Although figures show no bank robberies last year in Denmark, it appears online banking fraud and other forms of digital crime are now replacing the traditional ‘hold-up’.
Why No Bank Robberies?
It is believed that the recent Danish bank association ‘Finans Danmark’ figures showing no physical bank robberies in 2021 compared to 221 back in 2000, for example, may be down to a number of changes in society and banking in recent times. It is believed that the reasons include:
- The move to a cashless society meaning that banks are holding much smaller stocks of cash. For example, cash usage across Scandinavia has now fallen to below 10%.
- Fewer banking branches outside of larger towns and cities limiting the options for criminals.
- Changes in the banking market, eg: banking as a service (BaaS) replacing traditional banking.
- The effects of COVID 19 restrictions hastening a move away from cash. For example, greater use of contactless payments, online banking and mobile wallet channels, acceleration of the take-up of digital payments and more businesses shifting to accepting (only) contactless payments from customers.
- Criminals opting for less risky options such as banking fraud and other forms of digital crime.
Bank Robberies Zero… But Online Fraud Surging!
The figures from Denmark appear to show that as well as bank robberies now being less feasible, physical robberies are being replaced and overtaken by less risky, highly lucrative and more flexible digital financial crimes such as online fraud and bank transfer fraud.
This is not just a trend localised in Denmark. For example, in the UK, UK Finance reported a 70% rise in Authorised push payment (APP) fraud in the first six months of 2021 (£355m).
How Technology Is Changing Banking
One of the key ways that technology is changing the banking world is through creating Banking as a Service (BaaS). This is a model that allows third-party companies, such as fintech startups and other non-financial firms, to offer financial services to their customers using the infrastructure and licenses of a traditional bank. BaaS providers typically offer APIs (Application Programming Interfaces) that enable their clients to integrate banking functionality, such as account creation, deposits, withdrawals, and payments, into their own products and services.
The BaaS model is often seen as a way for traditional banks to stay competitive in an era of rapid technological change, as it allows them to offer new and innovative services without having to invest in the necessary infrastructure and technology themselves. It also allows non-financial firms to enter the banking sector and offer financial services to their customers without having to obtain the necessary licenses and regulatory approvals, which can be a time-consuming and costly process.
BaaS can offer new opportunities for customers as well. It allows them to access a wider range of financial services through a single platform, rather than having to navigate multiple different platforms. It also provides a more seamless experience for the customer as they can access banking services without having to leave their current platform.
Additionally, BaaS can also provide opportunities for better and faster innovation in banking, as fintech firms are able to access bank infrastructure and offer new services and features more quickly than traditional banks might be able to on their own.
It’s worth noting that BaaS is still in an early stage and it’s a model that will evolve in the near future, with many players entering the market and creating new possibilities for traditional banking and other industries to intersect.
What Does This Mean For Your Business?
We are now moving rapidly towards a cashless society, a trend that was accelerated by the pandemic as businesses switched to contactless and expanded e-commerce and accepted more digital payments. Add to that some major shifts in the banking market, e.g. a growth in online banking and mobile wallet channels, BaaS replacing traditional banking, plus the remaining physical bank branches containing little cash as a result of these factors and it’s easy to see why physically robbing a bank is no longer as attractive as less risky alternatives.
For example, as has been the case for several years now, criminals prefer less risky yet highly lucrative online fraud and other digital financial crimes, aided by data breaches. It is important, therefore, that businesses and other organisations that criminals now attack with multiple methods (e.g., ransomware, phishing / APP) make their data and online security a priority. As consumers too, we all need to be aware of the many risks (phishing, malware, and more) that could lead to us becoming victims to fraudsters and cyber criminals so as to ensure that we are at least taking basic but trusted measures to protect ourselves.
By Mike Knight