New LexisNexis data shows bot attacks account for nearly 22% of Canadian transactions as mobile fraud costs surge
Canadian financial services firms are absorbing $4.09 for every dollar of fraud lost (up from $3.65 in 2021) as AI-generated attack methods, surging bot traffic, and the concentration of crime in mobile channels push the total cost of financial fraud to record levels, according to the LexisNexis Risk Solutions True Cost of Fraud Study 2026 North America, published this week.
The study surveyed 319 risk and fraud professionals across financial services and lending organisations in Canada and the United States, including 68 Canadian respondents from commercial banks, credit unions, payment service providers, investment and wealth management firms, fintechs, and other institutions.
Bots, scams, and synthetic identities drive Canadian losses
Canadian organisations estimate that AI-generated techniques are involved in approximately 25% of their fraud losses - meaningfully higher than the 19% figure reported by their U.S. counterparts.
That gap reflects both the pace of AI adoption among fraudsters targeting Canadian institutions and the relatively higher burden Canadian firms face in maintaining internal AI expertise: 37% of Canadian organisations named limited internal expertise as a top barrier to adopting AI-based fraud detection, compared with 29% of U.S. institutions.
Malicious bot attacks are a particular pressure point in Canada. These automated attacks - which test stolen credentials and probe login systems - account for approximately 21.8% of all monthly transactions in Canada, compared with 14% in the United States.
Approximately 55% of Canadian respondents said bot traffic increased year over year, a figure that, while slightly lower than the 58% recorded in the U.S., signals sustained and growing exposure.
Scams represent a further drain, accounting for approximately 31.7% of fraud losses among Canadian firms. Canadian organisations reimburse a higher share of those losses than their U.S. peers - 38.9% compared with 31.2% - a gap with direct implications for the bottom line of financial institutions and, ultimately, for the cost structures affecting advisors and their clients.
Minimising losses tops the agenda for Canadian firms
When asked to identify their top three organisational priorities, 62% of Canadian respondents cited minimising fraud losses - the highest-ranked concern among Canadian institutions and a markedly more direct loss-reduction focus than the response from U.S. firms, where improving customer trust and reducing friction ranked first, each cited by 51% of respondents.
Improving customer trust and loyalty came second for Canadian organisations, cited by 60%, followed by ensuring regulatory compliance at 53%.
That compliance focus matters for advisors. As Canadian regulators including CIRO and the Canadian Securities Administrators continue to scrutinise conduct standards and client protection obligations, the fraud prevention strategies that firms adopt carry regulatory as well as financial weight.
Poorly designed controls that generate excessive friction have their own cost: the study found that 56% of all respondents across both countries said fraud prevention strategies had increased customer churn, a finding that underscores the difficulty of hardening security without impairing client experience.
AI is infrastructure, not experimentation
The study's most significant structural finding for Canadian wealth firms is that AI has crossed from pilot to production.
More than half of North American organisations surveyed (56%) said they are currently using AI to defend against synthetic identity fraud and account takeover. Synthetic identity fraud, in which fraudsters construct fictitious identities by combining real and fabricated personal data, was the single largest fraud category across North America at 19% of losses, with third-party account takeover, third-party identity fraud, and first-party fraud each accounting for 17%.
Four in five respondents rated AI-powered capabilities as extremely or very important when selecting fraud prevention vendors. Over the next 24 months, Canadian and U.S. institutions plan to invest most heavily in biometric authentication, cited by 53% of respondents; verifiable credentials and digital identity wallets, at 48%; and behavioural intelligence such as keystroke dynamics, at 47%. Approximately 62% plan to invest specifically in AI-enhanced identity verification.
Websites and mobile apps together account for nearly 70% of fraud losses across North America, with transaction activity representing 39% of losses by customer journey stage, followed by new account creation at 33%. The fraud threat is not concentrated at a single touchpoint - it follows clients through every stage of their relationship with a financial institution.
The performance gap between firms with automated fraud programmes and those relying on manual processes is striking. Organisations with mainly automated programmes reported perceived effectiveness of 89%, compared with 61% for manual-first organisations, and recorded nearly three times the reduction in customer churn (29% versus 10%).
They were also more than twice as likely to track fraud by both channel and payment method, a granularity that gives them a measurable analytical advantage.
"Fraud continues to evolve across every stage of the customer journey, and digital channels and AI-assisted techniques are increasing the speed, scale and complexity of attacks," said Kimberly White, senior director, fraud and identity, North America, at LexisNexis Risk Solutions.
