FIS: Cyberthreats and Fraud Cost Firms US$98.5m Annually

Financial services technology provider FIS has quantified the cost of disruptions and inefficiencies in business operations at an average of US$98.5m per company annually, according to new research conducted with Oxford Economics.

The study, titled "The Harmony Gap: Finding the Financial Upside in Uncertainty", surveyed 1,000 C-suite executives across six industries in the US, UK and Singapore to identify issues affecting the money lifecycle in organisations. 

The money lifecycle refers to the complete journey of funds as they move through an organisation's financial systems.

Cyberthreats emerged as the primary concern, with 88% of respondents identifying it as a significant source of disruption. Fraud ranked second at 79%, while regulatory complexities troubled 65% of executives surveyed.

Stephanie Ferris, CEO and President of FIS, says: “We commissioned this research to determine the sources of disruption and inefficiencies within organisations' financial ecosystems, whether money is at rest, in motion or at work. The findings uncover the consequences of disharmony in the money lifecycle.”

Payment friction and cyber vulnerabilities

The movement of funds between points presents challenges for most businesses surveyed. More than half (51%) of respondents indicated that moving money through payment systems generates more tension than other phases of the money lifecycle.

Despite 79% of companies adopting automated payment processing technology, 57% still experience transaction delays at least monthly.

Cybersecurity threats pose a persistent problem, with 37% of executives reporting daily encounters with cyberthreats and 74% facing critical threats monthly.

While 83% of firms prioritise fraud risk management, 53% expressed dissatisfaction with their fraud response protocols. 

Training remains an issue, with 47% of companies failing to regularly educate employees on fraud and cyber awareness.

Insurance companies demonstrate better practices in this area, with 75% relying on employee training for fraud prevention compared to the 48% average across other sectors.

Technology investment strategies

The research indicates that companies with dedicated financial technology teams show greater preparedness for addressing operational challenges. 

Of the companies with specialised fintech teams, 85% reported being moderately or well-equipped to handle inefficiencies, cyber risks and compliance issues.

These companies also demonstrated stronger financial performance, with 83% experiencing revenue growth after implementing embedded finance solutions. On average, businesses realised an 8.5% increase in sales through these investments.

The insurance sector lags in technology adoption, with only 52% of investment companies reporting dedicated fintech teams, compared to 74% across all industries surveyed.

Firdaus Bhathena, Chief Technology Officer of FIS, notes: “The findings highlight that a well-defined technology strategy, supported by a dedicated and knowledgeable team, is a fundamental component of a firm's success. 

“Companies that invest in building or partnering with fintech expertise are better positioned to optimise their financial operations.”

Artificial intelligence (AI) and automation represent significant areas of investment for the surveyed companies. More than half (55%) are investing in generative AI and machine learning to achieve strategic objectives.

However, implementation challenges persist. High costs of implementation and maintenance concern 73% of respondents, while 64% struggle with insufficient in-house expertise. Integration difficulties with existing systems affect 58% of businesses.

Despite these challenges, executives maintain an optimistic outlook regarding AI. Just over half (56%) plan to use AI to increase organisational agility, while 48% expect it to help acquire new customers.

Bianca Fisher, Research Manager at Oxford Economics, adds: “This research has quantified the impact of tensions within the money lifecycle. This analysis has allowed us to identify the cost of financial disharmony and how it can hinder organisational growth. 

“By working with FIS, we've delivered insights that will help businesses globally understand and address these challenges.”

FIS plans to release complete findings ahead of its annual Emerald conference in May.

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