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The CU2.0 Podcast
This podcast explores contemporary, critical thinking and issues impacting the nation's credit unions. What do they need to be doing to not just survive but prosper?
The CU2.0 Podcast
CU 2.0 Podcast Episode 389 Alloy's Sara Seguin on the State of Fraud in 2026
Fraud is up, a lot, at credit unions, according to the Alloy 2026 State of Fraud Report, says Sara Seguin, a principal adviser at Alloy. Sara is a past CU 2.0 Podcast guest - link to that show is in the show notes.
She’s on the show now to report that credit unions say they have experienced a 72% increase in fraud events, more than any other segment.
Worse, a lot of fraud now involves synthetic identities - i.e., manufactured people - and a long con that may take months or years before the crooks seek to defraud the credit union.
What can credit unions do to fight back? Alloy has pointers.
Credit unions also have seen a spike in in-branch fraud, says Alloy. That’s surprising but also very worrying. Hear the details in the show.
Fraud is not a fun topic, I know that. But it is a real, every day concern at just about every credit union in the US and knowledge - of what fraudsters are doing and the tools available to fight back - is indeed power for a credit union.
Understand, too, last year’s fraud trends aren’t this year’s. It’s a constant battle where the criminals are always updating their weapons. Credit unions have to do likewise\.
How? What? Listen up.
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SPEAKER_00:Hi, and welcome to the CU 2.0 podcast with big new ideas about credit unions and conversations about innovative technology with credit union and fintech leaders. This podcast is brought to you by Quillow, the real-time loan syndication network for credit unions, and by your host, long-time credit union and financial technology journalist Robert McGarvey. And now the CU 2.0 podcast with Robert McGarvey.
SPEAKER_02:Fraud is up a lot at credit unions. That's according to Alloy's 2026 State of Fraud Report. Alloy's been on the show before. There's a link to an episode from last year in the show notes. But there's news to report this year, a lot of news, and it's not all good. One number that's worrisome is that credit unions have experienced a 72% increase in fraud events, more than any other financial segment in the country. 72% increase. Worse, a lot of fraud now involves synthetic identities, i.e., manufactured people, and a long con that may take months or years before the crooks seek to defraud the credit union. How many synthetic identities are lurking among your accounts? What could credit unions do to fight back? Alloy has pointers. Credit unions also have seen a spike in in-branch fraud, says Alloy. That's surprising. And it's also very worrying. There are details in the show. Fraud's not a fun topic. I know that, you know that. But it's a real everyday concern that just about every credit union in the U.S. and knowledge of what fraudsters are doing and the tools available to fight back is indeed power for a credit union. Understand, too, last year's fraud trends aren't this year's. It's a constant battle. When the criminals are always updating their weapons, credit unions have to do likewise. How what? Listen up. So this is not your first time on this particular rodeo.
SPEAKER_01:It is not. It is great to chat with you again. I think it's maybe even been about a year since we last spoke.
SPEAKER_02:I I believe it was about a year ago, yeah. Brought us up. So maybe that's good for you. I don't know.
SPEAKER_01:You know, it's it's it's a it's a weird business to be in, right? You you don't want to see it go up, but at the same time, at least we can help to solution some of that.
SPEAKER_02:So looking through the the report this morning, I I saw that 20% of the respondents were credit unions. Tell me about the credit unions. You don't have to name them, of course, but big, small, what what are they?
SPEAKER_01:I would say definitely a range. So in the state of fraud report, there is a range of credit unions by size. So when we really take a step back and survey the 500 plus industry leaders, 20% of those are credit unions. So broad range of credit unions are included. It is all anonymized. So we do not receive which institutions have responded.
SPEAKER_02:Oh, so you don't, it's not just that you're not going to tell me. You don't know.
SPEAKER_01:True. Yes. Yes, we we really, we truly do not know. It is completely anonymized.
SPEAKER_02:Now, credit unions reported some facts that were different from what other institutions were reporting, such as, you know, what did they say that you didn't hear from big banks, for instance?
