The global fraud detection & prevention market size was valued at USD 17.33 billion in 2018 and is expected to grow at a CAGR of 18.9% over the forecast period. Digital convergence through smart devices is transforming the business environment. Over time, digital convergence is anticipated to create new market opportunities and make certain existing business processes obsolete. The emergence of technologies such as the Internet of Things (IoT), Artificial Intelligence (AI), cloud computing, Augmented Reality (AR), and mobile banking & e-transactions has enhanced virtual platforms for the new-age consumer. However, increasing cyberattacks, financial crimes, data breaches, and identity thefts are challenging the organic growth of organizations. One such area of concern is digital fraud, which has become a vital issue for businesses operating in the BFSI, healthcare, and e-commerce areas.
Over the years, hackers have developed sophisticated tactics to identify and exploit vulnerabilities. Currently, the mounting losses stemming from frauds account for 5% of the overall revenue of an organization. With the rising volume of data generated from numerous transactions, enterprises nowadays are taking proactive measures to curb losses arising from cyber threat and fraud. As such, fraud detection and prevention has become one of the top priorities across several industries.
Market leaders operating across industries from healthcare to financial institutions are recognizing the limitations of traditional or existing strategies and tools to combat digital fraud. Traditional methods require complex and time-consuming investigations and thus are expected to become obsolete. Threats such as malware, phishing, Card Not Present (CNP), counterfeit card, and Account Take Over (ATO) have adversely affected the use of e-payment platforms. Moreover, these threats are anticipated to restrict the greater reach of digital platforms, thereby hampering the growth of businesses.
Increasing sophistication of cyberattacks is necessitating organizations to implement fraud detection and prevention solutions along with various policies and training programs to control internal and external frauds. As the nature of digital fraud continues to evolve, vital institutions and businesses are anticipated to adopt the latest strategies to make digital payments more secure, thereby garnering consumer trust.Thus, investments in digital security would become a market differentiator for several enterprises.
The adoption of customer-centric fraud prevention techniques has become one of the top priorities in business strategy. This approach helps to bridge the gap between security and improved payment experience. For instance, financial institutions have started to adopt advanced fraud prevention technologies such as voice recognition at their call centers to verify the client’s voice. Moreover, the implementation of technologies such as geolocation and device fingerprinting has made consumer verification virtually seamless. These factors are anticipated to contribute to the fraud detection & prevention market growth.
Based on component, the market for fraud detection and prevention has been segmented into solutions and services. The solutions component segment accounted for the largest revenue share of over 65% in 2018. Fraud detection and prevention solutions allow organizations to identify anomalies and patterns of behavior in fraudulent activities, thereby enabling them to address frauds at the preliminary stage. Moreover, these solutions help to reduce the time-to-detection and enable the faster processing of large volumes of data in motion from various data sources.
Meanwhile, the services component segment is anticipated to register the highest CAGR over the forecast period. Numerous emerging economies are in the primary phase of implementing robust security strategies. Organizations in these countries would require consulting, integration, support, as well as third-party services. This is expected to drive the demand for fraud detection and prevention services over the forecast period.
The authentication solutions segment dominated the market for fraud detection and prevention in 2018 with a market size of USD 5.01 billion. Companies are adopting authentication solutions to secure logins and passwords, in turn establishing higher consumer trust. Solutions such as voice biometrics and single factor & multifactor have enabled seamless customer authentication, thereby improving fraud detection capabilities. The digital payment platform has rendered the manual authentication process obsolete. Thus, fraud authentication solutions are expected to prioritize a single view of the enterprises’ customers and prevent operational silos.
Meanwhile, the fraud analytics solutions segment is anticipated to register the highest CAGR over the forecast period. Fraud analytics solutions use business intelligence, data science, AI, and machine learning to enable the early detection of fraud. As organizations accumulate a higher volume of customer information, fraud analytics solutions prove to be useful in enabling users to examine fraud patterns. The use of descriptive, predictive, and social network techniques are potential factors expected to boost the segment growth.
The professional services segment dominated the market for fraud detection and prevention in 2018. Professional services encompass consulting, training, and support services for fraud detection and solutions components. Companies offering these services also assign consultants with a high level of technical expertise and related experience to their clients. Moreover, the training and support program plays a vital role in the ecosystem. It helps users to mitigate security gaps and improve the overall security measures for the implementation of fraud detection and prevention solutions.
Meanwhile, the managed services segment accounted for a revenue share of over 28% in 2018 and is anticipated to grow at the highest CAGR over the forecast period. Fraud managed services include a team of experts that manage business activities such as monitoring business transactions to detect and respond to emerging threats. The team also reviews every grey-area transaction and provides a swift decision on a non-flagged transaction. As the risk liability is transferred to a third-party, businesses can focus on other value-adding activities. Thus, the demand for managed services is expected to increase across the BFSI, healthcare, and IT & telecom sectors.
The payment fraud application segment accounted for the largest revenue share of over 40% in 2018. The emergence of electronic banking has propelled the use of cashless payments and e-wallets. The digital transformation of the payments industry has enabled ease of access to banks by providing resources and tools at the customer’s fingertips. However, this e-wave has resulted in the growing concern of digital frauds.
