing opportunities for fraudsters. These programs' flaws or weaknesses might allow simple access to banking and financial reserves. As a result, the necessity to identify such frauds in real-time, as well as the requirement to fix any application vulnerabilities, is contributing to the segment's growth.

Over the projected period, the identity theft category is expected to grow at the quickest rate. Identity theft is becoming more common as crooks learn how to circumvent the verification procedure. In 2020, the Federal Trade Commission's investigation tool, known as "The Consumer Sentinel Network," recorded 4.8 million fraud and identity theft claims, up 45 percent from the previous year. As a result, the necessity to combat rising identity theft is projected to boost market growth.

  • Insights into Organization Size

Based on organization size the market is divided into: Small and Medium Enterprise (SMEs), Large Enterprises. In 2020, the big enterprise category accounted for more than 74 percent of total sales. Fraudulent activities such as phishing and money laundering, as well as distributed denial-of-service assaults, are common among major businesses, and such attacks can have a detrimental influence on profits. As a result, huge corporations must implement preventative solutions and services. One of the most important corporate tactics for ensuring organisational data security is to invest in preventative measures. The SMEs category, on the other hand, is expected to grow at the quickest rate throughout the projection period.

The rising number of fraud cases in these firms is responsible for the segment's rise. Cyber-attacks are a result of SMEs' rising reliance on digital solutions and their lack of effective security procedures. Furthermore, SMEs face difficulty in monitoring data protection compliance standards due to a lack of understanding about frauds and their impact on corporate earnings. Furthermore, greater cross-border trade adds to a rise in fraudulent activity. As a result, the segment is expected to rise in the next years due to a demand for solutions that can analyse, identify, mitigate, and report frauds among SMEs.

  • Insights into Vertical Segment

Based on vertical segment the market is segmented into: BFSI, Government & Defense, Healthcare, IT & Telecom, Industrial & Manufacturing, Retail & E-commerce, and Others. In 2020, the BFSI segment had the biggest revenue share, accounting for more than 30% of total revenue. The banking and financial services industry's incumbents have become a frequent target for hackers due to rapid digitalization and electronification of processes. Furthermore, the rising popularity of goods like mutual funds, stockbroking, and insurance among customers who want to digitally access these solutions across several touchpoints forces businesses to incorporate fraud prevention systems. Furthermore, the rise in identity theft and card fraud incidents throughout the world is encouraging the use of authentication solutions in this market.

Over the projected period, the retail & e-commerce vertical category is expected to grow at the quickest rate. Electronic gadgets and digital platforms are used by incumbents in the retail and e-commerce industries to improve client experience. The use of such solutions, however, raises the danger of financial and digital fraud. As a result, demand for authentication and other fraud prevention solutions is likely to rise in this sector throughout the forecast period in order to secure client information and reinforce security infrastructure.

 

Regional Overview of Fraud Detection and Prevention Market

Fraud Detection and Prevention Market Regional Analysis

Regional Growth Insights Request Sample Pages

In terms of total global fraud detection and prevention market size, it is anticipated that North America would be the region with the greatest contribution to the FDP market. It is one of the places in the globe that is one of the most affected by operations that include money laundering and financing terrorist organisations; as a consequence, it has the biggest number of FDP providers. Because of the ever-increasing issues associated with frauds, banks, governments, and other financial institutes in this region are being forced to use cutting-edge technical methods for the management and security of their institutions from fraud. As the world continues to move toward interconnectivity and digitalization, one of the most significant concerns that has emerged is that of ensuring the safety of enterprise-critical infrastructures and sensitive data. The presence of cybersecurity suppliers is highest in North America, which is an extremely technologically sophisticated region and ranks first in the globe.

The United Kingdom (UK), Germany (Germany), France (France), Sweden (Sweden), Italy (Italy), and the Netherlands (Netherlands) each have sizable economies that are these countries are boosting their investments in FDP-related technologies. As a result of an increase in network crimes, frauds, and advanced cyber and bot assaults, there is a growing need for FDP solutions in Europe. The major players in the European FDP market are concentrating their efforts on expanding their presence in a variety of vertical markets, including BFSI, telecommunications, retail, government and public sector, and manufacturing, which has resulted in significant growth opportunities for the industry. Insurance scams are the most significant challenge that European nations must confront. Because of the proliferation of activities that facilitate the laundering of money and the funding of terrorist organizations across Europe, the European Banking Authority (EBA) has decided that fighting financial crime would be the top priority for the European Union in the year 2020.

 

Competitors in Fraud Detection and Prevention Market

List of Top Fraud Detection and Prevention Market Companies

  • Iovation Inc. (US)
  • IBM Corporation (US)
  • CardinalCommerce Corporation (US)
  • Oracle Corporation (US)
  • Experian PLC (Ireland)
  • PayPal Holdings Inc. (US)
  • Distil Networks Inc. (US)
  • LexisNexis Risk Solutions Company (US)
  • Accertify Inc. (US)
  • F5 Networks Inc. (US)

 

Recent Developments by Key Players

  • NICE Actimize will improve SURVEIL-X, a comprehensive trade monitoring system, in July 2020. SURVEIL-X has been upgraded with self-service analytics for tailored risk identification. Financial Services Organizations (FSOs) may use SURVEIL-X Studio to quickly design, test, and deploy bespoke analytics risk detection models in order to narrow regulatory and operational risk gaps.
  • In April 2019, NICE Actimize launched CDD-X, which combines sophisticated analytics and AI to improve KYC/CDD procedures. The powerful combination of AI technology with NICE Actimize's KYC/CDD expertise saves client review time by up to 70% and improves high-risk customer management accuracy.

 

Fraud Detection and Prevention Market: Segmentation

By Component

  • Solutions
  • Services

By Solution

  • Fraud Analytics
  • Authentication
  • Governance
  • Risk and Compliance

By Services

  • Professional Services
  • Managed Services

By Application

  • Identity theft
  • Money Laundering
  • Payment Fraud
  • Others

By Organization Size

  • Small and Medium Enterprise (SMEs)
  • Large Enterprises

By Vertical Segment

  • BFSI
  • Government & Defense
  • Healthcare
  • IT & Telecom
  • Industrial & Manufacturing
  • Retail & E-commerce
  • Others

By Region

  • North America
  • Europe
  • Asia Pacific
  • Latin America
  • Middle east
Report Metric Details
Market Size USD in Billion By 2030
CAGR CAGR 23.2%
Historical Data 2019-2020
Base Year 2021
Forecast Period 2022-2030
Forecast Units Value (USD Million)
Report Coverage Revenue Forecast, Competitive Landscape, Growth Factors, Environment & Regulatory Landscape and Trends
Segments Covered by Component (Solution, Services) Organization Size (SMEs, LMEs), Deployment Mode, Industry Vertical
Geographies Covered North America, Europe, Asia-Pacific, LAME and Rest of the World
Key Companies Profiled/Vendors BM (the U.S.), FICO (the U.S.), SAS Institute (the U.S.), DXC Technology (the U.S.), SAP (Germany), ACI Worldwide (the U.S.), Fiserv (the U.S.), NICE Systems (Israel), Experian (the U.S.), LexisNexis Risk solutions (the U.S.), iovation (the U.S.), Friss (Netherlands), Dell technologies (the U.S.), First Data (the U.S.), Wirecard (Germany), Software AG (Germany), Easy Solutions (the U.S.), Distil Networks (the U.S.), Guardian Analytics (the U.S.), Securonix (the U.S.), MaxMind (the U.S.), Kount (the U.S.), and Simility (the U.S.).
Key Market Opportunities Rising Demand For Fraud Detection And Prevention In Technology Industry
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