Managing Check Fraud Without Increasing Friction In CX

Fraud, CX, and the Silent Cost of Speed 

The digital acceleration of banking has delivered on its promise: faster, more convenient financial experiences. But convenience without control is a false victory. When speed introduces risk, it creates a silent churn in customer trust—and an explosion in fraud exposure.

We’re long past the point where customer experience and fraud mitigation can operate on separate tracks. The real innovation opportunity now lies in redesigning how we think about and manage the trade-offs between the two. The most progressive banks aren’t just reducing fraud; they’re rebalancing the system.

The False Choice in Check Fraud Prevention: Growth or Safety? 

Too often, financial institutions split their loyalties:

• Fraud-focused leaders are measured by loss reduction. 
• Product and CX teams are measured by adoption, retention and digital migration.
• One wants to apply more friction; the other wants less. 
• Internal factions chase KPIs that are inherently at odds 

My company recently worked with a national bank that decreased its rising check fraud by increasing an already high hold rate and applying friction to its new accounts. Their fraud team was ecstatic. Their CX team? They were drowning in complaints, dealing with lower-than-desired mobile usage and falling behind peer benchmarks for app adoption. That kind of friction might reduce fraud losses, but it also erodes growth and leaves the customer stranded in the middle.

Banks don’t need to choose between growth and safety. But they do need to unify the metrics that govern both.

A New KPI Equation for Balancing Fraud and Customer Experience 

Here’s a radical idea: Treat fraud friction as a customer experience problem, not just a risk.

I’ve been advocating for a new metric—one that evaluates fraud strategies not only by what they save but also by what they cost. That equation looks like this:

(loss reduction + customer growth + CX impact) – (development or vendor spend) = net value

Without this lens, banks risk celebrating “wins” that undermine long-term health. If fraud mitigation leads to a 5% drop in losses but drives a 10% rise in account churn, that’s not progress—it’s a strategic error.

Check Fraud Isn’t Just a Back-Office Problem Anymore 

Customer expectations have shifted. Most people won’t tolerate three-day check holds or inconsistent deposit availability when other apps offer funds in minutes. The old logic of simply “holding to be safe” is collapsing under the weight of digital expectations.

At the same time, fraud rings are operating at a professional scale, leveraging bot farms, VPNs and social media to execute playbook-driven attacks, particularly through faceless digital channels like mobile deposit and ATM. And here’s the kicker: Mobile, what I’ve seen as the most scalable and cost-efficient channel, is often the most restrictive from a check deposit perspective.

Many banks still lack robust risk tools in mobile environments. That gap, combined with tighter thresholds and limited availability, drives more than 70% of high-risk volume back into physical branches, where servicing costs are five times higher, based on what I’ve seen at my company. Across the $4 trillion in checks we process annually at VALID Systems, we see 74% of check items deposited in-branch and 89% of dollars. It’s a self-defeating cycle.

Using Behavioral Intelligence for Real-Time Fraud Detection 

What breaks this cycle is a shift from static, rule-based detection to adaptive behavioral modeling.

Behavioral AI systems don’t rely on what a check looks like. They assess how a customer behaves—how they’ve historically transacted, including where and under what patterns. That context allows institutions to make smarter decisions in real time, rather than defaulting to blunt-force hold treatments or rejections.

But here’s what many leaders still misunderstand: AI is not a shortcut. It’s a framework for continuous learning. When treated like a plug-and-play “set it and forget it” tool, it fails. The most effective systems are those that self-adjust to shifting patterns and are paired with humans who analyze trends, test outcomes and retrain when needed.

Post-Covid Check Fraud: The Perfect Storm 

To understand the urgency of modernizing a fraud strategy, look at what’s happened since the pandemic. In 2020, government stimulus efforts overwhelmed financial systems, and fraud rings used that window to organize, fund and scale. The result? A sharp decline in traditional fraud but a surge in professionally executed, digitally coordinated attacks.

Check fraud, in particular, has ballooned. Even as overall check volume declines, the sophistication and velocity of check-related fraud have accelerated. Social media now hosts entire playbooks, organized by bank.

Customer Experience in Fraud Strategy Isn’t a Soft Metric 

Leveraging intelligent risk strategies to create better customer outcomes drives outsized value for financial institutions. We’ve witnessed this firsthand. By applying real-time risk decisioning to check deposits, institutions can confidently offer instant access to funds for a small convenience fee. One major national bank my company worked with that implemented this capability for mobile deposits saw an 80% increase in deposit activity within the mobile channel among users of the instant deposit feature, compared to non-users.

The lesson? The best risk strategies manage fraud and enhance customer experience. Managing for a fraud loss goal at the expense of customer friction is simply protecting a line item on someone else’s bonus plan.

Conclusion: What CEOs Should Track Now

If you’re in the C-suite, here’s the real takeaway: Demand unified metrics.

Track fraud loss reduction and customer behavior in the same dashboard. Measure digital migration, call center volume and churn alongside fraud trends. Ask:

• How many of your holds were false positives?
• How many fraud decisions correlate with NPS drops?
• How much was saved — but also how much was lost in tr

If your fraud and CX leaders aren’t aligned, you’re not running a risk program. You’re running a blame game.

Managing fraud doesn’t have to mean increasing customer friction, and secure doesn’t have to mean slow. The future of fraud strategy isn’t about choosing sides—it’s about building smarter systems that serve both. To see how this works in action, explore VALID’s RTLA at validadvantage.com/guarantee.

This article was originally published on Forbes: https://www.forbes.com/councils/forbestechcouncil/2025/06/06/managing-fraud-does-not-have-to-mean-increasing-friction-in-cx