CYBER SECURITY


IBS Journal August 2017


10


The year of living dangerously


It has been a distressing year for everyone in fintech. Reports about rising fraud levels are coming in left, right and centre from all regions and channels and, for now, their momentum is not slowing down


Junior Reporter Henry Vilar


T


his year, the Reserve Bank of India has been issuing warnings about the rising fraud rate. Europe is experiencing its highest ever numbers in card fraud losses,


with the UK and France accounting for 70% of total European card fraud. However, it seems that in this region fraud has been concentrated in a few hotspots, as only 10 European countries have seen an increase in fraud, while eight have had a decrease.


Card-not-present fraud increased 150% during 2016. Identity fraud has hit record levels. And in the UK, e-commerce fraud is topping consumers’ worries. Social media, the playground for the age of information, is making this much easier. Criminals are acting from abroad – they’re organised, sophisticated and ready to strike. So what’s ahead of us? We spoke with industry experts about fraud trends, anti-money laundering (AML), and what the industry can do to leverage data to protect consumers.


IBS Journal spoke to Tim Ayling, EMEA director at RSA, who said that we are in the middle of a dramatic increase in mobile fraud. Interactions with any aspect of any bank have progressively turned from in-branch to digital, meaning that non-presence may in cases make fraud easier. With the evolution of channels, fraud has accompanied the technological shift.


Rahul Singh: Criminals are taking advantage of technology lags


While browser-based fraud had been dominating in the past few years, now mobile has taken the lead. As more people manage


their finances on their phones, this has to be one of the main channels where fraud is taking place, with many types of malware taking advantage of the systems to steal personal data.


Catching up with consumers


Rahul Singh, president of financial services at HCL, told IBS Journal that the gradual shift from high-street in-branch banking to modern digital use has produced a leap in technology. With a change in customer behaviour and different types of interaction with the branch, certain fraud and AML standards must be met. Unfortunately, Singh believes that most legacy systems haven’t caught up yet, and have not been updated to the level of sophistication required for modern AML.


The rise in fraud is natural, but will fade off as banks update back-end systems


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This is one of the main reasons fraud attempt rates have increased in the last year: “Criminals have spotted how some tech is lagging behind, and are leveraging this disparity. AML and KYC (know your customer) processes need to be adapted to digital channels, and up to now, it has been very rare,” said Singh.


Ben Robinson, chief strategy officer at Temenos, told IBS Journal that many banks realise their legacy systems are indeed dated.


As Singh said, “[The recent rise in fraud] is, to a certain extent, natural, but will fade off as banks update their back-end systems. It may take some time, but it will happen.”


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