NEW YORK—By any measure, fraud is no longer just a back-office problem for credit unions. It has become a front-line member experience issue—one unfolding in real time across digital channels, payments, account opening, mobile banking and even member communications.
And according to new research from PYMNTS Intelligence and Velera, the challenge is only becoming more complex as fraudsters deploy increasingly sophisticated tactics powered by artificial intelligence, automation and coordinated multichannel attacks.
The latest installment of the PYMNTS Credit Union Tracker Series, produced in partnership with Velera, argues that traditional fraud strategies built around siloed systems and reactive response models are no longer sufficient in an environment where threats can emerge simultaneously across payments, digital banking and identity verification channels.
“Fraud is entering a new phase of complexity for credit unions,” the report states, noting that attackers are increasingly orchestrating “coordinated, multichannel schemes that challenge traditional detection and response frameworks.”
The report points to research showing one in 10 consumers experienced card fraud in the past year, with many incidents tied to impersonation scams, credential theft and unauthorized transfers. At the same time, fraud now touches nearly every stage of the member lifecycle—from onboarding and authentication to payments and account maintenance.
For credit unions, the implications are significant.
The expansion of digital services has widened the potential attack surface just as member expectations around speed and convenience continue to rise. According to the report, 56% of credit unions identified cybersecurity and fraud as their top concern for the second consecutive year, while 77% reported experiencing at least one incident of unauthorized network access during the past year.
Compounding the issue are legacy technology environments that often leave institutions with fragmented data and disconnected fraud signals. Fraud indicators may exist inside an organization, but without integrated systems they can remain isolated long enough for attacks to succeed.
Artificial intelligence is also changing the nature of the threat itself.
The report notes that generative AI tools are making synthetic identity fraud easier to execute, enabling criminals to create increasingly convincing fake identities capable of bypassing traditional verification systems. Fraudsters are also becoming more adept at mimicking legitimate user behavior, making malicious activity harder to distinguish from authentic member interactions.
A Broader Strategic Challenge
As a result, the report suggests fraud is evolving from a manageable operational risk into a broader strategic challenge capable of impacting underwriting models, balance sheets and long-term growth.
At the same time, member expectations around fraud prevention are changing just as rapidly.
According to the research, 82% of credit union members say their payment method choice is primarily influenced by which option feels most secure. Members increasingly expect fraud prevention to operate invisibly in the background—providing real-time protection without adding friction to the user experience.
That expectation extends beyond simply stopping fraudulent transactions. Members also expect immediate communication, rapid resolution and seamless support when fraud does occur. The report found that strong fraud resolution experiences can deepen member relationships and increase confidence in the institution, while slow or confusing responses can quickly erode trust.
This is driving many credit unions toward real-time, AI-driven fraud strategies designed to identify anomalies earlier and respond before losses occur, the report states.
The report notes that more institutions are leveraging machine learning and advanced analytics to monitor transactions and member behaviors continuously across channels. Those tools, combined with broader access to integrated data, are helping credit unions reduce false positives while improving detection speed and accuracy.
Breaking down data silos has become central to that effort.
According to Velera COO Dean Michaels, aggregating signals across card, digital and branch interactions creates a more complete view of member behavior and risk, improving both fraud detection and response capabilities.
Increasingly, credit unions are also turning to ecosystem-style partnerships to strengthen fraud defenses without building every capability internally. Shared infrastructure, integrated alerting systems and AI-driven risk tools are enabling smaller institutions to access broader datasets and more advanced fraud-prevention capabilities.
The report points to Velera’s recently launched Atmos Risk platform as one example of that trend, describing it as a cloud-based fraud ecosystem that applies AI to unified, cross-channel data in real time.
Karen Postma
Karen Postma, senior vice president of risk solutions at Velera, said the industry must move beyond fragmented fraud controls toward multilayered, enterprise-wide strategies.
“The nature of fraud is changing rapidly—and credit unions are facing a threat landscape defined by coordinated attacks, consumer-engaged fraud and increasingly sophisticated scams,” Postma said. “Protecting members now requires moving beyond fragmented controls toward a dynamic, multilayered defense that unifies data across every touchpoint.”
Ultimately, the report argues that fraud prevention is becoming inseparable from member experience itself.
Credit unions that can combine real-time analytics, integrated data and proactive communication without introducing unnecessary friction will be better positioned to preserve trust, strengthen member relationships and compete in an increasingly digital financial environment.