Mitek and Datos Insights Report Finds Synthetic Identity Fraud Is Emerging as the Defining Fraud Threat of 2026

Mitek Systems, Inc. , a global leader in digital identity verification and fraud prevention, announced new research findings developed in collaboration with Datos Insights that reveal synthetic identity fraud is rapidly becoming one of the most significant systemic threats facing financial institutions. The convergence of generative AI, organized fraud rings, and scalable synthetic identity creation is reshaping fraud risk, forcing financial institutions to reassess how they combat a new era of AI-driven fraud.

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Drawing on survey data from North American fraud executives and interviews with fraud prevention leaders, the research examines how synthetic identity fraud has evolved beyond traditional application fraud into a broader enabler of financial crime across credit, deposit, and check fraud channels. Findings also explore how advances in AI are increasing fraudsters’ ability to create, scale, and operationalize synthetic identities more efficiently, while highlighting the growing pressure on financial institutions to modernize identity assurance and fraud prevention strategies in response.

Key findings from the research include:

• Synthetic identity fraud is widely recognized as a systemic threat, with 84% of fraud executives identifying it as a high or moderate risk to application processes.
• Financial impact continues to grow significantly, with U.S. unsecured credit losses reaching ~$2.94 billion in 2025, up from $1.8 billion in 2020. These losses represent only part of the total cost, as synthetic identities increasingly enable downstream fraud across deposits, checks, and mule activity.
• Synthetic identity fraud is expanding at a baseline growth rate of roughly 16% annually, driven by low-cost access to stolen or fabricated identity data and increasing fraudster efficiency.
• 55% of fraud executives still reported increases in first-party check fraud losses in 2025, underscoring its persistence.
• The rise of generative AI is accelerating both scale and sophistication, with 40% of financial institutions already observing increased attack rates tied to AI, and most expecting continued growth.

“These findings reinforce what fraud and risk teams are already seeing firsthand: synthetic identity fraud has become an industrialized threat,” said Garrett Gafke, Chief Operating Officer at Mitek. “AI-enabled tactics, organized criminal operations, and scalable identity manipulation are changing the economics of fraud. Financial institutions need identity authentication and fraud prevention strategies that can detect risk earlier, adapt faster, and disrupt coordinated attacks before losses compound.”

The research also points to a larger shift in how fraud operates across the financial ecosystem. Rather than isolated incidents, synthetic identities are increasingly being used to establish long-term fraudulent accounts that can be leveraged across multiple products and channels over time. This evolution creates compounding financial and operational risks for institutions that rely on fragmented fraud detection approaches.

“Synthetic identity fraud is a strategic control point for financial institutions because it increasingly serves as the foundation for a wide range of downstream fraud activity,” said Trace Fooshée, Strategic Advisor at Datos Insights. “As generative AI lowers the cost and difficulty of creating convincing synthetic identities, institutions are being forced to rethink how they approach identity verification at enrollment. Organizations that invest early in modern verification, behavioral analysis, and lifecycle monitoring capabilities will be significantly better positioned to disrupt fraud before it scales across the broader financial ecosystem.”

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