IT in Banking

Financial services are top target for cyber crooks

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Cyber fraud attempts targeting South African organisations increased 187% in the first four months of 2021, compared to the last four months of 2020.

This is according to consumer credit reporting agency TransUnion’s quarterly fraud report, which provides an analysis of global cyber crime trends.

The findings, which show fraudsters are ramping up their efforts mostly in the financial services industry, are based on intelligence from billions of transactions and more than 40 000 Web sites and apps contained in the consumer credit reporting agency’s identity proofing and fraud analytics solution suite –TransUnion TruValidate.

TransUnion monitors digital fraud attempts reported by businesses in varied industries, such as financial services, healthcare, insurance, retail, telecommunications, gambling and gaming.

According to the report, as more consumers went online for banking and other financial transactions, the percentage of suspected digital fraud attempts in financial services across the globe increased 149%, when comparing the last four months of 2020 and the first four months of 2021.

Across industries, the rate of suspected digital fraud attempts globally rose 24%, when comparing the first four months of 2021 with the last four months of 2020. In SA, the overall percentage of fraud attempts across industries increased by 7% during the same time period, according to the report.

“The rate of fraud attempts is up globally, and especially in the financial services industry, because fraudsters understand this is where the most high-value transactions are taking place,” says Shai Cohen, senior VP of Global Fraud Solutions at TransUnion.

“We are seeing more financial services organisations implement fraud prevention solutions with some success, though our findings make it clear this is not the time to relax. As the economy begins to open up and perform better, businesses need to do even better to ensure they are providing a secure marketplace that offers friction-right experiences to consumers.”

A secure marketplace is of special importance, as COVID-19 accelerated the shift to digital financial transactions, addsCohen.

In late September 2020, 40% of consumers with a financial account said in a TransUnion-commissioned survey that they are using digital platforms more frequently since the onset of the pandemic. The same survey found 60% of consumers said the majority of their financial transactions are conducted via mobile applications.

After the financial services sector, the travel and leisure sector had the second highest cyber fraud attempts, with an increase of 29.47%, followed by online communities (online dating, forums) which reported a 22.66% increase. The gaming, insurance and retail industries showed the least number of attempts, with -39.30%,-28.45% and -10.28%, respectively.

TransUnion defines identity theft as the top type of digital fraud in financial services. The second and third most reported types of digital fraud were first-party application fraud and account takeover, respectively.

“An interesting dynamic is playing out where we are seeing other industries facing far fewer suspected fraud attempts than what has been observed in financial services. In some cases, we are seeing a decline in such fraud attempts,” says Keith Wardell, product director at TransUnion Africa.

“The key takeaway for businesses is that fraudsters do not treat every industry equally. They often pick and choose an industry to focus on, based on the time of year or what businesses are seeing more transactional activity. At times, fraud attempts are simply conducted at random, simply to determine if businesses are prepared to meet their challenges.”

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