Mitigating Internal Fraud: A Case Study on Washington Trust Bank

Report Summary

Mitigating Internal Fraud: A Case Study on Washington Trust Bank

Ninety percent of the money spent by banks on vendor-built fraud detection solutions is focused on detecting and mitigating external fraud, signaling an important overlook to the growing threat of internal security breaches.

Christine Barry
Research Director

Boston, MA, June 23, 2006 – In a new report, Mitigating Internal Fraud: A Case Study on Washington Trust Bank, Aite Group examines the spending practices of global banks and their focus, or lack there of, on internal fraud. It forecasts increased spending on internal fraud detection solutions, as strengthening security becomes a top IT initiative at many banks around the globe. These initiatives reflect stricter regulations to protect customer privacy and increased vulnerability to new methods of fraud. The report also includes a case study on US$3.1 billion in assets, Washington Trust Bank, and how it is taking a cutting-edge approach to internal fraud detection through desktop intelligence software.

Aite Group forecasts that by 2008, financial institutions globally will spend US$254 million on third-party vendors of fraud detection software, up from US$174 million in 2005. It also projects that spending on internal fraud detection solutions will increase almost 230% during that same period.

"The low percentage of IT spending on internal fraud detection does not accurately reflect the seriousness of this threat. In fact, it is estimated that 60% of fraud cases are committed by bank employees" notes Christine Barry, Research Director with Aite Group and author of the report. "Banks are addressing the problem by implementing new processes and better training employees to identify it, but technology is certainly being under-utilized."

This is a 9-page Impact Note. Clients of Aite Group's Fraud & AML service can download the report.

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