Banking Fraud Prevention: A Growing Concern in Malaysia Amidst COVID-19 Pandemic

The COVID-19 pandemic has brought about significant changes to the economic landscape, forcing financial institutions to reevaluate their fraud detection frameworks. In Malaysia, the situation is particularly concerning, with an increasing number of cases of financial scams, social engineering, and digital payment fraud reported.

Human Behavior Manipulation: The Most Common Fraud Technique

According to a recent FBI Internet Crime Report, 57% of online fraud cases involve manipulation of human behavior. This highlights the importance of protecting against these types of attacks. In Malaysia, the Cyber999 Help Centre received over 3,906 complaints during the movement control order period from March 18 to June 30, 2020, a staggering increase of more than 90% compared to the same period the previous year.

Regulatory Response: Enhanced Defenses Against Fraud Risks

Malaysian regulators have taken notice of the growing trend and are urging financial institutions to enhance their defenses against fraud risks. Bank Negara Malaysia updated its Risk Management in Technology policy last year, emphasizing the need for automated fraud detection systems that leverage heuristic behavioral analysis to monitor all financial transactions.

Industry Experts’ Warning: Creativity of Fraudsters Will Increase

Industry experts warn that as the pandemic continues to affect the economy, fraudsters will become even more creative with their schemes, resulting in a high number of fraud cases over the next few years. To stay ahead of these threats, financial institutions must adopt more sophisticated approaches, such as artificial intelligence-based fraud solutions.

Moving Beyond Rules-Based Systems

Rules-based systems are no longer sufficient in today’s rapidly evolving fraud landscape. Instead, banks should leverage machine learning algorithms that build dynamic user profiles by correlating data from various banking systems to identify anomalies in real-time and block suspicious transactions or activities.

Prioritizing Sound Technology Choices

As financial institutions in Malaysia embark on their digital transformation journeys, it is crucial they prioritize sound technology choices that meet regulatory guidelines. Deloitte, a leading professional services firm, is working with its clients in the region to ensure their technology investments are effective and compliant with regulatory requirements.

Conclusion

The COVID-19 pandemic has brought about significant challenges for financial institutions in Malaysia, including an increase in fraud cases. To stay ahead of these threats, it is essential that financial institutions adopt more sophisticated approaches, such as artificial intelligence-based fraud solutions, and prioritize sound technology choices that meet regulatory guidelines. By doing so, they can ensure the continued trust and confidence of their customers amidst these challenging times.