SPEAKER_01:Well, one of the things that we saw from a credit union perspective was 72% of credit unions reported the largest increase in fraud. So that was that's a higher rate than the regional community banks and higher rates than enterprise as well. So I think that that's pretty significant when we look at this 72% net increase coming from the credit unions. 34% of that were respondents who said their fraud increased a lot, which again is the highest range that we saw across different financial segments. So we're seeing from a credit union standpoint is they seem to be impacted, at least from this report, being impacted the greatest. You know, I think what else this tells us too, and and we know from talking with credit unions that they their reporting mechanisms and the the time that they are working on the cases at times can even be a little more in-depth than some of the other segments. So I think when we hear this rise in fraud across the credit union segment, I feel very confident that that is accurately being reported.
SPEAKER_02:Now, what's the biggest problem credit unions are facing in terms of fraud?
SPEAKER_01:Yeah, so some of the biggest problems that they're facing when we think of fraud typology, synthetic fraud. So when we look at credit unions versus other segments, synthetic is quite high for them compared to other segments. We also see, though, that if we think about where the fraud events are occurring, uh for credit unions specifically, they are showing the highest rate of their fraud occurrences in online banking. But when you look at the in-branch, credit unions actually have the highest percentage across fintechs, regional community, and enterprise, they are trending to be the highest showing uh fraud events in the brand at about 14% of their fraud events. So I think, you know, we when you take a step back and you start to look at credit unions are showing an significant increase. They are showing that it is not just online banking channels, they are showing significant numbers across in-brand, ATM, and contact center as well. You're really starting to see where credit unions some have made the investments into various channels versus others maybe have focused on online mobile first. And so now they're they're starting to shift to make more investments into other channels.
SPEAKER_02:We'll talk in a minute about synthetic fraud, but tell me about this in in-branch fraud. What what what is that? What kind of events?
SPEAKER_01:Yeah, so so this could this could range on multiple different types of events. We think of in-branch, it could be that a fraudulent check, or I'll say a counterfeit check was cashed at the branch, or perhaps a check that was stolen in the mail was taken to the branch and cashed, or it was deposited in the branch at the credit union. It could also be that someone goes into the credit union and sits down and they request for a wire to be sent. And perhaps it was account takeover from the start, right? So you have an account takeover scenario. They go into the branch and request for a wire to be sent. So many different types of fraud could be included in that, but credit union is showing 14% of their fraud events are being reported as uh occurring in the branch.
SPEAKER_02:Much of what you're talking about there is all these goodies in terms of fraud. It's uh I mean, this is stuff that was occurring before you were born, before I was born. It's it's my heavens, that's it's still out there. It's it's I'm I'm impressed, really.
SPEAKER_01:You know, you know, Robert, it it's it's uh you certainly don't want to give the the fraudsters credit, but definitely on the industry, there's the what's old is new again. And when you hear about these different fraud schemes, it they're not necessarily new types of fraud, so to speak, right? They've just exposed new vulnerabilities, right, within the system and within the process. You know, so when we look at synthetic identity fraud, uh credit unions were sitting at 56%, which is is significant, right? And the next, the next one sitting there was Enterprise Bank at 43, right? So synthetic identity credit unions are still being heavily impacted. It's interesting because when we speak to some of the credit unions too, you know, they're saying you know, part of that could be they're still their onboarding system and not necessarily having synthetic in place. Some of it may being a different type of identity, maybe categorizing as synthetic, right? So but I agree with you, you know, even synthetics, it's been around for quite some time. And so we just continue to see these different fraud types cycle through, cycle through the industry.
SPEAKER_02:Right. And what baffles me really is why synthetic fraud is so hard for banks and credit unions to detect. Now, the the key to this, and correct me if I'm wrong, the linchpin is a social security number. Why can't I verify that the social security number has some validity and that this person, if the person actually exists, might actually have it?
