Although figures show no bank robberies last year in Denmark, online banking fraud and other digital crimes are now replacing the traditional ‘hold-up’.
It is believed that the recent Danish bank association ‘Finans Danmark’ figures show no physical bank robberies in 2021 compared to 221 back in 2000, for example, maybe down to several changes in society and banking in recent times. It is believed that the reasons include the following:
– The move to a cashless society means that banks hold much smaller cash stocks. For example, cash usage across Scandinavia has now fallen below 10 per cent.
– Fewer banking branches outside of larger towns and cities, limiting the options for criminals.
– Changes in the banking market, e.g. 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.
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 more than just a trend localised in Denmark. For example, in the UK, UK Finance reported a 70 per cent rise in Authorised push payment (APP) fraud in the first six months of 2021 (£355m).
One of the key ways that technology is changing the banking world is through creating Banking as a Service (BaaS). This model allows third-party companies, such as fintech startups and non-financial firms, to offer financial services to their customers using the infrastructure and licenses of a traditional bank. BaaS providers typically provide APIs (Application Programming Interfaces) that enable their clients to integrate banking functionality, such as account creation, deposits, withdrawals, and payments, into their 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. It allows them to offer new and innovative services without investing in the necessary infrastructure and technology. It also allows non-financial firms to enter the banking sector and provide financial assistance to their customers without obtaining the required licenses and regulatory approvals, which can be time-consuming and costly.
BaaS can offer new opportunities for customers as well. It allows them to access a broader range of financial services through a single platform rather than navigating multiple different platforms. It also provides a more seamless experience for the customer as they can access banking services without leaving their current platform.
Additionally, BaaS can provide opportunities for better and faster innovation in banking, as fintech firms can access bank infrastructure and offer new services and features more quickly than traditional banks can on their own.
It’s worth noting that BaaS is still in an early stage, and it’s a model that will evolve shortly, with many players entering the market and creating new possibilities for traditional banking and other industries to intersect.
We are moving rapidly towards a cashless society, a trend accelerated by the pandemic as businesses switched to contactless, expanded e-commerce and accepted more digital payments. Add to that some significant 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. 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. Therefore, businesses and other organisations that criminals now attack with multiple methods (e.g., ransomware, phishing / APP) must make their data and online security a priority. As consumers, we also need to be aware of the many risks (phishing, malware, and more) that could lead to us becoming victims to fraudsters and cyber criminals to ensure that we are at least taking basic but trusted measures to protect ourselves.
