68% of Banks Increase Fraud Defense Spending as Account Takeovers Spike

Banks are learning that fraud defense is no longer just about stopping losses after the fact. The bigger shift in the latest data is that many institutions now see fraud prevention as part of protecting growth, customer trust and the ability to keep up with faster payments.

That is the central takeaway from “2025 State of Fraud and Financial Crime in the United States,” produced by PYMNTS Intelligence in collaboration with Block. The report shows that unauthorized-party fraud, driven by credential theft and account takeovers, now makes up 71% of fraud incidents and dollar losses, a sharp reversal from last year.

Average fraud loss rates rose to 0.8 basis points, with large banks reporting losses of 3.6 basis points and neobanks at 1.1.

But the report’s more useful insight is practical: banks are starting to treat fraud technology as core infrastructure, not a side project.

Embracing Analytics

That shows up in bigger budgets, broader adoption of machine learning and behavioral analytics, and more willingness to rethink old systems that cannot keep pace with new threats.

Seventy-one percent of fraud incidents and dollar losses now come from unauthorized-party fraud, up from a far more even mix a year earlier, showing how quickly fraud patterns can shift and why banks need defenses that adjust in real time.

Sixty-eight percent of financial institutions increased fraud-detection spending year over year, while the share citing cost as a barrier to adopting new fraud tools fell to 36% from 60% in 2024.

Fifty percent of institutions say fraud hurts customer loyalty, 48% say it costs them new business opportunities, and 70% say machine learning helps them balance proactive and reactive fraud strategies.

Those numbers point to a more constructive story than a simple rise-in-fraud narrative. Banks are not standing still. They are spending more because they have fewer illusions about the threat, and because the tools are becoming more central to day-to-day operations.

The report shows that behavioral analytics and machine learning are moving into the mainstream.

Roughly eight in 10 FinTechs and large banks report using advanced behavioral analytics, while one in five institutions, especially smaller and regional banks, still operate without those tools. That gap matters, because it suggests the industry’s next challenge is not just buying better defenses, but making sure smaller institutions can integrate them without getting buried by data costs, legacy systems or competing priorities.

There is also a clear action plan embedded in the findings. Banks need to modernize fraud systems in layers. That means combining artificial intelligence with rules-based controls, improving communication with customers, leaning on cloud platforms where it makes sense and using outside partners when internal systems cannot move fast enough.

Just as important, banks need to treat fraud as a business issue, not just a risk issue. When fraud damages loyalty, weakens reputation and slows innovation, stronger protection becomes a way to defend revenue as much as deposits. For banks that act early, that is the positive angle in this report: better fraud defense can also be a path to better customer confidence and stronger long-term growth.

At PYMNTS Intelligence, we work with businesses to uncover insights that fuel intelligent, data-driven discussions on changing customer expectations, a more connected economy and the strategic shifts necessary to achieve outcomes. With rigorous research methodologies and unwavering commitment to objective quality, we offer trusted data to grow your business. As our partner, you’ll have access to our diverse team of PhDs, researchers, data analysts, number crunchers, subject matter veterans and editorial experts.