Key takeaway: Merchants and payment processors shouldn’t assume rising bank fraud-prevention budgets translate into fewer downstream losses. ProSight’s data suggests the bottleneck is operational capacity and data quality, meaning merchants may need to lean more on their own fraud tooling and dispute management rather than expecting better-funded bank defenses alone to close the gap.
More than half of North American bank executives raised their fraud-prevention budgets by at least 5% this year, yet 85% say the fraud threat is changing faster than their institutions can respond, according to a new survey from ProSight Financial Association.
The 2026 State of Fraud Prevention Survey canvassed more than 125 executives at banks and credit unions across North America from late June to early August, including roles in compliance, cybersecurity, fraud prevention, and risk, among others, ProSight said. Fifty-three percent of respondents increased fraud-prevention spending by 5% or more in the most recent fiscal year. Despite that, operational constraints, not budget, are what’s holding institutions back: alert overload, staffing and talent limitations, and data quality were all cited more often than budget constraints as barriers to fighting fraud.
Jason Bartolacci, director of ProSight’s Fraud Alert Network, said of the threat environment, “the bad guys are always a couple steps ahead of us,” adding, “I am not hearing a lot of optimism right now.” The survey also found 87% of respondents believe artificial intelligence is helping fraudsters more than it’s helping banks, citing AI-enhanced phishing, synthetic identities, and deepfakes.
Why it matters: ProSight’s survey covers bank-side fraud operations only and doesn’t address merchant-side outcomes directly. Still, the widening gap it describes between spending and operational execution has implications beyond the bank side of a transaction. These include checkout fraud, account takeover, and scam losses that originate on the bank side routinely land back on merchants through chargebacks and disputes. Thus, an industry where defenders admit they’re falling behind on operational execution, is one where merchants should expect dispute volumes and fraud losses to keep climbing even as issuer spending rises.
Source: ProSight Financial Association
