In this special episode made in partnership with Instnt, we discuss one of the most pressing and rapidly evolving challenges in financial services: fraud. As digital channels scale and customer expectations for seamless experiences rise, the question is no longer just how to detect fraud, but how to manage its impact without slowing growth or eroding trust.
From the rise of AI‑enabled attacks to the realities of consumer behaviour, this conversation explores why fraud has become an enterprise‑wide issue and why traditional approaches are no longer enough.
We examine the shifting economics of fraud, the growing tension between frictionless journeys and risk management, and the emerging role of insurance as a mechanism to transfer loss and unlock growth.
Hosted by Debbie West, this episode brings together three leaders at the forefront of this challenge:
- Kent Lugrand, President & CEO, InTouch Credit Union
- Mike Wilson, President & CEO, Members 1st Federal Credit Union
- Sunil Madhu, Founder & CEO, Instnt
Together, they share practical insights on building resilient fraud strategies, from journey mapping and cross‑functional taskforces to AI adoption, governance and new financial models that could reshape how institutions approach risk altogether.
Key Themes & Insights
The Scale of the Fraud Problem
- Identity fraud alone drives $50 billion in losses across US financial institutions.
- Synthetic IDs, stolen credentials, first‑party fraud and account takeover are accelerating, fuelled by cheap data and AI‑powered attacks.
- Fraudsters operate without constraints; institutions must comply with regulation, governance and privacy rules, creating an uneven playing field.
Why Credit Unions Are in the Crosshairs
- Rapid digitisation post‑pandemic has increased exposure.
- Members expect frictionless onboarding and one‑click experiences but these create openings for fraud.
- Consumers often assume institutions will make them whole, regardless of fault, increasing financial pressure.
Fraud as an Enterprise Problem
Mike Wilson shares how Members 1st FCU reframed fraud from a “fraud department issue” to an enterprise‑wide challenge:
- Built a cross‑functional fraud task force.
- Mapped fraud journeys end‑to‑end.
- Introduced kill chains and pattern‑based rules.
- Created a “fraud squad” within the call centre to handle volume.
- Proactively reissued compromised cards and shut down fake websites. This reduced fraud losses to one‑third of previous levels.
The Economics of Fraud Are Broken
Sunil Madhu explains why fraud is “normal”, a crime of motive, means and opportunity, and why the economics currently favour the fraudster. Key points:
- Fraud-as-a-service is openly available online.
- Fraudsters only need to succeed once; institutions must defend every attack.
- AI helps attackers more than defenders due to regulatory constraints on model explainability.
A New Paradigm: Fraud Loss Insurance
Instnt’s model, backed by Munich Re and Swiss Re, introduces:
- Insurance for identity fraud losses – previously uninsurable.
- Denial‑free claims, reimbursed within 30 days.
- Ability for credit unions to free up CECL reserves, enabling more lending capacity.
- Predictable cost structures instead of spiky fraud‑driven losses.
Kent Lugrand highlights the importance of quantifying fraud risk to strengthen member trust and financial resilience.
AI: Equaliser or Risk?
Both CEOs emphasise:
- AI is essential to fight AI‑driven fraud.
- But AI is not a silver bullet, it’s one tool in a broader strategy.
- Governance must come before deployment. Mike outlines how Members 1st created an AI Center of Excellence, appointed an AI Officer, and now deploys AI for underwriting, automation and executive productivity.
The Road Ahead: What a Winning Fraud Strategy Looks Like
Kent Lugrand: Quantify fraud risk to better serve members and strengthen trust.
Mike Wilson: Treat fraud as an enterprise issue; combine technology, governance, vendor accountability and consumer education.
Sunil Madhu: Shift the economics – use insurance to turn unpredictable fraud losses into fixed costs and unlock growth capacity.
Why This Conversation Matters
Fraud is no longer a back‑office problem. It’s becoming a defining factor in how financial institutions grow, compete and maintain trust. This episode offers a rare, candid look at how CEOs are navigating the tension between frictionless digital experiences and rising fraud threats, and how new models like fraud loss insurance may reshape the industry.
