There has been a surge in fraud-related losses in India in recent times, a study conducted by Forrester Consulting and commissioned by Experian has revealed.
The insights are based on a survey of 308 fraud managers in the financial services, telco, and eCommerce sectors across 10 countries in the Europe, the Middle East and Africa and Asia–Pacific regions including India, Denmark, Germany, Austra lia, Italy, New Zealand, the Netherlands, South Africa, Spain, and Turkey.
The study underscores that the future of effective fraud prevention lies in the realm of artificial intelligence and machine learning technologies. A press release issued by the company stated the study reveals that a staggering 64% of respondents acknowledged experiencing an increase in fraud losses over the past year. This concerning trend is compounded by the fact that 67% of these respondents said rapid advancements in technology were making it tough to cope with the new complexities in the fraud scenario.
Financial Services Worst Hit
The findings reveal that year-on-year fraud losses were increasing for nearly two-thirds (64%) of respondents, with financial services organisations reporting the biggest increase in losses. There are several factors driving this surge in fraud attacks, such as persisting financial pressure on consumers, numerous data breaches leaking sensitive information on to the dark web, and the arrival of publicly accessible Generative AI—which has lowered the technical skills required to conduct fraud.
Attacks Up In Every Category
The volume of fraud attacks has gone up in almost every category. Synthetic identity attacks—where real and fake information are combined to form new identities—are on the rise, particularly in the financial services sector. This is closely followed by identity theft attacks and account takeover attacks. In the eCommerce sector, friendly fraud attacks, where customers dispute legitimate charges, have grown the most for merchants, followed by synthetic identity attacks.
Fraud Prevention Hurdles
According to the study, the biggest challenge limiting businesses’ ability to prevent fraud is a lack of device fingerprinting for fraud identification (62%). The second is an increasing number of referrals, causing increased delays and costs (56%). Businesses emphasised the crucial role of device data in passive customer screening. The top fraud-related priority is improving the explainability of ML models (65%), which shows how important ML has become to fraud prevention. Transparent ML models allow for human oversight so that unintentional bias can be identified. This capability is essential to ensure ethical AI use and to comply with a future AI regulatory framework.
AI/ML: Shaping The Future Of Fraud Prevention
Nearly two-thirds (67%) of businesses believe that the future of fraud prevention will be driven by AI/ML-powered solutions. The main benefits of using ML fraud solutions are an increase in acceptance rates, reduced losses through greater fraud detection accuracy, and a decrease in the volume of manual reviews and false positives. “The rise of advance technology transforms fraud dynamics, challenging established securities, and breaking down barriers. Addressing this challenge requires a potent solution—AI. Unlike traditional methods, AI excels in swift adaptation and real-time analysis, actively defending against ever-changing threats. Unlocking the power of data and machine learning, AI becomes a custodian at digital gateways, ensuring ensuring consumer protection and preventing substantial losses for businesses. It plays a pivotal role in fortifying security, protecting businesses from significant financial risks, and building a robust credit ecosystem,” said Manish Jain, Country Managing Director, Experian India.