SPEAKER_01:Yeah, Robert, you know, I I will say a few different pieces. You know, one, there are some great vendors out there who have some some good synthetic products, right? You know, and so I think first and foremost, there's there's the question of what are you running at onboarding in an effort to detect the issue with the identity, right? Whether it's identity theft, it's synthetic, et cetera. So I think there are solutions out there that might be one of the issues, though, right? Is there a solution in place to help detect it within the credit union space? But then, you know, to your point, it it does. You think about it and you're like, this shouldn't be that hard, right? But what we see is that there are identities that have been created that are cycling through, I'll say, the ecosystem. So almost to an extent where you know, you start to build credit on these, you know, essentially creating this new identity, you start to build credit on this identity. And so it's becoming what we're seeing some broadsters be in it more for the long game as well. And so when they do that, if they are being patient and building in the time, right, to build a good reputation on an account or build upon an identity, that that is that at times can be then more difficult, right, for the vendors out there to determine it and really continue to reassess their model on the good versus bad.
SPEAKER_02:Well, some of it seems simple though to me. In your report, you talk about how a synthetic is usually uh something of a long con. It's not super long, but you open an account and you do nothing wrong. In fact, you do a few things right. Deposit a little money here and there, small amounts, doesn't have to be a lot. And time goes by, but the time is not a long time, it's like six months, nine months, and then fraud kicks into gear. I think, you know, if you and I go out and get we get City Citibank credit cards with$20,000 limits today. And we both run out and start spending money madly. One or both of those accounts is gonna be frozen at some point in the day. As you begin to approach 20 grand, City's gonna say, What the hell? Now they might call you up, might talk to you and say, Oh, yeah, okay, cool, keep keep spending, sounds good. Or they might not, but the the computer would flash a red alert, right? It's so if I'm a crook, I know what the what the time frame is where an account has to mature at an institution, or I have a decent guess about what that time frame is, and I just wait it out. I mean, that's simple game law game logic, right?
SPEAKER_01:Yeah, I I I would say that, Robert. And then I would also add in too if as they go and they open up this account and they are it is as you're right, right? They are in it for if they're in it for the long game, and a few months go by, there can be activity that may not even appear to be bad at the on-site, right? Like they're trying to do it.
SPEAKER_02:It should be good.
SPEAKER_01:It yeah, and they're just trying to stay right under the radar. That in that time span as they are building, we'll say it's credit, right? But in that time span that they're building that credit and they are building that, they can also go and open other accounts too at other financial institutions. So it's all I agree. There's definitely timing components. We we have even seen where the synthetic is created, and if it's bypassed from an onboarding perspective, and they they don't have the long game. It's just it they use that created identity to open the account, and then they immediately just start pushing through a fraudulent transaction. So we've we've seen it in a multitude of ways. We're definitely seeing groups of fraudsters that are being patient.
SPEAKER_02:Yeah. I still get hung up about the the social security number. Like a year or two ago, I was filing my tax returns online, and IRS rejected it and basically said something's wrong with the social security number. It was my wife's social security number, and I transposed a couple numbers. And so that was easy to rectify. But you know, their software instantly said, No, there's something wrong. Try again, Bozo.
SPEAKER_01:Yeah, I I think the key there, right, is is they're taking a so it's great that it flagged it, right? If it was transposed, but I think the key is when they're using the social security number. And like I'll go back to, let's say that they are not using a synthetic detection tool. So what a system may see come through is that it is a legitimate social security number and it is other information with it that for that account to be open, they could have had, you know, almost already established that identity out there. So then you start to get, I'll say, mismatched responses, right? On, okay, well, we know the social is good. We know this other information is good, we've seen it out in the wild with the two together before, okay, it must be good. Like that there, there's definitely those components, but but again, there's solutions out there that have a direct connection into SSA. And like so we think it depends on if you're looking at it in credit unions can make the investment and look at the synthetic tools out there, those can definitely help them from an onboarding perspective.
SPEAKER_02:Are the synthetic detection tools terribly expensive? Because I mean, your report is pretty clear that worry one right now for most financial institutions is synthetic identity fraud. So I would say, geez, do we have any tools here to prevent this? And if the answer was no, I'd say, how much do they cost? What's stopping us here? So how much do they cost?
