Banks Step Up the Fight Against Stolen Credentials

Fraud against banks and their customers is on the rise, according to a February 2025 report from PYMNTS Intelligence and Arculus from CompoSecure, with 87% of institutions reporting increases in stolen or falsified credentials over the past year.

Stolen credentials account for 41% of fraud the banks report, the single highest source of fraudulent activity according to the report. Account takeovers and fraudulent transactions, specifically, had the biggest increases in the past year.

Previous security measures are increasingly less effective as criminals constantly develop new ways to defeat them. To combat the increase in fraud, banks are exploring advanced authentication tools such tap-to-authenticate metal payment cards. In total, 77% of report respondents expressed interest in adopting this technology.

Big Banks, Small Banks

Not surprisingly, larger institutions, with their greater resources and greater exposure to risk, are leading adoption, with nearly 70% of banks with over $100 billion in assets expressing a strong level of interest in metal cards. Figure in the 23% of large banks that said they were somewhat interested, and the share increases to 92%.

On the other hand, smaller banks, defined as those with $1 billion to $5 billion in assets, were less keen on exploring tap-to-authenticate metal cards.

Within those institutions, different stakeholders reflected varying levels of interest. For example, those who head up product development departments are somewhat more likely to show strong interest in issuing tap-to-authenticate metal payment cards as opposed to their colleagues who head up fraud prevention divisions, 43% to 40%, respectively. These numbers demonstrate metal cards desirability in terms of attractiveness to consumers, as well as their perceived security features.

Password Challenges

Passwords have been the default security measure since the dawn of the modern internet. However, they remain a particular source of friction for both customers and institutions. The problem, of course, is exacerbated by the sheer number of passwords consumers have to keep track of. Indeed, 71% of fraud leaders cite difficulty remembering credentials as their top authentication challenge. Interestingly, 41% percent of banks prefer tap-to-authenticate technology on metal cards specifically over their plastic counterparts. Metal cards, it’s reasoned, have a premium look and just feel more secure to customers. The largest banks — those with assets more than $100 billion — favor metal cards most, with 69% preferring them, compared to just 7% for plastic cards. The smallest banks show more preference for plastic cards — 39% compared to 19% for metal cards.

Beyond the Password

Passwordless authentication using logins via tap-to-authenticate metal cards seems to be the direction banks are heading, with larger banks again leading the way in adoption, even though this technology has been around for decades. Developed using radio frequency identification (RFID), contactless payment technology first appeared in the 1990s, with the first such payment being made on Seoul, South Korea’s mass transit system back in 1995.

Many banks expect to implement such solutions in the next three years. The institutions that have rolled out these measures report improved customer loyalty, greater profitability and, most importantly, enhanced fraud reduction as key benefits.