Experian's recent report uncovers a significant increase in AI-powered fraudulent activities
In the face of a rising tide of AI-related fraud, UK businesses are bolstering their defences with advanced, AI-driven strategies. These strategies aim to counter threats such as deepfakes, identity theft, and synthetic identities, particularly in the financial sector.
The surge in AI-related fraud was evident in 2024, with SIM swap fraud seeing a dramatic increase, rising by over 1,000% year-on-year. Almost 3,000 cases were logged on the National Fraud Database, making it a significant concern for businesses and authorities alike.
In response, businesses are adopting proactive, intelligence-driven approaches to fraud prevention. One such approach is AI-powered adaptive fraud detection. By utilising AI models trained on vast datasets, businesses can detect subtle anomalies and evolving fraud patterns in real time. These systems improve continuously with new data, reducing false positives and allowing compliance teams to focus on genuine threats.
Another strategy is deepfake detection with continuous retraining and federated learning. Organisations deploy detection models that are updated daily with emerging threats using federated learning, which balances effectiveness and privacy. These systems are part of a dynamic defence posture rather than static security measures.
Behavioural biometrics and multi-factor authentication (MFA) are also being incorporated. Beyond traditional MFA, firms analyse typing patterns and navigation habits in real time, forming part of inter-bank behavioural fraud detection networks now deployed by over 100 financial institutions in the UK.
UK businesses are also implementing layered verification protocols resistant to synthetic media. This includes cryptographic device authentication, mandatory transaction time delays, and pre-established secondary communication channels to verify high-risk or high-value transactions.
Recognising that no single technology can fully eliminate risks, UK businesses are adopting comprehensive frameworks that integrate people, processes, and technology to maintain overall system trust and security. These strategies reflect a shift from static, rules-based defences to adaptive, AI-enhanced frameworks that combine detection, verification, continuous learning, and systemic coordination.
UK Finance is advocating a national approach that spans multiple sectors, focusing on preventing fraud before it happens rather than isolated tactical responses. This approach reflects the understanding that fraud is a constantly evolving threat requiring layered defences and constant adaptation.
The UK's Financial Conduct Authority (FCA) is actively engaging with firms on deploying safe and responsible AI for fraud prevention. This includes live AI testing initiatives aimed at promoting innovation while ensuring consumer protection and compliance with evolving regulatory standards.
With 68% of businesses planning to increase their fraud budgets in 2025, the focus of these increased budgets will be on combatting AI fraud with AI technology. Over half (52%) of UK businesses are set to improve AI analytics in 2025, while 58% are focused on tackling the growing risk of synthetic identity fraud.
In addition, 60% of businesses are prioritising improving the detection and prevention capabilities for first-party fraud. Paul Weathersby, Chief Product Officer, Identity & Fraud at Experian UK&I, emphasised the importance of investing in layered security, biometric checks, and smarter fraud detection to protect customers and stay ahead of the threat.
These strategies demonstrate a proactive and innovative approach by UK businesses to combat the increasing sophistication of AI-related fraud threats effectively.
- In an effort to combat the rapid increase of AI-related fraud, UK businesses are amplifying their defences with AI-driven compliance measures, including AI-powered adaptive fraud detection, deepfake detection, and behavioural biometrics.
- Recognizing the dynamic nature of AI fraud, UK Finance is advocating a national approach that incorporates multiple sectors, emphasizing preventive measures and a shift from traditional, rule-based defences to adaptive, AI-enhanced frameworks.
- To bolster their cybersecurity and effectively counter AI-related fraud, over half of UK businesses are planning to enhance their AI analytics in 2025, with a significant focus on improving detection and prevention capabilities for first-party fraud and tackling the growing risk of synthetic identity fraud.