SPEAKER_01:Yeah. So Robert, I would say that from a return on investment, it is it is definitely worth it because you are looking at it from a proactive perspective. And so when we look at cost, right, uh here's how I would frame it. I would say that you can build your onboarding flow in such a way that you may not, you know, in theory, you should waterfall it, right? So instead of calling out to five different vendors all at the same time and having all of the responses coming back, then you're paying for all five of those vendors, right? You know, look to see if if you are going to deny based on a hard and fast rule in the beginning, and that is of less cost, then you run that first, right? And maybe your synthetic check is one of your last checks that you perform before opening the account. So that way you can, again, there's many different ways to build the waterfall, but that's how I would always recommend you build your onboarding strategy and also look at the cost of each of those vendors, right? Are you going to do device reputation? Are you running behavioral? What type of fraud screening are you doing? Where does KYC sit in the workflow? Have your synthetic component. Are you doing phone check? Right, that list goes on and on. But I think that if you list all of those out and you understand the cost, and then you understand your risk appetite, it really helps you to say, okay, well, it is worth spending this amount on this population because the the flip side of that, right, is tens of thousands dollars if they do end up getting through your funnel. So I think it's it's of course there's a cost, but it it's it is worth it to make that proactive investment and do so in such a way that you build it and can really cost optimize.
SPEAKER_02:Well, I I think we're gonna see more of this in credit union land for a simple reason, which is that uh five years ago, very few credit unions offered 100% online onboarding. Some did, but not very many at all. Now most of them are have uh realized that with today's consumer really need 100% online onboarding. So they're implementing it one way or another, probably complaining. And you know, I I I I think back like 12 years ago, 13 years ago, I I've moved cross-country and I get a letter from Chase saying, hey, why don't you open an account with Chase, uh bank a checking account, which I didn't have with them. I had a credit card account. And uh and you know, and once you open it, just take this. There's a little coupon here, just take it down to Chase, we'll give you 300 bucks. Now, I opened it 100% online, but of course I went down to get the 300 bucks. And and I didn't feel aggrieved. I didn't feel like, oh wow, this is so like 1950s here, man. I was like, cool, it's 300 bucks. I just walk in, give it to somebody, I say, cool, yeah, credit it, boom, done. And uh, I I did think that was a genius on Chase's part. It's and and subsequently when institutions have asked me to come in, I I generally declined, so I don't get the account. I was like, I got it. Man, that's so old. But offer me a purse. Yeah, come on. I can be brought. Now, is there now you say in the report that the losses are underreported? How can that be?
SPEAKER_01:Yeah. So Robert, that's a great question. You know, one of the things that we talked about with with within alloy was, you know, when we see some some loss numbers, right? And then if you see the there's, I think there's two sides of well, there's probably multiple sides of losses, to be honest. But but if we just took a really easy approach and we said there's the you know true reporting as to what a bank is reporting, you know, within their data and to their risk committee and to their board, right? Those are into their executive team. Those are very real loss numbers that they are tracking. But then externally, there are a lot of different industry forums that have really tried to, you know, help institutions understand where they are at in the industry with their losses, right? So are they, you know, is there a loss bucket that they are not experiencing versus are they an anomaly in in check fraud and everyone else is really low and this institution may be high? And so what we mean by that is what we found is in some of the industry forums, it's so important to have that data and to really see where you sit across other institutions and credit unions, et cetera. But you know, what you see on in some of those reports, it's showing that losses are probably a little lower than what banks are actually reporting internally, right? And so this is not only coming from institutions we've spoken with, just folks in the industry, in understanding where losses really are compared to what is being reported to some of the industry forums, even when that information ultimately ends up being anonymized, right? And so when we break it down as to why, many different reasons. There is, if depending on who is filling out the information, perhaps it's the digital team and they're only answering from a digital perspective and digital losses. It could be, you know, depending on how, again, the organization is structured, who knows about what losses that could be a component. There's also a component of, you know, I've heard an institution tell me before, you know, well, we certainly can't put our actual losses on that report. And so I think it's what's important to know is connect with your peers in the industry and just even try to understand percentages of, you know, this percentage of your client base that this is what you're experiencing in fraud, or average new account loss is X dollars, right? And I think some of those numbers will help, but but we reported that out uh in an effort to show folks that if you see a number that says folks are experiencing, you know, credit unions experience over$500,000 in losses a year, right? We would say, well, that that may be low. Right. And so, you know, it just really want folks to understand that if the industry is saying they are underreporting those numbers, then you know, just use your best judgment in and how you use some of those those numbers.
