New Report on Digital Innovation and Fraud Highlights Areas of Focus for Industries

Thursday, February 6th 2020, 2:01 pm
By: News On 6


A New Report from Kount and Javelin Research details how fraud slows digital innovation. Protecting Digital Innovation: Emerging Fraud and Attack Vectors, conducted by Javelin Research, surveyed hundreds of respondents across businesses in the retail, restaurant, insurance, and financial industries. The survey results reveal that the risk of fraud slows innovation across industries. However, it also discovered that fraud prevention strategies transcend industry, enabling different businesses to learn from each other and adopt similar fraud mitigation strategies and tactics when innovating their products and services.

Download the Report

Businesses are investing heavily in product innovation and user experience

Across industries, the top focus across businesses is adding new products and services at 57%, and refining the user experience at 55%.



The problem lies when they bring these advancements to market: businesses face fraud challenges because new digital products and services attract new fraud attacks.

The most innovative businesses also face the greatest emerging fraud threats.

The report found that 42% of businesses say fraud impedes their expansion into new digital channels and services. However, only 36% are focused on reducing current fraud and the associated costs, as well as new fraud, by improving identity verification for new users.



With the threat of emerging fraud and increasing expectations for a frictionless customer experience, businesses are challenged to balance competing pressure to innovate, grow revenue, and provide a good user experience.

Rich Stuppy, Kount’s Chief Customer Experience Officer, says as businesses integrate new digital features — such as voice ordering or mobile wallets — to engage with their customers, there are increased opportunities for fraud. “As enticing as these new innovations are for businesses, the fact is that many aren’t adopting the proper fraud controls at the same pace,” he says. “This report underscores the fact that digital innovation and the corresponding increases in revenue in these industries will never reach their full potential without integrating proper fraud prevention initiatives.”

Notable industry findings


  • In the digitally mature retail industry, user experience and reducing fraud costs are top concerns: 58% of businesses plan to invest in refining their existing channel user experiences, and 46% plan to invest in reducing fraud costs.


  • While restaurants are focusing on digital innovation, they aren’t investing enough in fraud mitigation to protect their digital investments. Managing fraud is ranked as their lowest priority at 4% and is far below the average compared to other industries. The perception is that food and beverage does not have resale value.


  • The insurance industry’s focus is expanding digital and mobile functionality.
  • 40% of insurers are planning on expanding mobile support so customers can open new policies, file claims, and submit documentation.

Consumer Banking

  • Digitally mature financial institutions (FIs) are focused on investing in fraud mitigation as a top priority: 52% of FIs plan to invest in additional measures to secure existing accounts and 46% plan to invest in better identity verification measures.

Fraud prevention is an essential ally in digital innovation

Digital transformation has reached different levels of maturity for Retail, Restaurant, Consumer Banking, and Insurance verticals. And while fraud prevention is an essential component of any successful business advancements, fraud prevention solutions need to be low friction.

48% of businesses report customers are more sensitive to anti-fraud measures that disrupt their online experience than they were a year ago.

In addition, the businesses surveyed revealed that 64% of their customers are not confident in the digital security of the businesses’ digital channels.

The report analyzes each industry’s innovation and fraud controls, providing a benchmark for and recommendations on advancing innovation while balancing fraud reduction. To be effective, businesses should balance user experience, operational considerations, and fraud mitigation when launching new innovations.

Businesses can apply similar fraud prevention strategies regardless of industry

The report provides in-depth recommendations that can help businesses combat digital fraud, including ways to:

  1. Bring fraud management and cybersecurity teams into early development stages.
  2. Identify the key fraud risks facing each part of your business now, and down the road.
  3. Minimize friction for customers with well-informed, risk-based authentication.
  4. Move away from one-time passwords.
  5. Modernize authentication measures.


Download the Report

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