Alberta Quarcoopome’s thoughts ….Beware of digital banking fraudsters on the loose (1)


“Nothing is impossible, the word itself says I’m possible”!

-Audrey Hepburn

It seems heart-warming to see how opportunities are being taken amidst the COVID 19 crisis. Living in this era brings with it, mixed emotions- the good, the bad and the ugly. For every venture that institutions are undertaking, it has both its good and bad times. In banking, the two things that stand out for me are the huge volumes of transactions that are being done online through internet, electronic or virtual banking. Nobody imagined that the rate of patronage of virtual banking could be so overwhelming. The other one is the gradual acceptance of remote working from home. Although this has been a regular feature among certain departments in banking, it has now been formally accepted as another means to achieve the objectives of the institutions.

Did anyone imagine that training across the world could be so much different? It seems as if we are living on various planets. Training institutions have been forced to resort to the virtual methodology as the new way of imparting knowledge, sharing information and taking decisions. Instead of bankers travelling around the globe to attend workshops, conferences and training to get empowered on the job, they only need to set up the system and log on to a virtual platform. It seems so easy, but is it, really? Many groups, associations, institutions and corporate teams are now inviting people to join them in virtual workshops. This has been so beneficial to me, except a few weeks ago when I joined a corporate zoom webinar, only to be greeted with a session of pornography! You can imagine the embarrassment of the host. We just had to leave the virtual meeting in disgust. It had been hacked. Every system brings with it a mixture of excitement, euphoria and unfortunately risky events in the form of errors, frauds, losses, reputational damage and so on.


The Advantages of Digital Banking

Digital delivery has huge attractions: It is cheaper for banks to provide and it enables more customer-centric strategies, empowering users to access banking services whenever and wherever they want. We can now perform bank-to-bank transfers, View account transactions and history, pay bills without writing cheques, transfer money between our accounts, sign up for paperless statements, set up account alerts and reminders, and mobile banking. All these are fast and convenient and we can even protect our accounts online.

Concerns about Digital Banking

The advantages of digital banking far surpass the disadvantages. It can be quite challenging for beginners due to  trust and responsibility issues. Some are unable to handle complex transactions. Sometimes the financial jargons require some assistance and some customers are still not comfortable with virtual assistance, in this day of robots assistance. Some customers still prefer to relate to humans at a point in time. For non-IT savvy customers, digital banking has created new vulnerabilities. Customers become the weakest links in the chain. Their awareness of online security risks is often poor and they are easily duped into divulging confidential data to criminal groups that can then be used to authenticate fraudulent transactions.


The New Surge

Have you realized that the new normal is now becoming a hotspot and target market for fraudsters?  Have you seen a new surge in the familiar signs of fraud attempts? They are still on the loose. Let us see some examples which are not necessarily new:

  • Unfamiliar callers with excited voices stating how they have missed you. They first mention your full name and even add your company’s name. Of course, these can easily be found on the internet. They try to chat you up with some imaginary transactional offers or deals, soliciting your partnership. Usually, it is to supply some equipment to an oil and gas company. Let me pause here. Being charmed or carried away usually ends up with you being duped.
  • Unsolicited e-mails requesting your assistance to repatriate some millions of inherited foreign monies, waiting to be disbursed.
  • E-mails cautioning you to update your system, or subscribe to a free newsletter or strange links.
  • Mobile money frauds. These phone-based frauds, where criminals pose as bank staff to persuade victims to divulge their login details, are also widespread, although fraudsters are also exploiting a growing range of channels to steal confidential information.
  • Many phishing-type scams now involving significant elements of ‘social engineering’, in which the criminals use information taken from their victims’ social media profile, pose as officials to phone victims and check their personal details, and even intercept their mail to build a profile of the victim that will allow the fraudster to impersonate them. The information gained may be used to create lists of possible passwords that can be used in attempts to crack their online accounts. However, it can also be used to steal the victim’s identity and make fraudulent applications for financial products.
  • Fraudulent loan applications are a common practice, with fraudsters either applying for them with their own names and then absconding with the case or using stolen information to deceive lenders.
  • A new major international industry in which sophisticated criminal groups employ sophisticated methods, sometimes in collusion with corrupt bank staff, to steal huge sums.
  • Infecting digital devices with malwares Fraudsters use software which infect customers’ devices with malware that recognize when they are logging into online banking services. The software save their keystrokes, enabling fraudsters to steal their passwords. During an online banking session, both physical hijacking of the line and malware is used to initiate a financial transaction that a customer might mistakenly authenticate.


The Challenges Facing Banks

Dear bankers, have you sat back to reflect on the possibility of massive cyber-attacks in the wave of remote working from home and easier access to systems? How about the customers? How well are they informed about the digital banking platforms they have logged on to?

Now that the industry is facing criminal gangs using modern technology, banks can’t afford to use traditional manual methods of fraud monitoring and detection. These manual methods neither have the capacity nor the speed to meet the challenges facing banks today. Traditional monitoring methods are the reason why high-profile data breaches are making headlines.  There is a need for real-time detection of fraud and this technology do not come cheap sand there is pressure on banks to modernize their payments capabilities  since instant/real time payments has been exacerbated by the emergence of COVID-19 and the compelling need to quickly scale operations due to the rapid growth of contactless payments, and subsequent increase in digitization. Until then, the concentration is preventive measures.

Organizations and security developers are investing billions of dollars in fighting these fraud attempts. Worldwide spending on security systems is projected to hit $131 billion by the end of 2020, and $174 billion over the next two years. Artificial intelligence (AI) and machine learning (ML) applications often form the core of these cybersecurity systems and are being deployed across banks, retailers, telecommunications companies and many other businesses.

The March edition of the Digital Fraud Tracker® explores recent developments, including the use of AI and ML to fight application fraud, the importance of separating good bots from bad bots, and the potential impact of the new coronavirus on the cybersecurity industry.

Fighting Digital Fraud- The Preventive Way

Internal control processes and systems need to be designed to reduce the risk that embezzlement or mis-apropriation could occur through digital transactions. Timeliness is of essence here.

Next week, we shall examine a comprehensive lists of digital fraud prevention strategies that both banks and customers can adopt to get a win-win position and enjoy the benefits of digital banking.





Alberta Quarcoopome is a Fellow of the Institute of Bankers, and CEO of ALKAN Business Consult Ltd. She is the Author of two books: “The 21st Century Bank Teller: A Strategic Partner” and “My Front Desk Experience: A Young Banker’s Story”. She uses her experience and practical case studies, training young bankers in operational risk management, sales, customer service, banking operations and fraud.



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