Senior Vice President at CredoLab, Tarun Kumar Kalra on Monday averred that the escalation of financial crime is not far behind the double-digit growth of digital payments. In an interview, he argued that “Rapid expansion of digital channels, exploding growth in the number and types of devices, and reduced customer face time are making financial service providers vulnerable to online fraudulent activities.”
Already, latest Capgemini’s World Payments Report 2019, has projected that by 2022 the world would have seen a double-digit growth of digital payments, stressing further that “Worryingly, the escalation of financial crime is also soaring. Fraud is going mobile, mirroring consumer behaviour.
“We needed to better understand financial crime which is why we joined forces with iovation, who produced the iovation Financial Services Fraud and Consumer Trust Report 2019.”
Details of the report showed that interviews were conducted with 5.9 billion financial services providers and over 1,600 consumers in the US and the UK. The study revealed that between 2015 and 2018 there was a 575% increase in online identity fraud. In the first half of 2019, 50% of all risky transactions originated from mobile devices. This matches the trend which is seeing mobile surpass desktop.
Continuing, Kalra observed that “Through our interactions with financial services providers in South Africa, we have established that the problem in South Africa and on the African continent is just as threatening as in other parts of the world.”
“The South African Banking Risk Information Centre (SABRIC) reported recently that the country currently has the third-highest number of cybercrime victims worldwide and loses an estimated R2.2bn a year to cyber-attacks,” CredoLab averred.
He further explained that “Tackling this issue is complex. Overly aggressive fraud detection harms customer experience. It slows transaction speed as customers need to perform too many steps before checkout and can even flag good consumers as suspicious.
“Banks and fintechs need to confront financial fraud with the same levels of sophistication as today’s criminals. They need fraud prevention tools that are real-time and accurate, and in 2020, Artificial Intelligence (AI) and Machine Learning (ML)-based solutions are central to achieving this.
“We have had to be infinitely smarter than hardened criminals while matching the rapid pace of digital change,” he says.
“AI and ML concepts are now familiar to most banks and financial institutions, yet conventional AI approaches that rely on rules and predictive models are no longer enough. Accurate information must be generated in milliseconds to combat the issue in real-time.”
The CredoLab executive recalled that the firm, a Singapore-based fintech company entered the African market towards the start of last year, adding that “Now financial services companies in South Africa, Nigeria and Kenya can better protect themselves against financial frauds such as identity theft, new account fraud, synthetic identity fraud and account takeover fraud.”