SPEAKER_02:Yeah, I'm surprised that the regulators, the bank and credit union examiners don't want to see accurate loss numbers.
SPEAKER_01:So they will see accurate loss numbers coming from directly from the institutions.
SPEAKER_02:Okay.
SPEAKER_01:Yes. Yep.
SPEAKER_02:Yeah, because I was gonna say this because I'm I was pretty sure that was part of the exam.
SPEAKER_01:And yes.
SPEAKER_02:And if you're lying to me in those numbers, and I'm an examiner, I'm not gonna be happy with you.
SPEAKER_01:That's right. That's right.
SPEAKER_02:Now, the big issue in your report is of course AI. And it seems to me that fraudsters have a significant lead on AI adoption and use over many institutions, not necessarily big banks like Chase and Bank of America, but many other institutions. Am I right?
SPEAKER_01:You are right. So the the report shows if we just look at the entire population, that 91% indicated more financial crimes are being committed with AI technologies. And so this really starts to tell us a few things that financial organizations are tracking and really trying to split out where they are being impacted by AI versus not. I think the the thing to keep in mind too is from an AI perspective, it it really allows, you know, if we're thinking through the fraudster lens, it really allows them to move at a faster pace, move at a larger scale, and commit more complex schemes faster. And really it brings the the components of that personalization, right? So unfortunately, they are able to pull together and aggregate more personal information if they are going to pull off certain types of schemes. They are reporting seeing a rise in the crimes that are being committed. And so the response to that is also institutions saying we are looking to make investments and further investments in into AI, right? I think that's that's the good news, is because it can really help, you know, not only from an operational perspective, but even from a detection, right? And really help to find the anomalies, the patterns that the human eye is not going to be able to see. That folks have built models for years as those have been running and they're being used. And as technology continues to improve, so can those AI components as well.
SPEAKER_02:Well, your report, if I remember it correctly, shows that fraud is significantly up at credit unions and regional banks, and down at mega banks. And I I would guess that one of the reasons for that is that the big banks are have gotten really good at AI and spent gazillion dollars, whereas the smaller institutions are lagging at that. I mean, am I crazy in thinking that?
SPEAKER_01:No, you're you're not. I mean, I definitely think there's a there's an investment component, right, by size. So the larger you are, the more resources you have, the higher dollars you have available to invest. I also think there's organizations that it is as you get larger, their philosophies and their interactions with their clientele are different at times than those of credit unions with a really robust member component as well. And so I would say you're spot on when it comes down to the investment dollars that can be allocated in the larger institutions and the resources that resources they have are, you know, are gonna far exceed what the credit unions have. I think the the component there though is for credit unions to certainly not, you know, they have access to tools and really look for different institutions, different partners that will work with them, right? It is more of a partner in an effort to determine their strategy, what they're looking to achieve, how they can help them do that from a strategic perspective, versus just, you know, one-point solution is not going to be the silver bullet to really look for that vendor that will help to partner and you know, platforms that will help to give you multiple components, not just to combat what what you need right now. It's to combat what you don't know you might need five years from now or three years from now, right? And looking for those investments. I think that's a that's a key for credit unions as well to be successful.
SPEAKER_02:Well, I would think if I were a criminal, I would use AI to test some of my schemes. Yeah, it's yeah, would this work? And it'd give very specific details. And I I think I could get some answers out of AI on that. And it probably would offer me tips about how to make it better. And that said, I think I think the uh financial institutions have to be doing the same using AI to help them. I mean, you can't build an iron curtain around the institution, but you can certainly fortify it.
