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Digital banking has fundamentally transformed how money is managed: transfers, loan applications, and card payments now happen with a single click. Borders are nearly irrelevant as funds flow across countries within seconds.

As digitalization accelerates, consumer expectations are rising. They now seek payment options that are convenient, secure, and instantaneous. Only institutions that uphold trust will stay competitive.

The Scale of the Challenge

At the same time, new payment technologies are increasingly under pressure. With the advance of artificial intelligence, fraud risks are growing in both frequency and sophistication.

A recent report by TransUnion, which also operates in Switzerland, highlights the scale of the challenge: in Q2 2024, 49% of respondents across 18 countries and regions reported being targeted by fraud attempts via email, web, phone, or SMS.

«With the advance of AI, fraud risks are growing in both frequency and sophistication.» 

For businesses, this translates into significant financial risk. Since 2023, Swiss criminal law has explicitly recognized identity misuse as an offense. In 2024 alone, 59,034 digital crimes were recorded in Switzerland, more than 90% of which were categorized as cyber-economic crime.

What can Swiss banks do?

Escalating Costs From Banking Disruption

Banks now face a complex identity fraud landscape ranging from traditional theft and account takeovers to sophisticated synthetic identity fraud (SIF). Defending against these threats requires heavy investments in time, resources, and technology.

«Synthetic identity fraud is one of the fastest-growing financial crimes.»

Failing to implement robust risk management exposes banks not only to financial losses and operational disruptions but also to regulatory risks, including fines, business restrictions, reputational damage, and litigation costs.

A proactive approach to loss prevention should include deploying advanced technologies such as AI and machine learning to manage the growing volume and complexity of identity fraud while ensuring regulatory compliance.

Securing Third-Party Ecosystem Risks

The shift toward banking ecosystems, where third parties are integrated to enhance services, introduces additional risks. Weak risk management with third-party providers can lead to financial losses, regulatory penalties, and reputational damage, undermining the benefits of ecosystem participation.

«Risk management and customer experience can be at odds.»

Data breaches or service disruptions from partners pose direct threats to financial institutions. Banks need to map their entire digital supply chain, implementing security requirements that cascade through vendor tiers and establishing incident response protocols that quickly isolate compromised connections.

Robust third-party risk management frameworks are therefore essential, including thorough due diligence, clear contractual terms, continuous monitoring, strong internal governance, and contingency planning.

Balancing Risk Management With Client Experience

Risk management and customer experience can be at odds. Clients do not want to bank with institutions vulnerable to fraud, but excessive controls can create friction. Banks must strike the right balance: too little or too much risk management harms client relationships. Ultimately, they must define an acceptable level of risk that aligns the needs of clients, regulators, employees, investors, and stakeholders.

«The shift toward banking ecosystems, where third parties are integrated to enhance services, introduces additional risks.»

Building Resilient Banking Ecosystems

Swiss banks must adopt a holistic approach addressing risks like synthetic identity fraud and third-party ecosystem risks with equal rigor. This requires investing in advanced analytics platforms that correlate data across multiple risk domains, identifying coordinated attacks or systematic vulnerabilities.

Banks that effectively balance comprehensive risk management with seamless customer experience will protect their operations and gain competitive advantage.

Anthonie De Bos is Vice President of Security and Resiliency at Kyndryl, a global leader in IT infrastructure services. 

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