As fraud campaigns grow more coordinated and cross-channel in 2026, financial institutions need to pivot from static, point-in-time controls to real-time behavioral signals and stronger collaboration
Key insights:
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AI scales deception — Fraudsters automate convincing scams, create synthetic identities, and overwhelm legacy controls, making AI an essential part of financial institutions’ anti-fraud solution.
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“All-green” fraud is rising — The biggest losses often happen in correctly authenticated sessions, making them much harder to detect.
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Behavior plus collaboration wins — Financial institutions need to shift from point-in-time checks to real-time, cross-channel behavioral signals and tighter inter-institution cooperation to spot coordinated campaigns and reduce friction without stalling growth.
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How financial institutions are facing fraud in 2026 isn’t what it was like even two years ago. AI has industrialized deception, synthetic identities bypass traditional checks, and scams manipulate legitimate customers into moving their own money even as every security control shows green.
Today, financial institutions face a perfect storm, according to Michal Tresner, CEO of ThreatMark, and Sara Seguin the Director of Enterprise Banking at Alloy. Indeed, they’re trying to manage attacks that scale automatically, identities that look real but aren’t, and victims who authenticate correctly before being convinced to hand over funds.
5 trends financial institutions need to understand in 2026
Looking at each of these five key challenges individually can offer both perspective and possible solutions.
1. The AI threat multiplier
Generative AI (GenAI) and large language models (LLMs) have fundamentally changed the fraud landscape. “AI is now the biggest threat facing financial institutions in 2026,” Tresner notes, adding that fraudsters are leveraging these technologies to create highly convincing content while automating attacks at unprecedented scale — a combination that overwhelms traditional security systems.
Seguin agrees and confirms this trend is already visible in the data. “Financial institutions are seeing a measurable increase in AI-enabled financial crimes, while consumers increasingly expect banks to deploy AI-based security in response,” she explains. The reality is stark: AI has become an essential tool for both fraudsters and those fighting against them.
2. The onboarding dilemma
In another area, the account opening process represents a critical vulnerability. Seguin points to rising first-party fraud and scams as particularly challenging because perpetrators often appear indistinguishable from legitimate customers going through the onboarding process. “A person may open an account with seemingly normal intentions — direct deposit or everyday banking — only to later engage in fraudulent activity,” she explains.
Onboarding is where institutions have the least certainty about either the authenticity of the identity or the legitimacy of the intent.
Tresner identifies a related threat: Synthetic identities. “Rather than stealing real identities, fraudsters now generate convincing fake ones, complete with realistic identity documents and even AI-generated images or video,” he says, noting that these synthetic identity accounts are exploding and frequently serve as infrastructure for moving stolen funds.
The common thread is that onboarding is where institutions have the least certainty about either the authenticity of the identity or the legitimacy of the intent.
3. Authentication under siege
Similarly, and even as financial institutions work to strengthen onboarding controls, account takeover remains a persistent threat. Fraudsters are now using AI to bypass authentication mechanisms at scale, making previously reliable security gates less trustworthy, Tresner explains. “Successful authentication can no longer serve as a definitive indicator of safety.”
Indeed, a properly authenticated session may still be the entry point for fraud, whether committed by an intruder or through a legitimate customer who is being manipulated.
4. The “all green” problem
Which brings us to another fraud scenario faced increasingly by financial institutions, and one that Tresner says may be 2026’s most operationally challenging issue — the fact that many scams don’t trigger traditional fraud controls. When the legitimate account holder initiates a transaction from their usual device and location using correct credentials, every standard check appears normal. The difference is the persuasion happening on the other side as fraudsters convince victims they’re interacting with trusted entities like banks, law enforcement, or romantic partners, and then direct them to transfer money.
Seguin notes that detecting these scenarios requires new approaches, such as identifying subtle behavioral signals like hesitation immediately before a money transfer. “Traditional device and credential checks won’t help when the customer is genuinely authenticated but acting under manipulation,” she explains.
5. Fraud as an industrial operation
Tresner emphasizes that modern fraud is not a series of isolated events but a coordinated, multi-step operation. Campaigns typically begin with establishing or compromising mule accounts, then deploying automated phishing kits to harvest personal data.
Younger users represent a growing target due to their online activity and platform usage, and the emergence of human trafficking-linked fraud operations has worsened this problem.
Not surprisingly, younger users represent a growing target due to their online activity and platform usage, Seguin says, adding that the emergence of human trafficking-linked fraud operations, including sextortion and overseas scam compounds, has worsened this problem.
What works in 2026
Tresner’s core recommendation for fraud investigators in financial institutions is for them to shift their focus from static, point-in-time checks to behavior-based detection. “Behavior profiling and analytics across channels can identify sophisticated actors and manipulation patterns invisible in single transactions or logins,” he explains, stressing that real-time cooperation among financial institutions is critical because fraudsters collaborate, and isolated defenses are insufficient.
Further, Seguin reframes fraud prevention as a growth enabler. “Effective risk controls allow institutions to launch products faster, set higher transaction limits with confidence, and avoid overly restrictive policies driven by fraud concerns,” she notes. Indeed, modern fraud defense isn’t just about reducing losses but about enabling safe expansion.
The 2026 fraud landscape presents compounding challenges: AI-driven scale and realism, onboarding uncertainty from synthetic identities and hidden intent, weakening authentication boundaries, scams that produce legitimate-looking transactions, and industrialized fraud operations that can span channels and institutions. Success in this area requires financial institutions to treat fraud as a behavioral, multi-channel, collaborative challenge because that’s exactly how their adversaries are operating.
You can learn more about the many challenges facing financial institutions today here