SPEAKER_01:Yeah, and Robert, you know what's really interesting too is we actually did a state of scams report and a little bit, you know, different because it was serving consumers to understand the impact scams are having on them, what they're looking for in a financial institution, how they've been impacted by scams. And the reason I bring this up is because 69% of that population in the state of scams report said that they would trade some privacy for stronger AI fraud protections from their institution. And then 66% reported they were more likely to choose an organization that actually applies AI. So it's it's interesting when you know we we look at it from the financial organization perspective and the investments that they are making. And, you know, not only we know the fronters are using them, but then the financial organizations to use them to make themselves better. But then you have consumers saying that they have expectations that their institutions are using AI as well, right? To protect them. So there's definitely this demand coming from the consumers. They have an expectation AI is being used. We already know the fraudsters are using it, banks are using it. I think they're increasing that investment as well, which is incredibly important.
SPEAKER_02:Now, when institutions look at your report, what kind, what range of reactions do you get?
SPEAKER_01:You know, it's it's interesting, Robert. Well, I I would say there's definitely components of yes, this is spot on. I am not alone. We see this every day, that this matches what we're experiencing. But then there's also, so I'll tell you something I found really interesting in I would say some of the reactions we've had related to, and this is specifically credit unions, too, in what the organizations have delayed or avoided due to fraud concerns. And what I mean by that is offerings to their members. So one of the things that the credit unions indicated was that 98% of respondents of credit unions said fraud risk is the primary factor when deciding what new products like real-time payments we can offer to our customers. Now, credit unions is leading the pack there, showing that they are thinking of fraud at the forefront. But then when you start to break it down a little bit, you you look at there's one particular one that I've heard some interesting reactions on the higher risk customer segment limits. So a credit union, 60% of credit unions reported that they have delayed or avoided higher risk customer segments and higher risk customer limits because of the lack of fraud controls. And so, you know, I think that the response there is we're hearing yes, that is spot on. And then there's another mix of, well, we haven't considered raising some of our limits yet. But if we did, that would that would be an issue. We we would need the fraud controls in place, which is, you know, again, you know, when you start to look at different growth mechanisms, I think there is a theme in this report that starts to come out and it's the growth component. We talk a lot about fraud and fraud avoidance. We talk about the risk versus reward, but now there's this growth lever that is really coming to the surface to say, if you can control and you have the right controls and fraud, you can you can grow, right, with quality accounts. And so that's definitely a theme and one of the reactions we've we've heard coming out of credit union specifically, because credit unions also reported that acquisition and new client acquisition is one of their top focuses for this upcoming year.
SPEAKER_02:It's hard to acquire new new accounts, new members if you're paranoid about who they are. It's I mean, the these two things are hard to align. I'm not saying you should have no defenses whatsoever. Of course you should. You have to. But you can't create friction for the applicant, I don't think, and hope to succeed because the big banks, big credit card issuers live in a frictionless world.
SPEAKER_01:Yes, I I agree with you, Robert. There's definitely a balance there. I think that institutions are are trying to figure out, and certainly from a credit union perspective, they do not want to, you know, have they don't want to proceed if there's a lot of friction to their members and they want it to be a, you know, start off with a great relationship. But the expectation of consumers is that it's fast and it's easy to do business, and you know, they can self-remediate if there's an issue. And so it's definitely, you know, and as you said, Robert, you know, you received an offer you to go into the branch right now. Institutions are looking at how can they they have your attention, how can they, you know, just do it all in in while they have your attention versus you know making folks go into the branch. So it's definitely an interesting shift for sure.
SPEAKER_02:Well, I just think of the big credit issuers, big banks mainly. You know, when I was when I was a kid, a young adult applying for a credit card, you filled out a paper for them, you put it in an envelope, you sent it to them. About a month later, you'd hear back. You'd get by mail. And if there was a card in it, you were approved. If there was no card in it, you weren't approved. Okay. That process took about a month. Now you apply for a credit card at certainly any big institution, they will tell you in the course of this session, which will only take five minutes if you're really quick filling it out. Uh, yes or no. I mean, it's that simple. And furthermore, they will even give you a digital card number so you can begin to spend right now. Right. You don't need to wait for the damn piece of plastic. No. Get busy spending.
SPEAKER_01:Right, right. Drive up that balance.
SPEAKER_02:So my point is, and obviously they must be comfortable with this because they wouldn't be doing it. Uh as and so many institutions, uh, the big institutions, almost all of them do it that way. So credit unions, I think, still wanna think about this. I I don't I understand the the desire for caution, but I don't know if that's good business strategy, actually. So it's uh I mean this is a world of speed.
