Rising fraud losses, growing costs and outdated systems highlight the need for integrated, more efficient compliance solutions
Berlin, July 30, 2025 – European fintechs, banks, insurers and other financial institutions are coming under increasing operational pressure due to growing regulatory requirements. According to a new study by global verification specialist Sumsub, so-called “compliance fatigue” is now an industry-wide problem.
The new report from Sumsub “The State of European Financial Services: 2025 Report” shows:
- 51% of fintech experts cite “keeping up with changing regulations” as the biggest challenge
- 44% report high operating costs as a significant burden
- 29 % struggle with the effectiveness of transaction monitoring
- 25% see frequent false alarms as a drain on resources
The cost of failure
The study, based on the responses of 225 experts from fintechs and financial service providers in Europe, shows the financial consequences of these challenges:
- Over half (55%) record annual fraud losses of between €100,000 and €1 million, with 25% losing between €500,000 and €1 million.
- Almost one in five (18%) loses more than €1 million a year
Fragmented processes hinder proactive strategies
Despite increasing fraud risks, many compliance processes remain fragmented. New forms of fraud such as AI-generated deepfakes and synthetic ID documents highlight the limitations of manual checks and isolated tools. Even high-quality but outdated or undeveloped processes can now be easily circumvented.
Without real-time detection, cross-channel monitoring and centralized data, teams are forced to react to threats rather than prevent them, increasing both risk and operational costs.
- Most common types of fraud according to the industry: payment fraud (52%), money laundering (48%), forged documents (43%)
- AI-generated deepfakes increased by 900% worldwide in the first quarter
- Synthetic document fraud increased by 378% in the first quarter of 2025
Fraud development bypasses outdated setups
Despite the increasing complexity of threats, many providers continue to rely on outdated compliance structures. These gaps not only cost resources, but also lead to avoidable risks and highlight the need for intelligent, scalable compliance infrastructure.
- Over 53% of companies use manual processes to report suspicious activities and transactions in full or in part
- Only 17% rely on a fully outsourced solution for transaction monitoring
- Over 20% state that they are unable to recognize new, innovative fraud methods
Financial service providers anticipate stricter regulation
The study also shows a growing concern about stricter regulations. The industry is preparing for an increasingly regulated environment in which violations will not only result in internal disruptions, but also high financial penalties.
- Almost half (47%) expect higher penalties for non-compliance in the next 12 months
- 38% expect stricter KYC/KYB requirements
- 50% expect stricter regulation in transaction monitoring
“Financial institutions in Europe are at a turning point,” says Ilya Brovin, Chief Growth Officer at Sumsub. “They are facing a compliance environment that is not only becoming more complex, but also more costly – especially with outdated, manual systems. At the same time, the pressure for quick solutions is increasing. 76% of all fraud cases occur after onboarding. This means that compliance must not end with identity verification. The solution is not just about risk management: it’s also about regaining efficiency, improving the user experience and ensuring sustainable growth.”
The full report The State of the FIs and Fintech Industries in 2025 is available for download here: https://sumsub.com/files/The_State_of_European_Financial_Services_2025_Report.pdf
About Sumsub
Sumsub is a full-cycle verification platform that secures the entire user journey. With Sumsub’s customizable KYC, KYB, transaction monitoring and fraud prevention solutions, you can orchestrate verification processes, attract more customers worldwide, meet compliance requirements, reduce costs and protect your business.
Sumsub has over 4,000 customers from the fintech, crypto, transportation, retail, e-commerce, education and gaming sectors – including Bitpanda, Wirex, Avis, Bybit, Vodafone, Duolingo, Kaizen Gaming and TransferGo.
PRESS CONTACT
PIABO Communications
Kim Bauer
sumsub@piabo.net | +49 (0)172 2768761
Markgrafenstrasse 36
10117 Berlin | Germany
