July 15, 2026—On this week’s episode of the Six Hundred Atlantic podcast, host Amanda Blanco and payments fraud expert Mike Timoney of the Federal Reserve Bank of Boston discussed the rise in payments fraud. Timoney states that growth in the number of payment rails and of payment providers has fragmented the payments ecosystem, introducing vulnerabilities that invite fraud.
More Ways to Pay
The payments ecosystem is far more complex than it was a decade ago. Modern payment rails and consumer-facing digital platforms–digital wallets, digital currencies and block-chain based solutions, payment apps–operate alongside legacy channels–cash, checks, wires, ACH, card networks. Legacy systems represent a smaller share of the market and are increasingly focused on specific use cases as the modern, customer-focused options offer greater speed, flexibility, and transparency. The number and variety of payments operators and providers also factors into the fragmentation of the payments ecosystem. Each of these rails and payment platforms has its own operating rules, data standards, timelines, security protocols, and user experiences. A lack of system integration leads to functional complexity, data silos, and resource overload, that together lead to systemic risk.
Fraudsters Exploit Weaknesses
Fraudsters are fast and agile. They look for and exploit gaps, weaknesses, and inconsistencies in financial systems, and take advantage of human vulnerabilities and emotional triggers through social engineering and scams. Timoney notes, “[They] realize that the difference in regulation, the response expectations, or even the data-sharing rules that happen, allow them the opportunity to obscure what they’re actually doing with the funds.”
And, they are using technology to their advantage. Fraudsters can quickly adopt new technology and are using artificial intelligence not only to develop more sophisticated methods, but also to grow the scale and reach of their attacks.
“Coordinated Intelligence”
So, how do financial institutions combat fraud? Timoney highlights the importance of “coordinated intelligence,” greater transparency and data sharing between internal payments systems to simplify and strengthen fraud monitoring and decision-making. Further, industry fraud reporting and information sharing, he says, provides universal benefits and strengthen the sector overall.
He also stresses the potential of AI and other technology to identify fraudsters and mitigate their attacks. Synthetic identify fraud and other modern methods require different risk mitigation strategies than in the past. Financial institutions cannot look at individual transactions alone to catch potential fraud. They must be able to not only verify a user’s identity, but also monitor and understand their behaviors and patterns.
Strong defenses, including strong data privacy controls and operational safeguards, Timoney advises, must be a priority on all of a financial institution’s platforms and applications. Read more of his recommendations for consumers in the article linked here.
The complete Cornerstone Advisors 2026 Digital Banking Performance Metrics report, commissioned by Alkami, is available for download.
Editor’s note: This information is provided for educational purposes only and is the opinion and research of the Federal Reserve Bank of Boston. Amanda Blanco is News Writer & Editor and Michael Timoney is Vice President of Secure Payments at the Federal Reserve Bank of Boston. The July 14, 2026, episode and past episodes of the Six Hundred Atlantic podcast are available on the Boston Fed website.