SPEAKER_01:It is, it is, Robert. And and you're spot on, right? It's the the larger institutions and in such they can do it because they that would mean they have the right controls in place. Or, you know, they are whether it's layering multiple different, I am certain it's layering multiple different vendors in order to pull back so they really understand the risk and its totality of the applicant that is applying. And from a business decision, it it is you would have to have and make sure that all of your fraud risks are covered in order to, you know, if you are going to do something digitally, you are going to do it very quickly, and you are going to make real-time decisions, that's all great. And that's exactly what consumers want. But ensuring the right fraud controls are there are going to be a must.
SPEAKER_02:And to some extent, you have to have some notion of what kind of losses you're comfortable with. I'm sure there's a number at American Express, I don't know the number, of how many millions of dollars we're prepared to suffer in fraud this year. And it's gonna be a big number. And the more they lower that, the more friction it gets introduced into the system, the fewer transactions they see. So there's cost on both sides of the equation, if you follow me.
SPEAKER_01:And uh I do, I do, absolutely. Yeah, and I agree. You know, there's there are you know, institutions they they have a fraud forecast, right? They understand what they are expecting to take in losses, because while some will say it's the cost of doing business, right? You know, certainly in the industry, we would like to see those losses as as low as possible. But but there is, there's definitely a a risk appetite, a tolerance of what range of losses is acceptable versus when you go outside of that range and now you are trending to, you know, what is what is the issue? How are you within one range, within forecast or below forecast, and and now you are trending higher? Was it a new product offering? Do you have a gap in controls? Do you need to make an investment? What does that look like? But you're right. It is all very important to really understand. And and also then how much money you can, you know, the what you can generate from a revenue perspective for the institution, because losses play right into that.
SPEAKER_02:Right. I mean, if some big banks will make what even they recognize are questionable loans, but they say, look, we're charging 18% interest on this. And maybe it'll work out, maybe it won't, but you know, we'll just roll a dice and see what happens. Whereas the credit union would say, wait, wait, we might lose this money. No, right, get out of here.
SPEAKER_01:Yeah.
SPEAKER_02:You know, there are there are probably jobs for you in New York City at big banks, but not here.
SPEAKER_01:So it's right, right.
SPEAKER_02:But yeah, fraud is just part of the the equation and it keeps growing. So you you don't have to worry about job security.
SPEAKER_01:You know, it it's it's one of those things that you're right, it's fraud keeps growing. And so the the industry is is here and a lot more solutions popping up left and right. But you know, how do we just continue? It's if the events increase, that's one thing. We don't want the we don't want the losses to increase, right? So even if the the attempts increase, how can we make sure as an industry we we keep those losses low and and we avert?
SPEAKER_02:Okay, when I first started writing about financial institutions, the head of security, not certainly not the biggest credit unions, but many of them was a retired police officer from the local community. And they were they were worried about arm robberies. And I laugh, not because an arm robbery isn't a serious piece of business, I'm sure it is, but that is insignificant in terms of actual financial loss at this point in time. It's uh it's it's all online computer loss to me. That's that's where the big money changes hands. It's uh and although there is that odd tradition in much of the country of stealing ATM machines, which is very peculiar. But it's quite expensive, not so much for the credit union in most cases, but forever well, particularly if it's a if it's uh an ATM in a store, then it's the poor store owner who's kind of foot the bill for that. But oh well.
SPEAKER_01:Right, right.
SPEAKER_02:So before we go, think hard about how you can help support this podcast so we can do more interviews with more thoughtful leaders in the credit union world. What we're trying to figure out here in these podcasts is what's next for credit unions. What can they do to really, really, really make a difference in the financial scene? Can't all be mega banks, can it? It's my hope it won't all be mega banks. It'll always be a place for credit unions. That's what we're discussing here. So figure out how you can help. Get in touch with me. This is rjmegarvey at gmail.com, Robert McGarvey again. That's rjmeggarvey at gmail.com. Get in touch, we'll figure out a way that you can help. We need your support, we want your support, we thank you for your support. The CU two dot oh podcast.