FINTECH STRATEGIES
The response has been predictable: more warnings, step-up authentication and interruption. It protects balance sheets in the short-term but does little to address root cause. Customers are left navigating inconsistent journeys and, over time, become conditioned to ignore controls – the‘ moral hazard’ concern that featured strongly in the debate around a mandatory reimbursement regime.
The more fundamental shift is upstream. Fraud is now conceived, tested and scaled on social platforms, messaging services and digital marketplaces. That is where victims are engaged and trust is engineered. Banks are the final checkpoint, not the first line of defence.
The uncomfortable truth is that these platforms remain optimised for growth and engagement. Friction is deliberately minimised, which makes social engineering effective and pushes fraud risk downstream while the cost is absorbed elsewhere. That model is no longer tenable. If fraud is to be reduced meaningfully, social platforms need to introduce friction earlier in the lifecycle with stronger identity controls, faster takedown of malicious content and intervention in suspicious interactions. This requires a trade-off they have largely avoided, accepting instead some impact on engagement to materially improve user safety. Until that shifts, the system remains structurally imbalanced. While meaningful cross-sector collaboration
– encouraged within the UK National Fraud Strategy – is a step in the right direction, if the financial services sector is anything to go by, regulation will be needed to provide clarity and consistency around expectations.
Fintech’ s friction problem For fintechs, this need is immediate. Many propositions depend on seamless, low-friction experiences. When fraud controls sit almost entirely at the payment layer, those experiences become harder to sustain. The answer is better precision rather than introducing greater friction.
Customers do not push back on meaningful intervention, rather they
74 July 2026