Businesses in South Africa have identified AI-driven fraud as a major emerging threat, according to a recent research report.
Digital identity solutions provider iiDENTIFii commissioned World Wide Worx to conduct research and produce the iiDENTIFii Identity Index 2024 report.
It is based on responses from 200 large and medium enterprises across industry sectors and provides an in-depth analysis of the current identity fraud concerns, practices, and preparedness among businesses.
Those surveyed in the study expressed concerns about growing identity verification fraud and its impact on their business. These concerns centred around the potential for financial loss (35.3%) and reputational damage (34.8%), illustrating that financial and brand implications are almost equally weighted when considering the future outcomes of a business.
The concern for AI-driven fraud was particularly pronounced, with up to 63.2% of smaller businesses and 60.9% of larger businesses identifying it as a critical threat.
Businesses in South Africa are adopting identity verification (IDV) solutions with the aims of enhancing security and reducing fraud.
The report shows that adoption rates of AI-based fraud detection are at 50.5% and biometric methods are at 39.5%. This demonstrates a strategic shift towards leveraging cutting-edge technologies to mitigate identity fraud risks.
However, the implementation of IDV solutions doesn’t come without its challenges.
Arthur Goldstuck, author, thought leader and founder of World Wide Worx says, “Despite the trend towards investing in IDV solutions, there are still some significant barriers to implementation, with 31% citing regulatory compliance and 23% citing user acceptance as the most substantial barriers.”
This is further reflected in the investment patterns in fraud prevention technologies. Many businesses, particularly those with 201-1,000 employees, allocate between 10-20% (46.4%) of their budgets to these technologies, underscoring the prioritisation of fraud prevention in their corporate strategies.
Gur Geva, founder and CEO of iiDENTIFii, adds, “This points towards an opportunity for more coordinated industry-wide approaches to digital identity, from stronger collaboration to a sustained commitment to investing in advanced technologies. This could enhance the effectiveness of fraud prevention at an industry level and build a more resilient ecosystem against identity fraud.”
Larger companies also display significant investment, with 42.2% dedicating 10-20% and 26.6% allocating more than 20% of their budgets to fraud prevention technologies.
However, a lack of collaboration among industry stakeholders is evident, with 45.6% of small businesses and 31.3% of large businesses never engaging in cooperative efforts to share intelligence and combat fraud.
“As companies respond to emerging threats and adopt new technologies, tracking progress through this index will be essential to ensuring that identity verification systems are not only robust but also responsive to the evolving landscape of identity fraud. This dynamic approach, supported by the Identity Index, will ultimately drive stronger and more cohesive efforts in safeguarding against fraud and enhancing trust in digital interactions,” says Goldstuck.
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