In an attempt to curb cyberattacks and frauds, several financial institutions and retailers have adopted robust measures such as multifactor authentication, consumer analytics, and governance policies. Moreover, these organizations are actively focused on prioritizing fraud detection by constantly updating fraud management systems with new rules, statistical models, and acquired knowledge of frauds. Advanced analytics enables organizations to recognize patterns of fraudulent transactions, which, in turn, helps them in the detection and prevention of frauds. Some organizations also employ a constant or continual approach to fraud detection, which works particularly well in situations where preventive controls are not efficient enough.
The large enterprise segment dominated the market for fraud detection and prevention in 2018 and accounted for a revenue share of over 75%. Large enterprises have a higher spending capacity coupled with cyber-technical expertise for fraud detection and prevention. However, these enterprises are still prone to attacks such as botnets, distributed denial-of-service, and phishing, which necessitates them to adopt fraud detection and prevention strategies. The adoption of these solutions can potentially contribute to improving risk management in an organization, thereby strengthening the segment growth.
Cybercriminals mostly target Small & Medium Businesses (SMBs) as they lack sufficient security measures for the detection of advanced threats. Thus, factors such as a low level of awareness of frauds and emerging threats are challenging the IT infrastructure of SMBs. Owing to the mounting losses and stringent government laws, SMBs are anticipated to adopt fraud detection and prevention solutions. Moreover, offshore business activities along with cross-border business operations by SMBs are anticipated to create opportunities for cybercriminals to exploit vulnerabilities and conduct fraudulent activities, which would lead to an increasing need for advanced solutions for identifying, assessing, and acting against emerging threats.
The BFSI segment dominated the market for fraud detection and prevention in 2018. BFSI has emerged as a key vertical owing to operations such as stockbroking, mutual funds, and insurance, among other core banking products. The accelerating digitalization of banking services has made the BFSI sector an easy target for frauds and heists. However, as BFSI is one of the vital sectors for economic growth, it is essential for enterprises in this sector to prioritize the prevention of threats and breaches. Financial institutions are widely adopting hybrid models such as advanced analytics and rule-based fraud detection and prevention techniques.
The retail & e-commerce vertical segment is anticipated to register the highest CAGR over the forecast period. The growing use of electronic payment options has necessitated companies to adopt robust fraud detection and prevention solutions. Retail & e-commerce companies store and generate a large amount of sensitive personal data, such as credit & debit card information, PINs & passwords, and login IDs. As such, protecting customer information is one of the top priorities for these organizations.
The North American market for fraud detection and prevention accounted for the largest revenue share in 2018. The growth of the regional market can be attributed to the presence of prominent players such as ACI Worldwide, Inc.; BAE Systems; Dell Inc.; Equifax Inc.; and Fiserv, Inc. Furthermore, increased investments made by companies in advanced fraud prevention solutions to comply with stringent government regulations, such as PCI DSS standards, is anticipated to propel the growth of the regional market. The rising awareness of fraud detection strategies among SMBs is also expected to boost the demand for these solutions.
Meanwhile, the Asia Pacific region is anticipated to grow at the highest CAGR over the forecast period. Frauds are rapidly increasing in emerging countries such as China and India. The growing importance of infrastructure development and adoption of advanced technologies across APAC countries have led governments to enhance their infrastructure security by implementing stringent regulations. This, in turn, is compelling enterprises to adopt advanced security solutions.
The market for fraud detection and prevention is highly fragmented due to the presence of several individual solution providers operating globally. The market is also characterized by high market rivalry due to the presence of established players. Moreover, third-party security service providers offering robust risk management are anticipated to increase market competition. Market players are offering fraud detection and prevention solutions to a range of industries for addressing the increasing number of frauds, thereby leveraging opportunities to grow in the market. Moreover, numerous companies are developing innovative ways to assess fraud risks as it would enable them to deliver customized solutions. Key industry players include Total System Services, Inc; Software AG; SAS Institute Inc.; SAP SE; Oracle; IBM Corporation; Fiserv, Inc.; Experian plc; Equifax, Inc.; BAE Systems; and ACI Worldwide, Inc.
Base year for estimation
Actual estimates/Historical data
2015 - 2017
2019 - 2025
Revenue in USD Million and CAGR from 2019 to 2025
North America, Europe, Asia Pacific, Latin America, and MEA
U.S., Canada, U.K., Germany, China, India, Japan, Brazil, and Mexico
Revenue forecast, company ranking, competitive landscape, growth factors, and trends
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This report forecasts revenue growth at the global, regional, and country levels and provides an analysis of the latest industry trends in each of the sub-segments from 2015 to 2025. For the purpose of this study, Grand View Research has segmented the global fraud detection & prevention market report on the basis of component, solutions, services, application, organization, vertical, and region:
Component Outlook (Revenue, USD Million, 2015 - 2025)
Solutions Outlook (Revenue, USD Million, 2015 - 2025)
Governance, Risk, and Compliance
Services Outlook (Revenue, USD Million, 2015 - 2025)
Application Outlook (Revenue, USD Million, 2015 - 2025)
Organization Outlook (Revenue, USD Million, 2015 - 2025)
Vertical Outlook (Revenue, USD Million, 2015 - 2025)
Government & Defense
IT & Telecom
Industrial & Manufacturing
Retail & E-commerce
Regional Outlook (Revenue, USD Million, 2015 - 2025)
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