European Banks Failing to Stop Fraud at Instant Payment Speeds, Sumsub Report Finds

European financial institutions are struggling to combat sophisticated fraud due to fragmented compliance systems that fail to share data in real time. As new EU regulations mandate instant payment processing, the inability to detect threats during onboarding rather than at the point of transaction leaves firms exposed to significant reputational and criminal liability.

What was announced

Sumsub released "The State of European Financial Services: 2026" report, highlighting a critical gap in how banks, insurers, and fintechs handle fraud prevention. The research reveals that only 9% of financial institutions currently operate an integrated platform across fraud and compliance functions. Furthermore, just 18% have achieved full real-time integration of identity, fraud, payment, and AML data.

The report notes that fraud is predominantly detected late in the customer journey. Only 17% of firms catch fraud at the onboarding stage. Instead, most threats are identified during account access (32%), payment initiation (29%), or withdrawal (29%). In 24% of cases, fraudulent activity is only discovered after a customer files a complaint. This delay is particularly pronounced in France and the Benelux region, where 26% of firms most commonly catch fraud only after a payment has settled.

Geographically, the UK and Ireland lead Europe with 13% of firms using integrated platforms, compared to just 8% in the DACH region. Regulatory pressure is a primary driver for change across the continent. The EU’s Instant Payments Regulation, requiring transfers to complete within ten seconds, is cited by 27% of practitioners as a major force for change over the next 24 months. However, nearly half of institutions still require manual review for at least a quarter of their alerts, and 32% identify slow investigations as their primary operational weakness.

"European financial institutions are not short of fraud and compliance tools, but those tools don’t talk to each other. Fraudsters exploit the gaps between siloed systems, and regulation is now demanding decisions in seconds that many firms still make in days. The case for a single view of the customer journey has moved from the operations team's agenda to the board's."

Ilya Brovin, Chief Growth Officer at Sumsub.

The companies involved

Sumsub is a global verification and fraud prevention provider that specializes in orchestrating the entire customer journey through a single platform. The company provides customizable KYC, KYB, AML, and transaction monitoring solutions designed to help businesses scale while maintaining regulatory compliance. By consolidating these disparate functions, the firm aims to eliminate the data silos that currently hinder many European financial institutions.

The company has established a significant presence in the fintech and banking sectors, offering tools that automate identity verification and risk assessment. Sumsub’s market position is defined by its focus on "full-cycle" verification, moving beyond simple document checks to include ongoing monitoring and behavioral analysis. This approach addresses the industry's shift toward real-time requirements and the need for a unified view of user activity across multiple touchpoints, from initial sign-up to final withdrawal. To date, the company has been the subject of extensive industry coverage regarding its role in securing enterprise systems and streamlining identity verification processes for global exchanges and core banking platforms.

What FF News has reported before

FF News has closely tracked Sumsub’s efforts to streamline compliance and security across various markets. In September 2026, the company launched Sumsub Debuts Workforce Verification to Combat AI Fraud and Secure Enterprise Systems, targeting internal security threats. The firm also expanded its regional capabilities by introducing a Sumsub Unifies Nordic Verification with New All-in-One eID Bundle to simplify identity checks in Northern Europe.

Integration has been a recurring theme in Sumsub’s recent activity, including a partnership where DashDevs and Sumsub Partner to Embed Automated Compliance into Fintech Core Platform. Additionally, the company’s impact on operational efficiency was highlighted when BTCC and Sumsub Reveal How Automated KYC Slashes Verification Times to 3 Seconds, demonstrating the speed required to meet modern regulatory standards.

What this means

The findings suggest a dangerous disconnect between the speed of money and the speed of compliance. As the EU mandates ten-second settlement times, the industry’s reliance on manual reviews and siloed data is no longer just an inefficiency—it is a systemic risk. The shift in executive concern from regulatory fines to reputational damage and criminal liability indicates that the "cost of doing business" mentality regarding fraud is ending. Firms that cannot automate and integrate their fraud stacks face an existential threat; they will either be crushed by the operational volume of instant payments or lose the trust of a market that increasingly equates speed with safety.