Indonesia’s Banking Sector Warned of Escalating Fraud Threats Amid Pandemic
A recent study by GBG, a leading global technology specialist in fraud and compliance management, has revealed that the rate of fraud in Indonesia is showing no signs of slowing down, with money mule fraud expected to rise by 68% in 2020-21. The findings suggest that financial institutions in Indonesia are facing an escalating battle against fraudulent transactions, which are becoming increasingly sophisticated.
Fraudulent Transactions on the Rise
The study, titled “Future-proofing Fraud Prevention in Digital Channels: an Indonesian FI Study,” found that the country’s financial institutions are struggling to keep pace with the growing complexity and volume of fraud and cyber-attacks. With more people turning to digital banking channels during the pandemic, fraudsters are taking advantage of the increased online activity.
Types of Fraud on the Rise
The report highlights the rise of:
- Money Mule Fraud: Coordinated social engineering and unsuspecting individuals recruited to manage fraudulent transactions
- Synthetic ID Fraud: Fake identities created using stolen personal information
- Stolen ID Fraud: Personal information stolen and used to commit fraud
Recommendations for Financial Institutions
Financial institutions are advised to prioritize customer safety and security when using digital products, particularly in light of these emerging threats. It is crucial for Indonesian financial institutions to find innovative solutions to combat digital fraud.
Investment in Fraud Prevention Technology
The study found that financial institutions in Indonesia are planning to invest heavily in new fraud prevention technology, with an estimated budget of USD$88.9 million for 2020. This makes Indonesia the third-highest country in APAC for fraud prevention spending, behind Thailand and China.
GBG’s Digital Risk Management and Intelligence Platform
GBG’s comprehensive solution includes:
- Machine learning modules to reduce false positives
- Orchestration modules to enhance fraud detection by managing third-party call-outs to a range of solutions and data
Conclusion
The study’s findings serve as a stark reminder for Indonesian financial institutions to prioritize fraud prevention and customer safety in the face of emerging threats. As the country continues to rely on digital banking channels, it is essential that these institutions stay ahead of the curve and invest in innovative solutions to protect their customers from fraudulent activity.